Tuesday, August 04, 2009

Do You Run Your Writing As A Business?

STATUS: I tackled exactly one thing on my To Do list today and there are something like 20 items that need immediate attention. I’m still wondering how that happens.

What’s playing on the iPod right now? THE LONG AND WINDING ROAD by the Beatles

Today I had a morning meeting with my tax accountant to review my company’s P&L (Profit and Loss Statement) and the Balance Sheet. We wanted to review how we were doing in comparison to last year. We analyzed our current cash flow, upcoming expenditures, quarterly taxes, and generally made certain that we were financially sound and would continue being so.

Just three weeks prior to this meeting, I had connected with my bookkeeper to evaluate the P&L and Balance Sheet to see if anything was out of whack—which, interestingly enough, always happens. Just the nature of accounting.

Years ago, I read in a book (and I wish I could remember the title) that Americans who spent at least 1 to 2 hours a month reviewing their finances, discussing budget (or for heaven’s sake creating a budget), learning about investing, reviewing one’s 401k or Roth IRA, and just generally doing money management ended up 10 times wealthier than their fellow Americans who didn’t. (And it didn’t matter where these money planners started in terms of their income.) This book also highlighted that 90% of Americans spent more time watching TV did they spent on managing their money. I believe it.

So where am I going with all this? If you are a writer, even if you are unpublished, you need to treat this like a business. You need to sit down at the beginning of the year (or the beginning of the quarter) and create a business plan for yourself and your writing. This is how much I’m going to budget for my writing, for paper, for ink cartridges, for getting an agent, for attending a conference to learn the craft, or for joining a site like Backspace, and so on. You need to an excel spreadsheet or quicken or whatever money program you use to track expenses and hopefully, monies earned.

Why? Because even if you are unpublished, it makes good money sense to know exactly how much it costs you a year to pursue your dream. It allows you to plan. It shows you the cost benefit (or not) of pursuing this as a career. It gets you primed and ready for when you are published author and you definitely need to be doing this, budgeting appropriately, paying your taxes, and deciding on when you can write full-time versus when you need to keep that day job.

You might as well start making a good habit of it now. Besides, don’t you want to be one of those people who are 10 times wealthier than their counterparts who never discuss money on a regular basis? I know I do—which is why my tax accountant and I spent 2 hours discussing it this morning and this is just one of many sessions we’ll have throughout the year.