Archive for 25 May 2014

A Profitable Writing Business

CNBC The Profit TV SeriesOne of my favorite TV shows is “The Profit,” which I first watched in Las Vegas last year, where Marcus Lemonis spends his own money to turn around failing product-oriented businesses. His focus is People, Process and Products. You can run a business with two of three P’s, but you need all three to make a profit. Unlike too many reality TV shows, he isn’t afraid of walking away from a bad deal and ending the show on an unhappy note.

After my father passed away from lung cancer in 2012, I opened a living trust and split the writing business into two business entities: a California LLC for blogging and ebook publishing, and a Wyoming LLC for an Intellectual Property Holding Company (IPHC) to license my copyrights. After changing my workflow, this worked out quite well for a year-and-a-half.

And then I lost my non-writing job last October.

Since the two businesses doesn’t generate enough free cash flow to cover the cost of their respective business entities, and I needed every dollar of unemployment benefits for living expenses, I couldn’t afford to carry any more business losses. The California LLC got dissolved this past December. The Wyoming LLC will get dissolved at the end of this month. Now that the writing business is once more a sole proprietorship, my actual business expenses are quite low without the extra overhead.

The major expenses I have are web hosting and stock graphics for ebook covers. The predictable cash flow of ebooks sales can easily pay for those expenses. Cash flow above and beyond expenses becomes profit. Once you have excessive profits, you can pay for the self-employment taxes that come with being a sole proprietorship and build up a cash reserve. One of the problems I had with an out-of-state LLC is that I didn’t have the $3,000 USD minimum to open a business checking account for the IPHC.

Despite dissolving the separate business entities, I haven’t combined the internal structures for the two businesses. Blogging and ebook publishing is one business line. Licensing copyrights—first serial and reprints—are another business line. The accounting and related paperwork for the two business lines will be kept separate. Once cash flow reaches a critical mass, I’ll resurrect the two business entities and split everything up again.

The mistake I made two years ago was making an emotional decision and not a business decision. The emotional decision was protecting what’s mine from relatives who were eager to take everything my father owned after his death. The business decision would have taken profitability into consideration. After being in the writing business for eight years and the ebook publishing business for four years, it’s time to have a profitable writing business.

Finding Markets With Duotrope

DuotropeDuring my snail mail days (2006-2010), I found new markets to submit my short stories via the Writer’s Digest annual market guides. Every six weeks I would thumbed through my worn copy, read the market descriptions, make a list, and send out another two-dozen short stories to face a cruel world of rejections. That changed when I started submitting short stories via email and came across Duotrope.

The Writer’s Digest market guides became the writing bible since the 1920’s. As a teenaged wannabe writer, I checked out the previous market guides from the library to read the articles and see how the markets changed year-to-year from the 1960’s to the 1980’s. So ingrained that the market guides were back then, a magazine editor took me to task for submitting a manuscript by not reading the current 1984 market guide and cited the 1980 market guide that I did use. Comparing the two volumes side-by-side, there was a big change in the market description.

The market guides have gotten thinner and thinner over the years as rising paper and postage costs drastically reduced the number of magazine publishers, and the traditional publishing houses merged from many independent rivals to a few conglomerates. As I made the transition to submitting exclusively via email, I could no longer justify the cost of a thinner market guide.

Consulting printed volumes in the Internet age often meant finding market descriptions stale and out of date most of the time. Although you could go to the publisher website or send off a self-addressed stamped envelope (S.A.S.E) for the latest writer’s guidelines, you had to wait until the next volume came out to discover new markets. Not all publishers went through the trouble of being listed. Writers needed an online service to search market listings.

Duotrope came on the scene in 2005 as a free service, and recently became a subscription service for $5 USD per month or $50 USD per year. It’s worth every penny. With ~5,000 fiction, non-fiction and poetry markets are available to search by title, genre, length, payments, and submission type (electronic or postal). If you use the submission tracker, you can contribute to the statistics for each market by how long it takes for a publisher to respond to each submission and the acceptance-to-rejection ratio.

I’ve found many market listings that I submitted my short stories and poems to over the years. According to the submission tracker, I currently have a 22% acceptance rate (4.9% for short stories, 61% for poems) for the past year. My favorite feature is the weekly email that lists new markets, recently opened/closed markets, and submission deadlines for themed anthologies. I scanned the approaching deadlines to submit recently rejected short stories or find writing prompts for new short stories in the near future.

Writer’s Digest had an online service called Writers Market for many years. The service was often bundled with the deluxe edition of Writer’s Market at $70 USD per year. Not too surprising that Writer’s Digest would overprice their online service to protect their printed monopoly. The service is now available for $5.99 USD per month or $39.99 USD per year. With prices being more reasonable, I might give it a try someday. Until then I’m using Duotrope.

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