Author Business & Publishing, Writing & Publishing Articles

Getting in the Money Mindset: A Basic Financial Plan for New Authors

Getting in the Money Mindset

Back when I first discussed my goal of full-time authorship (and again when I reflected on my first full year as a published author), a few readers expressed interest in learning more about my plan to become a full-time author. In short, I’ve had to realize that, if I want writing to be my job, I have to think of it like a business. This mindset shift marked a huge evolution in my writing life, and I’ve done my best to outline my thinking process in the article that follows.

First, I want to make a few disclaimers:

1. I am not an accountant or financial adviser. All advice given should be taken (preferably to a professional) with a grain of salt.

2. This post is meant for authors who want to make a full-time career in independent publishing.

3. This post is written in first-person, because it is based on my own experiences and rough financial plan at this early stage in my career.

4. My situation will not be the same as yours. Therefore, my plan will not work perfectly for you, and I cannot create a custom plan for you. However, the over-arching principles should be applicable to all. To that end …

5. This post is meant to be an outline of a basic financial plan. It will not cover taxes, financial tools/software, budgeting, or how to sell books.

6. Again, I’m not an expert. Advice, resources, and other tips are welcome and appreciated!

All good? Good.

A Simple, Small, Shoulda-Had-It-Months-Ago Epiphany

If you listen to any of the major independent publishing podcasts, the authors and creative entrepreneurs featured will give you the same basic advice: know your goal. Mine is to make a full-time living from my writing.

While I’ve had this goal for years now, I’m embarrassed to say it took me a long time to realize exactly what this meant for me and Boxthorn Press (my business). I’d always looked at the big picture – one day, my book royalties will be enough to live on. That’s great, but it’s not a magical switch that will flip.

What I finally realized was that my ultimate goal of full-time authorship depended on one thing: making money. (Duh, right?) Now, I want to clarify that I’m not a greedy cash-grabber. I love writing, and I have told stories since childhood, regardless of financial gain. That being said, I want to continue to write for the rest of my life – and I’d have a heck of a lot more time to write if it were my only job. So, that’s what I’m going to make happen!

Breaking Down the Steps to Profitability

The Ultimate Goal: Book royalties must cover operating expenses (what it costs to publish, business activities, and requisite state/federal taxes), plus produce a profit (excess money to create my salary and pay personal expenses).

Step One: Invest Personal Funds
Currently, I’m covering all publishing expenses with personal funds from my day job. By keeping track of these expenses, I know how deep Boxthorn Press is in the negative. (Fun fact: on average, a small business owner in any industry can expect to spend about five years in this phase.)

Step Two: Royalties Cover Operating Expenses and Taxes
Eventually, royalties from my published books will begin to cover the cost of producing and marketing new books. At this point, all funds are re-invested in the business (in place of my personal funds). This means that the business has NOT broken even (because the excess funds have not recouped my initial investment) and it is NOT profitable (because there are no excess funds beyond expenses and debt).

Step Three: Break Even
In this stage, my total book royalties (for the length of my career) will equal my total personal investment. From this point on, the business will be profitable.

Step Four: Profitability
The royalties from book sales will exceed the operating expenses and requisite state/federal taxes, and create a true profit. Once this profit can cover my personal expenses (rent, groceries, insurance, etc.), I can make writing my sole source of income.

Defining and Calculating Profitability

How long am I willing to wait to go full-time?
Because my husband will be in graduate school for the next several years, I’m taking a VERY long-term approach to full-time authorship. As the main breadwinner, I must have a steady income to support us. Therefore, my goal is to go full-time after he finishes school. Estimation: 2025 (8 years)

What is a full-time income?
To determine this number, I must take into account living expenses (which will depend on where and how we live), my husband’s potential income, and our savings (and desired future savings). Since we plan to settle in the Midwest, my husband will be a university professor, and we should have a healthy nest egg saved, my starting salary could be low. Estimation: $20,000 (after taxes)

What are my annual operating expenses and taxes?
Expenses will vary based on regular business activities and how many books I publish. Likewise, the amount of taxes I owe will vary based on how much actual profit my business makes. Estimation: $4,000 per year

How will my profits grow each year?
A tough number to estimate. The more products I have to sell, the more potential sales I can make. As my number of books and investment in marketing increase, so will my profits. Estimation: see chart below

How do I determine when I can go full time?
At the simplest level, here’s the equation: Royalties – Expenses = Desired Salary

That’s easy to calculate for one year. However, it gets a bit messier when I take into account the years of personal investment and negative profits. Note: this chart does not include taxes, for purposes of simplicity.

Annual Expenses: the real or estimated cost of publishing and marketing books
Annual Royalties: the real or estimated royalties received from my published books
Annual Profit: excess funds (royalties minus expenses) per year
Running Gross Profit Margin (GPM): total profits for the lifetime of the business

2018: Annual profit hits zero (step two above)
2020: Gross profit margin turns positive (step three above)
2025: Annual profit exceeds $20,000 (salary goal met!)

How to Meet My Financial Goals

Short-term: Hit monthly royalty goals
Because I’m a visual person, I like to break down my larger royalty goals by both time and assets (e.g. books). For example, this year I want to make $2,000 in royalties. By time, that’s $167 per month. By assets, that’s 80 ebooks (priced at $2.99, sold at Amazon’s 70% royalty rate). I do this for all products, price points, and royalty rates.

Long-term: Follow the chart
This was the biggest “Eureka!” moment for me. If I keep my expenses at/under $4,000 a year and meet/exceed my annual profit goals (and no personal tragedies strike), I WILL make enough money to be a full-time author by 2025.

Forever: Save for the unexpected
In any aspect of life, there will be things outside of my control. Maybe Amazon will change its royalty rates. Maybe a marketing promotion will lose tons of money. Maybe I’ll get hit with crippling medical bills. That’s why I’ve allowed myself a long timeline, over-estimated expenses, and plan to build up a healthy nest egg before making the leap. I suggest you do the same.

How to Speed Up the Process

Mathematically speaking, the only ways to reach my goal faster are to A) spend less than my estimated annual expenses or B) make more than my estimated annual profit.

There are about a million tactics that could help. For example, I could higher a cheaper cover designer, play with book pricing, invest in proven marketing services, or create an additional source of income (e.g. courses or editing services). As stated in the disclaimer, this subject is outside the scope of this post.


The road to full-time authorship is long and difficult and different for every writer. However, the basic, over-arching plan applies to all of us.

Figure out the salary you need to live comfortably – this is your goal. Then, weigh your annual expenses vs. your annual profit until you’ve recouped any personal investment. Continue until the annual profit (after taxes) meets your desired salary. Do everything in your power to meet these numbers. Repeat every year, for as long as it takes.

Then once you’ve become a full-time author? Well, I’ll let you know when I get there …

For more information on the business and financial aspects of authorship, I recommend Business for Authors by Joanna Penn. To learn more about taxes and other legal concerns, check out The Self Publisher’s Legal Handbook by Helen Sedwick.

Author Business & Publishing, Writing & Publishing Articles

My First Anniversary as an Author-Entrepreneur

Holding my book for the first time!

Although I wrote my first novel, The Cogsmith’s Daughter (Desertera #1), nearly two years ago, this month marks the anniversary of its publication and what I consider to be my first year as a published author and entrepreneur. Is the writing life everything I thought it would be? Yes and no.

Before choosing independent publishing, I did extensive research into the field. I knew that one book (or two, or ten) is not enough to make a full-time living as an author. I held no illusions about being a break-out success or breaking even on my initial investment in one year (Across industries, small businesses take an average of five years to earn a profit.). While some authors reach these milestones within the first year, and while I have tallied many of my own proud accomplishments, short-term success has never featured in my goals. I’m lucky enough to be in a position where I can build my author career slowly. Currently, I’m 24 and a half years old. I want to be a full-time author on my 30th birthday. I think that is realistic and obtainable.

At this point, my career as an author-entrepreneur must be my second financial priority. With my husband in graduate school, I am the primary breadwinner for our family, and my day job must come first. In order to continue publishing books, I make sacrifices and set aside a budget for publishing expenses. Sometimes I miss those little luxuries (like binge-watching Netflix all Saturday, or dyeing my hair every three months), but the short-term sacrifices are worth the long-term gain. If I’ve learned anything from being an author-entrepreneur, it’s how to think days, months, and years into the future simultaneously.

Chai tea = writing fuel

When I first declared myself an author and established Boxthorn Press, I focused heavily on blogging and bringing together a supportive community of writers and readers. I cannot recommend this highly enough. Through writing and reading blogs, I’ve made some of my best friends, as well as many valuable business connections. I still want to provide helpful posts and engaging content for my fellow writers and readers, though I’m starting to realize that my blog needs to take a backseat to creation. Over time, my posting schedule has declined from five days a week to three to two, and I think this has been a healthy shift for my productivity.

Perhaps the most difficult experience I’ve had as a writer is dealing with criticism. I know my books aren’t perfect. On the fiction front, I have a long way to go as a storyteller (If I didn’t, that wouldn’t make for a very fun career!), and I’ll be the first to admit that my nonfiction booklets have been crafted on a shoestring budget. I know everyone will not like, understand, or appreciate my art, and negative attention is the price of exposure. Bad reviews and hurtful comments only strengthen my own self-doubt and internal editor, but luckily, I have the perfect antidote …

You. My readers and writing friends who are reading this right now. If you had told me one year ago the amount of support and encouragement and caring I would receive from the outside world, I would have laughed. But it’s entirely true. My readership is small but mighty. Those who enjoy my novels (and booklets) have shown an outpouring of support in reviews, social media shout-outs, and yes, monetary support. Without all of you, I would have a damn difficult time blocking out those negative voices and zero chance of achieving my dream of full-time authorship within the next five and a half years. So, from the bottom of my heart, thank you.

Without spoiling my 2017 New Year’s Resolutions, I want to wrap up this post by addressing my goals for the future. My creative mentor (from afar, that is), Joanna Penn, talks about measuring your life in Olympic periods (and writes an inspiring reflection post each year). If you judge your progress by one year, it may not seem like a lot has happened. However, over the course of four years, so much more can change.

Finishing my second book (aka the first is not a fluke!).

From late 2016 to late 2017, I want to focus on creation and diversification. I’ll put out a new book (hopefully two!) in the Desertera series, but I’d also like to expand the novels I have into audiobooks and perhaps foreign translations. At the same time, I’d like to start planning and writing my second series in the background, so that it is ready to publish when it is time to wrap up Desertera. With my nonfiction, I hope to begin a full-length book and perhaps diversify the products I already have.

Over the next Olympic period? I’d like to have two complete fiction series under my belt and available in all English formats (ebook, paperback, and audiobook) and perhaps another language or two in ebook format. I would also like to have two or three full-length nonfiction books, so that other writers can learn from my mistakes and accomplishments. I’d also like to expand my author-entrepreneurship into other avenues, such as course creation, author services, or perhaps something more social like podcasting. Hopefully, Boxthorn Press will be making a profit and heading to a place in which it can replace my day job.

You know what the craziest part is? I don’t think this is all a pipe dream. I’ve researched the industry, studied successful indies, crafted a basic financial plan, and have picked apart my every strength and weakness. While success is not fully in my power (I’m still beholden to my readers, after all.), I hold 90% of the cards. If I keep learning and working, I know I can make my dream a reality.

Two years ago, I started scribbling down an outline in a notebook and praying that I could achieve my biggest dream of writing a novel. One year ago, I hit the publish button and achieved my new biggest dream of becoming a published author. Today, I’m telling you that I want to achieve my newest biggest dream of being a full-time author by age 30.

Can I do it? Well, stick with me and let’s find out together.