Augmenting Your Freelance Income

Basically there are three avenues to pursue to keep your freelance financial picture sunny: diligence in negotiating the best freelance deals, scouting for sources of augmenting that income from time to time, and adding secondary sources of income to the overall financial setup.

The prime ingredient in the discovery of funds to supplement income is your own ingenuity. People in other businesses have advantages you don't. They can, like the publisher of the magazine you write for, apply to numerous people to raise capital: customers, suppliers, insurance companies, banks, employees, other companies, venture-capital firms, investment bankers, and governments. If your business is a sole proprietorship, as is that of most freelancers, you don't have those options. The ability to get credit depends on your personal reputation. Third parties cannot invest in the business without incurring responsibilities for business debts as well. That usually means you have to rely on relatives or very close, good friends, which often isn’t a good idea.

If you’re thinking of getting a loan from your bank to tide you over, think again. In most cases, banks do loan small businesses money for operating capital or improvements, but freelance writing isn’t generally one of them. In fact, most banks don’t really consider you a small business. Plus, the loans they make to small businesses usually start at $50,000 or more.

An alternative to borrowing the money is applying for a grant. The pros and cons of public funding of writers are as numerous as the writers who do or do not get the grants. Living from grant to grant is much like living from paycheck to paycheck. The truth is that once you get on the grant merry-go-round, it’s hard to get off. Some writers actually write less and less the more they skipped from one grant to another since   it's easier to get a second and a third grant after you've got that first one. But getting that first grant can be a real challenge.

While there certainly are lots of grants out there, matching up their requirements to your situation is difficult. Let’s face it, if you want someone to give you money, you’ll need to fulfill their requirements. Also, one mistake on a grant application and you’re out. In fact, you may find writing a grant application harder than the writing you normally do. Grantors look for many things, least of which is good writing. For many writers, the chore of getting the grant in the first place may be more than it's worth. Searching for “writing grants” online will yield many sources.

Trying for prizes, on the other hand, may not be such a bad idea. If you have a novel on the back burner or if you write in a specialized field—travel, science, business, etc.), you may qualify for annual prizes given by a variety of organizations, some of which come with a cash award, no strings attached. Many prizes, even if they don't carry a cash award, will eventually help line your pockets, since the prestige of winning can be a feather in your cap and portfolio. If you do win a prize or receive an honor, milk it for all it’s worth. If you think you have a chance, take the time to fill out the forms and send in the required material.

Get creative when thinking up ways to bring in additional income. Perhaps you have an extra room in your house that you can rent out to a college student, or if times are especially tough, consider taking in a roommate or housemate to help meet your bills. You could also rent out equipment you have that you use only once in a while. Post notices everywhere, locally and online.

Lastly, consider selling items on eBay. While selling one or two items won’t bring in much, you could set up a sideline business selling items in a particular category such as collectibles. To do this successfully, you’ll have to set aside time to purchase inventory and pack and ship the things you sell. This will eat into your writing time, but money is money, no matter how you earn it.

If you look around you may find you have that other sources of income, no matter how small, that would help relieve the strain on your business budget.

10 Ways to Keep Your Bank Balance in Check

Thanksgiving Weekend always seems to be the time when people look for bargains, especially on Black Friday. But as a freelance writer you need to look for bargains all year long. The best way to stay ahead of your bank account is to follow these easy steps.

1. Try to keep a cash reserve in your account to cover the slow months. Use it only for this purpose and replenish it as soon as possible. An easy way not to overdraft your account is to make this cash reserve invisible. In other words, set your ending balance without taking it into account. So when you’re at zero, you’ll actually still have money in the bank. This allows you to not only keep some money aside but also to avoid those high overdraft fees.

2. Another way to keep your income safe is to open a special savings account and deposit all your income in it. Then transfer funds to your checking account as you need them to pay bills. This method works especially well with a sporadic income flow.

3. To make bill paying more efficient, create a Bill Pay Sheet. At the top list all the months in two rows. Under them, list your regular monthly bills set up in categories—mortgage or rent, utilities, credit cards, insurance, etc. Next to each bill listing put the date due in parentheses, followed by the amount you need to pay that month. You can then add up all your bills to see how much you’ll need that month. Cross out each bill as you pay it to keep yourself on track.

4. Synchronize your accounts receivable with accounts payable as much as you can by your early planning method. Know when you’re supposed to be paid, and if you don’t receive payment within a day or two of that date, let your editor know.

5. Apply for credit with your suppliers. If you’re on friendly terms, ask to pay on a periodic basis, if need be, especially if you have established a good credit rating. Explain that your income arrives in spurts instead of on a regular weekly, biweekly, or monthly basis if this is the case. Some suppliers may be willing to bill you on a two-,three-, or four-month basis—allowing you a discount if you pay early. Talk this over with them, explaining it saves them billing and postage costs. Another possibility is to open credit accounts that allow you to pay in three-month or six-month installments with no interest if paid within the allotted time. This works well with car and dental care.

6. Slash expenses to the bone. You can only cut corners so far. But a close analysis of your budget may uncover frills that you can do without briefly without hurting your professional stance. You’ll be amazed how much you can cut your budget and still live a healthy and happy life. Doing this will not only make you more efficient, but will make you the envy of your friends.

7. You might be able to apply for a short-term bank loan for your business, but chances are no bank will loan you the money. Banks are in business to make money, so unless you’re borrowing $50,000 or more, the usual minimum for a small business loan, you’re out of luck. You might want to check credit unions you, your spouse, or other family members may belong to. A last ditch effort may be to borrow some money to hold you over from a family member or friend—this normally isn’t a good idea, however.

8. Join forces and share some of your expenses.  Get together with other local writers or even friends to share services.

9. Take a temporary part-time job. If you do work part-time, try to work at a job that is somewhat related to your writing or the subject matter that you write about. This way, you won’t be wasting your creative energies.

10. You might try applying for a grant. This, like a bank loan, is a slim possibility. Remember, while there are loads of grants out there, unless you can meet their requirements, they might as well not exist. And if you do apply for a grant, be sure to follow the instructions to the letter. If you don’t, you’ll surely be rejected. 

Planning for the Future

All successful businesses start with a master plan. As a freelance writer, you need to know where you’re going and have a plan in place to take care of contingencies—those times when the markets you’ve been counting on disappear. Perhaps you’ve been putting it off while focusing on getting published. Before you get too far along in your freelance writing career, take some time to compile a more definitive plan.

With a good plan, you’ll be able to review your progress periodically. Doing so will allow you to discover  the need for a change in your direction when your original plan and your checkbook balance are at odds. Plus a clear, concise, well-thought-out business plan gives you a better opportunity to get a loan from your bank or a friend or family member when money is tight or you want to buy some new equipment. Few people, bank loan officers included, ever take freelance businesspeople seriously unless they have a plan in writing.

Your plan should be flexible, but it should keep you pointing—and moving—in the right direction.

A good business plan also keeps your eye on your long-term goals. It will detail priorities in a sequence that will save you valuable time and energy and help eliminate worry, which can be a major distraction to your writing.

When you draft your plan, stick to facts, realities, and valid assumptions. Don't overlook the obvious pluses. Perhaps your spouse has a good, reliable job which won’t disappear overnight. Or you know that you'll be coming into some money in a couple of years.  Or, even better, you’ve been building up your expertise in a particular subject area which will allow you to eventually specialize in it, resulting in reliable assignments.

When compiling a business plan, keep daydreams to a minimum. You’ll only get frustrated if you write a plan based on wishful thinking. Deal in the here and now, not in what you hope will happen. Above all, don't overanalyze, or you'll drown in a sea of data you won't be able to use. Allow a certain amount of time for creating your business plan and then stop. You can always change it later.

If you’re dealing with several different types of markets or other related ventures, such as teaching or photography, you might want to compile some detailed sub-plans. These don’t have to be involved, but should include details for that particular venture to help you expand as you go. Once you have your plan in place, prepare a general To-Do List based on it that you can work into your daily routine.

Now that you know what a good business plan will do for you writing, let’s look at what it should include.

First and foremost, it should include a statement of purpose—what is the purpose of your writing business.

Second, a detailed description of your business, including a list of your specialties, the markets for them, and a paragraph on why you, above others, can give an editor or a client a unique angle.

Third, a discussion of what the market is like for your writing. Included in this section should be a list of opportunities, with specific details about current markets, names of publishers, publications, and editors, as well as other clients. Do the same for each of your specialties or other ventures.

Fourth, a plan for marketing your writing—how do you plan to promote it and yourself? 

Fifth, list your market objectives for one year, eighteen months, two years, and five years. These will help you outline your strategy—specific work you'd like to be able to cover in the year to come, research already available to you, what you'd need to research further, and probable places where you might find  information, plus the time and cost to get it.

And finally, a profit-and-loss statement or budget, including an estimate of your net worth, and a list of your office equipment with a projection of future items that could increase your productivity. This tells you and whoever is reading your plan where you are financially and where you plan to go.

Remember, the more flexible your plan, the more it will allow you to grow your freelance business.