Two of my kids are old enough to create and manage their own You Tube channels, and they expressed an interest in doing so. I figured it was a good idea because they’d learn social networking skills, how to create videos, edit those videos, etc. These are things they could potentially use for future employment. They, however, had stars in their eyes. They heard that people are making a good living off of videos via the ads on You Tube. When you get popular enough, your videos can start getting monetized. As they were talking about how many subscribers it would take to start earning money, I realized this is similar to what I hear from new authors.
When I hear most new authors talk, their focus is on how much money they’re going to make in X amount of time. This is why courses on how to make a six-figure income in a short amount of time are so popular. These courses feed into this “get rick quick” mindset. This is the same thing my kids were thinking when it came to You Tube. I had to sit down and explain to my kids how this stuff really works. Sure, there are always people who will make it big. For all the actors that run out to Hollywood, there is a small number that hit the big time. But this isn’t going to happen to most of them. And just because they post videos on You Tube, it doesn’t mean they’re going to be making a nice cushy living off their videos when they’re 18.
So today, I thought I’d make a blog post about what is a more realistic approach to the business side of being a creative person.
There are two main things you need to keep in mind when going into the business side of writing.
If you build it, they may not come.
I know this isn’t what new authors want to hear, but it’s true. Just because you publish books, it doesn’t mean you’ll make money. Just because you write in a certain genre with a certain plot, it doesn’t mean it’ll sell. Sometimes a book doesn’t resonate with readers, so they don’t buy them. It doesn’t mean the book is bad. (I’ve seen plenty of great books not selling well.) It just means the book didn’t “click” for some reason.
Even if you wrote something specifically to market, had tons of feedback on it from your target audience, got a professional cover, had a professional editor, and have the best website on the planet, you aren’t guaranteed sales. Also, you can run ads, do permafrees on the first in a series, or do other promotional stuff all day long, and you still might not reach the level of income you were hoping for. I’ve seen authors do all of the right things and still not make a living at this. The sad reality is that sometimes it just doesn’t happen.
If you do make money, don’t think your troubles will be over. Even if you’re not exclusive to Amazon, you will find sales going up and down. Things don’t always go up and up and up and… You get the idea.
I’ve been publishing through Amazon and Smashwords since 2009, and I’ve found this whole business to be a rollercoaster. Over the past three years, I’ve been carefully tracking my sales data, and I noticed that my sales went up and down across all retailers. I’ve always been wide. I’ve never been exclusive to Amazon. So I’ve had plenty of time to build an audience on the wide channels. And I have found that regardless of the retailer, sales go up and down. Yes, having a new book out often means sales go up, but it doesn’t mean it goes up to the same level it did with previous book, and it doesn’t mean it’ll succeed the same way at all retailers.
If you do manage to make money at this, I urge you to do three very important things I never did.
One: Save half of the income for taxes.
Disclaimer: This is specifically for the United States authors. (I don’t know how tax payments work in other countries.)
Maybe you won’t need to pay taxes on how much you make, but if you have to, at least the money is there. I had to sell stuff to pay my taxes because I hadn’t even thought to save a portion of my income back then. Believe me, you don’t want to be in a situation where you’re scrambling around to come up with the tax money you owe the government based off of last year’s income.
Now, you can set up a payment plan with the government. Some people do that. But since you’re considered a small business owner, you will be making quarterly tax payments (if the government thinks you’re making enough). So four times a year, you’ll have to pay taxes based off of last year’s income. If you miss the deadline for a quarter, you will have to pay a penalty. The quarterly tax payments are due mid-April, mid-July, mid-September, and mid-January. Usually, it’s the 15, but if the 15th is on a holiday or weekend, the date can get pushed back to the 16 or 17. Either way, you will be required to send in these tax payments.
You will save yourself a lot of stress and heartache if you save half of your money into the tax fund while you’re making it. Whatever you don’t end up having to pay can be tucked away into savings.
Which brings me to my next piece of advice…
Two: Put as much as you can into savings.
I didn’t do this, and I am currently living to regret it. The day might come when you aren’t making as much as you used to. This is what happened to me. This year, I’m projected to lose income for a third time. When I was making good money, I failed to save anything. After taxes were paid, I spent money like my income was going to stay consistent. I currently have $40 in my savings account. I have no investments. I have nothing tucked away in a retirement account, either. I’m 43. I made bad financial decisions. A lot of bad financial decisions. I’m not proud to admit it, but if you can be better off in the future because you’re going learn from my experience, then it’ll be worth going public with this. Every time I mention losing money, I get criticized. This isn’t a popular thing to talk about in the writing community, but I don’t want anyone to end up in my shoes. So please, learn from my mistakes. You don’t want to end up where I am.
Three: Learn to say no.
Over the past couple of months, I have had to start saying “no” to people I sincerely care about when they asked for money. I hate saying no. The fact that I had trouble saying no in the past is part of what led me to a situation where I only have $40 in savings. It feels good to give. But if you don’t position yourself on a firm foundation, how can you really help out someone else? Sometimes you have to think of yourself before you can think of another person. I know this one is hard. For those of you who are like me and will often sacrifice what we have to the point where we’re at the end of your own financial rope, saying no is a crucial lesson to learn.
At the end of the day, you have to be able to take care of yourself before you’re in a good position to help someone else. I don’t have a rule book on this, but in my opinion, you should have at least six months of living expenses tucked away before you can afford to help another person. A man I was watching in a You Tube video recommended one year’s worth of savings. With sales being so unpredictable, I’m inclined to say that you should aim to save between 6-12 months of living expenses (including tax payments). Of course, you need to keep saving beyond that. You’ll probably want to look into investments for your future, too, but I would get the savings built up first. You want something you can get to right away if you run into an emergency.
I do think there’s value in giving, but it needs to be balanced with savings. Only you can figure out the right ratio that works for your household. But I strongly advise you to say no to others until you have taken care of your own situation. You can’t get someone else out of a sinking boat until you plug up the holes in your own boat first.
So those are my tips for new authors. Does anyone have any tips they’d like to share?