Freelancer’s Survival Guide: Flexibility

Artwork donated by Pati Nagle.

The Freelancer’s Survival Guide: Flexibility

Kristine Kathryn Rusch

Earlier this week, I sat down with my notes and figured out how much more I had to write on the Freelancer’s Guide. I have about seven weeks of material (counting this week)—and that’s if those topics don’t become multiple posts, like Success was.

As usual, my prediction a few months ago about finishing soon was right on schedule—meaning it came smack dab in the middle of the project to make the fact that I still had half of the work to go much more palatable. My husband can tell you that I do this with every book I work on. When I hit the middle, I think I’m done (and I used to just end my books there, back when I was learning how to write novels. Dean would hand them back to me and tell me to go write the ending. <sigh>).

Anyway, counting today’s post, I have seven more topics. If you folks think I’ve missed anything, please comment or e-mail me, and I’ll cover that.

As soon as I finish, I’ll compile the guide. Since I don’t know when (or if) there will be a hard copy, I’ll send an electronic file (probably in PDF for easy reading) to everyone who has donated. That way, the entire book will be in one organized volume for easy reading.

Earlier in the week, when I reviewed my topics, I only had six. Then, this morning’s Washington Post inspired me yet again. Well, it didn’t so much inspire me as it reminded me of something I had forgotten—a hard lesson Dean and I learned when we ran Pulphouse, one I’ve acted upon ever since.

Your business has to be flexible.

What does that mean, exactly?

Well, let’s let the inspiration speak first. A front page article titled “Of The Signs of The Recovery, Few Say ‘Help Wanted’” on the November 18, 2009, edition of the Post, focused on businessman Tom Hudson, president and CEO of a company called Nth/works. Nth/works makes parts for small appliances, things like dishwasher doors and oven brackets. As the housing market boomed, so did the small appliance business. New houses needed new stoves and refrigerators. Companies like GE and Whirlpool hired Hudson’s company to make parts for their small appliances—and everyone made money.

Then, according to Hudson, “the orders just stopped.”

They stopped. Hudson cut back and cut back some more. He called the effect “devastating,” and he’s hoping for a turnaround. But he knows that the good old days are long gone.

I scan my newspapers and I scanned over the part in the body of the text about the decline in sales for his business. The writer, Dana Hedgpeth, did a nice job of leading the reader through the collapse, but I had lived through this kind of thing and read tons of these articles. I swear as I read, some part of my brain added “yada, yada, yada.”

Until I got to those two sentences: It was devastating. The orders just stopped.

Suddenly, I was catapulted back to the offices of Pulphouse Publishing in Eugene, Oregon, right after the start of the first Gulf War. And that war—the first TV war, everyone was calling it (even though that wasn’t true; it was the first 24/7 TV war)—devastated the book industry. No one went into bookstores. No one read for pleasure. Bookstore after bookstore had no customers day after day.

So the bookstores called us, the supplier, and asked us for forbearance on their usual payments. Then the stores stopped ordering. So did our regular book customers, people who shopped mail order.

Quite literally one day, the orders stopped. And you know what? It was devastating.

This isn’t like the buggy whip example I’ve used countless times. We at Pulphouse had no idea that the spigot would get turned off. I’m sure Tom Hudson at Nth/works didn’t know either. Had I been in his shoes, I would have known that the sustained growth wouldn’t happen year after year after year at that pace—there aren’t enough people to buy houses for that—but I wouldn’t have expected the orders to stop.

Every now and then the culture takes a sharp right turn. One day, something works and the next it doesn’t. That’s frightening and impossible to predict. On December 6, 1941, the U.S. economy was still trying to recover from the Depression. It was a peacetime economy with an interior focus. Then on December 7, 1941, the Japanese bombed Pearl Harbor. On December 8, 1941, we went from a peacetime economy to a wartime economy. By January 1, 1942, we had mobilized an army. Thousands of people had left the work force. Production changed from peacetime things to wartime things. The culture had taken a hard right turn and we never looked back.

World events have a significant impact on businesses. All through this month of November, the news media has reminded us that twenty years ago, the Berlin Wall came down. An entire generation has grown up without the Soviet Union or the Eastern Block. The economic changes have been staggering. I don’t think the definitive books on the business changes from that one event have been written yet.

But I can tell you what that hard right turn did to some writers in my business. It put them out of business, overnight. The bestselling authors of Cold War spy thrillers lost their readership immediately. I know of one author whose book was in the works. He had a significant six-figure advance. The book came out and died—selling less than his midlist books—and nearly destroyed his career. Only a few writers survived—John Le Carre being one of them. But if you look at Le Carre’s post-Wall books, they don’t focus on Europe. They deal with places like Panama.

In July of 1989, Cold War spy novels were bestsellers. By December of 1989, no one wanted to buy those books. An entire corner of an entire industry vanished overnight. (It’s been slowly creeping back, twenty years later, because Cold War thrillers are now historical novels. Go figure.)

Some writers who weren’t flexible and couldn’t switch categories never sold another book. Others managed to rebuild their careers, but it took years.

At Pulphouse, we made all the wrong decisions. As I’ve said many times in this guide, people who run their own businesses are, by nature, optimists. We may recognize that things are bad, but we’re convinced they’ll eventually get better.

And that was the approach we took at Pulphouse. We figured the precipitous drop in sales (actually, the complete lack of sales) would end within a month. Within two months. Within three months. It took us nearly one quarter of a year to begin our response, and that was three months too long.

We should have cut costs the week sales stopped. We should have laid off employees, slashed expenses, and cut production. Instead, we borrowed, figuring things would turn around.

We went from a completely debt-free corporation to $250,000 in debt in three months—with no hope of recovery. We weren’t flexible enough.

What can I advise businesses who find themselves in the same situation? Cut fast and hard. Reassess immediately. Plan for the crisis to be a long one (instead of some kind of one-month blip).

Expect things to get worse before they get better.

And ask yourself what will happen if things don’t get better? Will you have a business? Will you be able to survive? If the answer is no, then cut your losses now. Sadly, it’s better to shut down your business quickly than it is to extend the pain. Because extending the pain means extending the depth of your (or your business’s) indebtedness.

The problem, though, isn’t what to do during a hard right turn. If we could anticipate these kinds of cultural disasters, we’d all be rich. From the perspective of my lifetime, they seem to happen once every 15-20 years or so (once a generation). But of course that’s unscientific. We could have another hard right turn tomorrow, followed by a different one the next day. We just have to live through them.

But if you look at the history of businesses, some survive these disasters and others don’t. What’s the difference? Foresight and flexibility.

Sometimes you can have foresight. A lot of us knew that this housing bubble would end. If I were in the appliance business, I would have been socking away half my profits for the years after the housing bubble burst. I probably wouldn’t have expanded quite as much as some of my competitors did. But I saw this bubble very clearly—I used to work in real estate, and I learned my trade in a down market, so I knew that what was happening was unusual.

Sometimes I do think businesses are lucky enough to be forewarned—and I do mean lucky. Because you need someone in your business prescient enough to understand the information that comes your way and strong enough to know what to do with it. Take the end of the Cold War. There had been rumblings for months that it was on its last legs. No one knew the Berlin Wall would come down in one dramatic night, but they knew that something was up. And I know of some writers who moved out of Cold War fiction before the Wall came down, which seemed like a dumb move at the time, but seems smart in hindsight.

In his fascinating autobiography, The Way The Future Was, Frederik Pohl describes the same kind of circumstance, which saved Galaxy Magazine, once one of the premiere science fiction magazines. In the late 1950s, the American News Company vanished quite literally overnight. American News distributed magazines all over the United States. For reasons too complex to detail here (but all of them having to do with business and stocks and takeovers), American News disappeared. And when it vanished, it took hundreds, maybe thousands of magazines with it.

Old time science fiction writers still talk about the effect on the sf field. One day, there were dozens of markets for sf. The next day, only a handful. And Galaxy was in the handful.

How did Galaxy survive? According to Fred, Galaxy’s editor heard “rumblings” about the upcoming problems and warned the publisher “only a matter of months [before the collapse] that it was time to move. So [the publisher] took his business from ANC to one of the Independents just before [the problems] began and in the panic that followed, [the publisher] could look on with compassion and complacency because he already had his contracts for distribution signed.” [Pohl, Ballantine Books, 1978, P. 234]

In other words, Galaxy heard the rumors and acted on them quickly. By acting quickly, Galaxy survived one of the biggest collapses to hit publishing.

But some of that was luck. Hearing the rumors, having the foresight to act, and the ability to act. Somehow Galaxy either got out of its distribution contract with ANC or it was ready to renegotiate its contract at the exact right moment.

You, as a small business owner, can’t rely on luck. And you can’t assume you’ll have the foresight to act when you hear rumors of an upcoming problem.

So what can you do?

Prepare in advance.

Of course, I just told you that you can’t foresee a lot of these hard right turns. So how do you prepare?

You learn flexibility.

So many writers lost their entire careers to the collapse of Cold War fiction because they didn’t know how to write anything else. And even if they did, they had no track record in other forms of fiction. They weren’t nimble enough to move to another area of publishing when their area collapsed.

At Pulphouse, we didn’t move quickly enough. Our operation couldn’t survive without 19 employees and a lot of product. Cutting back didn’t seem like a viable option, so we didn’t do it. We probably could have survived with some judicious planning, long before the First Gulf War ever hit.

I’m not saying here that guys like Tom Hudson need to add another product line to their business. Nor am I saying that he should suddenly go into the business of building truck parts or making yarn.

What I am saying is that you need to have contingency plans. If you can’t do anything except sell widgets, then when the widget market collapses, you’ll have to shut down your business. But if you can move from widgets to books or farm out your manufacturing team to another business for the duration, you’ll survive.

In other words, you need to plan for a crisis. And you need to ask yourself what would you do if the market for your wares dries up entirely? Can you still run your business? Can you move to another product line fast enough to keep your business viable? Can you—should you—add a different product line to protect yourself against an incoming disaster?

At Pulphouse, we thought we had enough product to weather any disaster. What we didn’t have was the right kind of distribution. We had a lot of product going to the same clients. If we wanted to expand correctly, we should have considered product going through other supply chains. But we were already stretched to our limit. Our best bet would have been to cut expenses quickly, and then retool the business to the new era.

We didn’t do that. Our business failed.

Ever since, however, I have developed flexibility into my writing career. I write novels and short stories, which go to different markets and distribution chains. I have always kept my hand in the nonfiction market just in case I need to go back to work in that field (which is very different from fiction). I write under a variety of names, in case one gets caught in some kind of collapse like the kind that happened to the poor Cold War writers. My books sell here and overseas. I’m learning about the new media—websites, e-books, podcasts—just in case publishing moves exclusively online. (In fact, the Freelancer’s Guide is an experiment in new forms of publishing—and it gave me a much needed flexibility to do this Guide quickly, when people wanted to read it, not two years from now, when they’ve already weathered the crisis.)

I am always learning. I will still make mistakes, of course, and I probably won’t see the next hard right turn, but I believe I will survive it precisely because I am flexible.

So let me see if I can boil down what I mean by flexibility:

1. Know the strengths and weaknesses of your business.

2. Keep track of the news. Sorry, I know. You’re busy. But read the newspaper, watch the national news, go to online news sites. And don’t just listen to the people of your political persuasion, whatever that may be. If you’re liberal, watch Fox on occasion. If you’re conservative, listen to NPR now and then. Follow the business news. Follow the international news. And don’t believe the analysts. They tend to miss these hard right turns I’ve been talking about. Analyze things yourself. If it feels wrong to you—like the housing bubble did to me—figure out why. See if your gut is onto something. It probably is.

If you keep track of the news, you won’t be surprised when the Japanese attack Pearl Harbor. You’ll already know about the war in the Pacific, and the rumblings that President Roosevelt wants to get involved in the war in Europe. You’ll be preparing for a war economy as your worst-case.

3. Figure out the worst-case scenario. What happens if the market for your product (whatever that is) goes away overnight? What will you do? What can you do?

4. Look for opportunities. Some businesses prosper in a crisis. Sometimes it’s because the business is the last one standing (see Galaxy). Sometimes it’s because the business is the right business for the new economy. When the housing bubble burst, some cleaning and repair businesses grew. Those businesses specialized in cleaning “empties,” places that someone had moved out of. They worked for the banks or the lenders and prepared houses for resale. Opportunities exist. You have to see them and figure out if you can reposition your business to take advantage of them in the new economy.

5. Make sure you have economic flexibility. Make sure you can shut down quickly if you need to or trim your workforce and still be productive or trim your expenses and still make a profit. Or maybe you need the money to reposition your business to take advantage of the new opportunities that become available. Repositioning takes capital, and in a crisis, capital dries up. So you might have to provide that money yourself. If possible, have enough money set aside to buy time in a chaotic market. Often, waiting a few months before you retool your business is the best strategy. Most businesses can’t wait, however, because they’re operating on such a thin margin (or paycheck to paycheck in 9-5 parlance). In that case, trim, trim, trim and hope you can ride out the problem.

6. Vary your product line and your distribution system. I watched a local retail store with a very loyal clientele go out of business because the owner refused to have a website. She sold a specialized product. Before web stores, people from all over the country would visit her brick-and-mortar store once a year or so, and buy the specialized items. As the internet became ubiquitous, her shoppers didn’t have to leave home to get their favorite items, so her national clientele dropped off. Her shop, in a town of 7,000 people, died.

She was aware of the internet factor, but she refused to start her own website. She bad-mouthed the internet all the way to the bankruptcy of her business. If she had only spent the cash to set up a site and learned how to maintain it, she would be in business today. Her old clients would have ordered from her off the internet. She had a built-in market base, and she never realized it.

7. Expect change. If you think things will be the same next year as they are this year, you’re heading for a world of trouble. Just because something has worked year after year doesn’t mean that it will work in the future. Plan for the change, be ahead of it if possible, and figure out how to use it to your advantage.

Flexible businesses survive. It doesn’t take foresight and forewarning as much as it takes an ability to remain nimble. Keep your options open. Remember that the more static your business, the greater danger it’s in.

Then go learn something new, something that might benefit you. Have fun with it. Because there’s no reason to own your own business if you’re not having fun. Imho.

“Freelancer Writer’s Survival Guide: Flexibility” copyright 2009 by Kristine Kathryn Rusch.