Freelancer’s Survival Guide: Business Plan

Freelancer's Survival Guide On Writing


Artwork donated by Pati Nagle.

The Freelancer’s Survival Guide: Business Plan

Kristine Kathryn Rusch

In some ways, this is an ironic post, because I have reached a point in my life where I’ve realized that most plans don’t work. What I envisioned for myself as an 18-year-old wannabe writer has not happened.  What has happened are things that I never could have imagined.  Even my somewhat more realistic visions from my 25-year-old post Clarion Writers Workshop self  have not quite happened the way I expected.

From the vantage point of 1985, I never would have thought I’d be sitting here.

Of course, if I took my 25-year-old self and showed her my life, she’d be awed and thrilled and she’d be happy she achieved it, although she would ask why I had not achieved some of her wilder dreams.  Some simply aren’t possible in 2010.  I decided some weren’t for me.  And a few, well, I’m hoping I’ll achieve them in the future.

So as I sit here, with a deep understanding of how futile planning is in a career in the arts, I also realize the importance of a business plan.

You may all go “huh?” in unison now.

Business planning is important, no matter what you do as a freelancer.  Yet you need to be flexible and understand that your plan is simply that: a plan.  And like all plans in the movies, it never quite goes the way the protagonists think it should.

Business plans come in a variety of forms.  Some business plans are required.  In the early 1980s, my then-husband and I wanted to open a frame shop and art gallery.  He had a lot of experience with custom framing, and he’d operating a frame shop out of our home for a year.  He had made some money.  And then, we figured (for reasons now lost to the mists of time), that we needed to open a store front.

We did what all broke former college students do, we applied for a loan. First we went to our bank.  Credit was as tough then as it is now, and so the bank (nicely, because banks were nice way back then) declined to loan us money.

So we went to the Small Business Administration and applied for an SBA loan for $60,000.  (Boy, that number makes me shudder these days.)  The SBA required financial records, and a business plan. We had no idea what a business plan was. The SBA nicely supplied us with a form, which we filled out.

I’m sure some version of that form is online now.  You can find other versions of business plan forms in accounting software and in self-help books.  I’m not going to supply one here, except to talk about it briefly.  If you need something like that for your new business, then I would suggest you cobble one together from a variety of forms, just to cover all your bases.

In essence, what the SBA had us do was project five years of income.  We had to justify that income—we couldn’t just pull numbers out of our butt.  We justified our projected income based on my former husband’s sales for the previous year out of our home, and the yearly sales at the two frame shops that had employed him before he started the home store.

Then we had to extrapolate that income to a store front, with advertising and good traffic.  We had to show how other businesses in our area did—not just frame shops, but other businesses in the strip mall where we hoped to open the store.  We had to understand the traffic patterns, the number of possible clients, and the way that all became sales.

When we finished our educated guesswork, we had to turn to our expenses.  We knew what the rent and utilities would be. We knew what we would pay our single employee.  (And here’s where times were different: we could afford to provide health coverage for a retail job.  The coverage was a minor expense back then. <sigh>)  We knew what our supplies would cost.  Framing was easy—our expenses were a percentage of each order.  The customer chose the design, and then we ordered the supplies.  We had mat board and mounting boards on hand, but  mostly, we had no up front supply costs. It was all sixty-to-ninety days after we ordered the material.

The only expense we had was the art itself, and we got a lot of the original work on commission. We bought posters at a discount so that browsers had things to frame, and we did frame up some of our favorites.

As for the equipment, we already owned the expensive stuff for the in-home business. So our expenses were pretty low.  Where did that $60,000 number come from? Two years of operating costs, plus some cushion for our own salaries, etc.

The SBA came through with a loan…of $20,000.  Which my ex promptly turned down, without consulting me. He then gave the business plan to his father, who funded us, which turned out to be one of those colossal mistakes, mostly because of our naiveté.  I think now if we had taken the leaner, meaner SBA loan, we’d have worked harder and we might still have a business.

Not, mind you, that I’d rather be doing that than this.

The SBA looked at our business plan, found problems with it, particularly in the overly optimistic estimates of income, and decided to fund us for a year.  They then cut our salaries, and that’s where they got the $20,000 number.

Which isn’t bad.  They were wrong on the income—we had a lot of traffic: my ex was good at what he did, and had a lot of loyal customers from the moment the shop opened.  But they were right about the hidden expenses.

And that, I’m sure, comes from looking at countless business plans from countless businesses, all built on hope and fear and guestimates.

If you haven’t opened your small business yet—be that as a freelance writer or a frame shop owner, a pediatrician or a tow truck driver—then write up a business plan as if you were applying for a loan. Download those documents, design the right one for you, then do the research and be honest with yourself.

Don’t fudge the numbers.  If you can’t get the income to outweigh the expenses by being honest, then you probably aren’t ready to go freelance.  See the seven posts I wrote about money, because it is in financial planning that most freelance businesses go belly up.

Full disclosure:  I have never done that type of business plan for my writing business.  I have done it for all the others, from Pulphouse Publishing to the collectibles store that Dean opened a few years ago (and sold at a profit).

Why haven’t I done it for the writing? For two reasons.  Writing, like many other businesses in the arts, is too by-guess-and-by-golly.  I can tell you my sell-through for my short fiction (90% within a year of finishing a story; 99% within ten years of finishing), but I can’t tell you how much a single story will earn.  I wrote a story in August that got rejected by the anthology editor who commissioned it (with a very nasty note), then turned the story around and sold it for seven times what the original editor had promised me.  Some short stories have earned me tens of thousands of dollars. Others have earned a few hundred.  Unlike a piece of glass or perfectly cut mat board, a short story has no fixed value.

And a short story earns for years, as do novels.  I just resold two of my Grayson novels that I wrote ten years ago.  When you sell a picture frame, you cannot earn money from the same picture frame years later.   It’s sold and it’s gone.

I also can’t tell you about the traffic a single story will get.  I can point to similar stories, and the readership of various magazines, but I can’t tell you how many of those people will read my story, and what it means if they do.  It’s easier with books—you can guess from previous sales what future sales might be like.

But books are not like pens.  You can’t mass produce books.  My friend Karen Joy Fowler had a string of well-written midlist books that paid well, but not great.  So you’d think, from her track record, that she’s always publish mid-list books.

One day, at a book signing, she looked across the bookstore and saw two signs.  One read Jane Austen.  The other, with an arrow pointing toward a back room, read Book Club.  In that flash of inspiration we writers rely on, she combined both signs to The Jane Austen Book Club.  Then she wrote a kick-ass novel, with that as the title.

The book arrived at her publisher’s in the  middle of the Jane Austen craze, as book clubs were gaining traction.  Plus everyone in the publishing house loved the book.  Word of mouth proved terrific, and The Jane Austen Book Club hit the New York Times bestseller list, and got made into a movie.

In no way, could Karen realistically have done a business plan that showed how The Jane Austen Book Club would take her little freelance business from a boutique store off the beaten path to a well respected popular store on Fifth Avenue in New York City.  No loan administrator would have given her a second look.  No publisher would have believed her—not without reading the book itself.  The title might’ve been great, but the book had to live up to that title, which it did.

So why am I, a dedicated freelance writer who knows her business very well, talking about business plans if I say they’re not relevant for many businesses?  Because that financial guestimation business plan, the kind you need to get a loan or to attract venture capital or to round up a few friends to give you back-up funds, is only one kind of business plan.

The rest of this post will be about the other kind of business plan: the kind you draw up for yourself.  Now I’m not talking about goals and dreams.  We’ll talk more in-depth about those next week and the week after.

What I’m talking about here is survival plain and simple.  Because without a business plan, your freelance business will not survive.

Again, I hear the chorus of “huh?”  “Lady,” you’re all saying, “you started this whole post saying that plans go awry, that you can’t foresee the future, that your freelance business doesn’t have a formal business plan.”

Yep.  And yet I have an informal one.

Go back to some of the earlier posts, like the one on discipline. Freelancers have two big problems: time and organization.  When you quit your day job, you feel like you have a limitless amount of time ahead of you.  You have all day to accomplish various tasks. But you lose the job’s structure, so often days go by without accomplishing anything.

The same happens with organization. At a day job, someone organizes you—they tell you when to arrive, when to leave, when to eat lunch, where to sit, and what to do.  When you freelance, you decide all those things.  Which sounds lovely—in theory.  In practice, it’s a recipe for disaster.

To survive these things, you’ll need discipline.  You’ll also need to learn how to structure yourself (which is a future topic). And you’ll need an informal business plan.

Your informal business plan is nothing like the one you’d prepare for the SBA. This plan is for your eyes only.  But, like the SBA plan, this business plan must be realistic.

Your plan can only include things which you can control.  For example, I know that 90% of my short stories will sell in the first year.  Do I know which stories they are? No.  Do I know which story will take ten years to sell? No.  Do I know which story will pay me $10,000 and which one will pay me $100? No.

What I do know is that if I finish a story and mail it, it has a nine out of ten chance of selling within one year of the mail date. So I must a) write short stories and b) keep them in the mail.

I can control those two things.  I cannot control editors (dammit).  Nor can I control readers.  I can’t predict which story will make my name and which one will disappear without a trace.

So, using what I can control, here’s how I build my personal business plan.  I decide how many stories I’ll write this year.  That decision will be based on how long it takes me to write 1000 words, and how many words I will dedicate to my short fiction writing.  So if I write 1000 words in an hour, then a 4000 word story will take me four hours minimum.  Figure six to count in false starts, overwriting, rewriting, and general noodling.  Most of my stories are longer than 4K, however, so I tend to figure as a good average 10K.  I figure how many 10K stories I want to write, how many novels I want to write, and I divide by hours.  I then figure out how much time I need to devote to writing each and every day.

(Like this: Let’s say that my estimate shows me that I need to write 20,000 words per week for my writing plan. That means I must spend 20 hours per week at 1000 words per hour writing.  If I write 500 words an hour, I’ll spend 40 hours at it.)

I also need to factor in mailing time—and remailing time, since most stories do not sell on their first time out.  Some writers set aside an entire workday for mailing once a  month.  I try to keep up with whatever I have on a weekly basis, keeping everything in the mail.  That too becomes part of the plan.  Nothing stays on my desk. Everything leaves the office, one way or another.

Your business plan should include hours to work each week, the amount you need to accomplish, and which projects you plan to do.  You need to factor in things like time spent rounding up new work. (In a specialty store, that would be included in advertising and promotions; in writing it can be query letters and sending chapters to editors; in certain kinds of sales, it might be the number of cold calls you’ll need to make each and every week.)  You’ll need to find your Goldilocks solution: you don’t want to work too much, but you also don’t want to work too little.  You want your work schedule to be just right.

Even having concrete weekly goals is not enough to keep you producing day in and day out, particularly if you work at a solitary freelance job like writing.  Your business plan should divide up by quarters (how much do you expect to get done by March 31?), and by year.  You’ll need a target for this year, for five years from now, and for ten years from now.

And no, your business plan can’t include things like sell more copies of books than Dan Brown.  Or turn your little coffee shop into the next international franchise coffee business (like Starbucks) by the year 2020.  You can’t control those things.

You can control how hard you try.

“But,” you’re all reminding me, “you say that plans go awry. How can you plan ten years out?”

You need to, to keep yourself on track. But you also need to revise your business plan regularly.  If you take a left turn, like Karen Joy Fowler did with The Jane Austen Book Club, then you assess your business plan with the new direction in mind.

At the end of your year, reassess the plan. Did you achieve your daily, weekly, and monthly goals? If you didn’t, why didn’t you? If you did, were your goals too easy? Or were they just right?  Did you work hard enough? Or did you hardly work at all?

Be honest with yourself.

Then write a new business plan, with new targets, reflecting your current realities.

I would suggest that you keep the plans in two files: one on your computer, and one in hardcopy file folder.  After ten years, it’s amusing to look at old business plans. Some are very, very accurate.  Some aren’t.  If you keep detailed notes, you’ll know what works for you and what doesn’t.  You won’t keep reinventing the wheel.

The nice thing about an informal business plan is this: You’ve created your own road to walk on.  You’re not flailing in the dark.  You’re actually on a path toward success.  You may decide that particular path isn’t for you, and you might blaze a new trail.  But you’ll be moving forward with a purpose, rather than hoping and waiting for someone else to do something that will propel you along.

Will you be where you thought you’d be ten years from now? I can guarantee that you won’t.  But if you follow your own plan, you might be in an even better position than you imagined you’d be.

And you will certainly have had an enjoyable journey.

“Freelancer Writer’s Survival Guide: Business Plan” copyright 2010 by Kristine Kathryn Rusch.

13 thoughts on “Freelancer’s Survival Guide: Business Plan

  1. I’m big on planning, but it’s really tough when you have no clue how much a given story or article will bring. I think it was Woody Allen who said, “If you want to make God laugh, tell him about your plans.”

    All too true.

    I’ve spent two weeks writing short tsories that either never sold, or that brought in only a couple of hundred dollars, and I’ve spent four hours writing short stories that sold for a thousand dollars or more the first time out.

    I generally know roughly what an article will bring in before writing it, but sometimes things happen you can’t simply can’t control, such as a magazine folding before a piece is published.

    I learned my lesson quite a few years ago. I sat down and wrote a letter to the editor of our local paper. Because it was just a letter to the editor, and no pay was involved, I wrote it faster than usual, maybe twenty minutes, but it was still five hundred words.

    The editor liked it enough to publish it as a guest column, rather than a letter. The editor of a magazine happened to read that column, and bought reprint rights. Another editor at a larger magazine bought reprint rights after reading the piece in the first magazine.

    That little letter to the editor sold over and over and over, and has, to date, earned me several thousand dollars, all for a piece that I banged out in nothing flat, and never intended to sell at all.

    All you can do is count such events as gravy, slide the unexpected money into your business, and go back to planning, even if you can hear God chuckling in the background.

  2. Becky

    The plan that’s important for many of us business owners is a living, breathing plan we can change as we go along. I use the One Page Business Plan(R) There are books for creative entrepreurs, business women, financial services professionals, non profits and more.

    Longer plans, that are usually created for funding are available online both free and fee based. (I tell my clients to get focused first and create a one page plan… then create the longer plan) is a page I created that has resources for all types of plans and there are samples there, too.

  3. Any good business plan must include an outline of ways to finance growth- once the time is right (of course). As you indicated in your post, financing was, and still is so difficult to get. There is a great book titled, “The Handbook of Financing Growth” by Kenneth H. Marks that offers a start to finish plan… it is intended to enable the reader to read about the process, make an informed decision about what capital structure and funding approach is right for them, and then find viable sources in the directory (in the book and online). It is a great help for anyone wanting to write a great business plan.

  4. Hi Kris,

    Great post, and nice to see a similar work vibe. Long ago, I mad Sunday afternoons my “Reload and Fire!” day for stories, where I took everything that was rejected and found it a home (either sending it off to a new market, or finding the next best one to send it to and noting the date when I could send it).

    With a new novel project on the way, I aim for at least a thousand words a day. If I get it done quick, I allow myself the fun of working on a short story or non fiction projects. I try to keep weekends free to refill the well so I don’t burn out. Seems to be working so far. Might try 2000 words a day in a month or so, just to see if it makes a difference.



  5. Ah yes. On my bulletin board in big print this year where I can see it every day from my desk:





    Have You Made $333 Yet Today?

  6. Great post Kris.

    About 10 years ago I did something simple that had what seemed like a magical effect on my freelancing income.

    My Dad gifted my wife and I with planners (something I had never even considered using) and trained us on how to use them. With his encouragement I started tracking billable hours every day. From there I started setting, and meeting, weekly, monthly, and yearly goals. The process of observing my productivity completely transformed my work life and my income. That one lesson is easily one of the most valuable, in dollars, that I have ever been given.

    I bring this up here because it is very much like your informal business plan (the stuff you can control). At the beginning of the year my wife and I spend several days reviewing the previous year and looking at the year to come–setting goals and budgeting. We budget expenses as well as income, and from our income goals I setup a time budget and figure out how many billable I need to hit on a daily, weekly, and monthly basis to meet our income goal. I then track those hours every single day that I work (and I think that is the key).

    While billable hours wouldn’t seem to be directly under my control (I need clients), as soon as I started tracking it and focusing on what was most important to my business, I suddenly had enough billable hours to meet, and often exceed, my goals. I think the discipline and prioritization changed my focus enough that I found work that was already there, I just wasn’t tapping into. (I think it also added a degree of professionalism and follow through I had been lacking previously)

    Of course everyone’s mileage varies on this kind of thing, but finding key metrics in your business and tracking them religiously (be it words written, hours billed, sales called made) is very powerful.

    1. Both of these comments are spot-on, Mark and Robert. I also keep my goals in my calendar–my hardcopy calendar. I don’t use a day planner, but I have an expensive leatherbound calendar I buy special for my work and keep it up each and every day–what I’ve done, what I haven’t done, why, and what my goals are for the week. It really helps. (I have a separate one for my exercise plan that I keep in my closet, where I see it, along with the mirror, every morning. That works too.)

  7. When I’ve written business articles (and a nonfiction book I’m collaborating on at the moment), we call the business plan/mission statement the bull’s-eye on the target. You aim at it.

    Anyway, great post. Last summer I started an e-newsletter, set up a business plan, etc., and got started. What I wildly underestimated was how little response I would get from the marketing I did. I was counting on very little, actually–maybe a 1% response, but it came out to more like 0.25% or less. What I needed was more time and more money for marketing, which, partly because of a slow-down in other areas of my writing business (and the overall economy), so I folded it.

    Could it have worked? I think so. If I’d been able to afford the time and money to continue for another 10 months, it would have found its readership, subscribers, advertisers, ad revenue, etc., but I miscalculated. Maybe in the future I’ll start it up again.

    But I think it’s worthwhile to take those experiences and evaluate what you learned. And one of the things I learned besides the obvious was that I’d much rather be doing other types of writing than that particular newsletter content. And so I’ve put my energies and time into the sorts of things I would prefer to do, and have built on my already existing business, and seem to be doing a lot better.

    Maybe all I’m saying is that things change, learn from your mistakes, and constantly re-evaluate your goals, because they may change.

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