The Money-Managing Instruments to Master for Your Business to Take to the Skies
The Force is strong in indie authors! Given a single worst-case scenario, we can probably spin up a story world in the throes of conflict. Unfortunately, that same imaginative bias can wreak more havoc on your business than a sandcrawler swarming with Jawa traders. Ambush can come from either side: a lack of financial data could make you assume the worst and quit too early, or it could lead to a poorly timed splurge on publishing tools you’ll never use. Fortunately, there’s more than one way out of a desert sandstorm. Use a few simple instruments to clear your mind, free up new creative energy, and decide whether those extra purchases—like those quality second-hand androids—are worth a second glance. Limitations always seem to make for better creativity, from a simple sonnet to George Lucas’s Star Wars, and the financial limitations you create for yourself, a.k.a. a budget or a business plan, can shield your creative process better than a Jedi warrior.
Your publishing choices determine the kinds of income you receive and how your payments arrive. Adding more formats, merchandise, crowdfunding projects, or subscription plans makes for more complicated cash flow compared to earnings from e-books alone. But there are ways to simplify the process of dividing funds and keeping on top of business expenses. Using fixed percentages to calculate how much of each paycheck to save, invest in your business, or pay yourself—rather than fixed amounts—will let you break up large, irregular, or one-time payments while consistently building your business, and without cheating yourself or the tax office.
It isn’t just about how much of your income to spend or save each month. Every indie author has a different business strategy and income stream, which means every money management plan should be unique. But whether your publishing payments fit more into the “delayed and detective,” “micro, then mega,” or “feast and famine” categories, there’s an entire galaxy’s worth of advice on matching your budget to your income situation, and we’ve compiled a few for you to explore.
Your X-Wing’s Dashboard
To prevent crash landings, get familiar with your X-wing’s dashboard—your money decision tools—before launch. Just like Luke Skywalker, you have a speedometer, a gas gauge, and an oil pressure gauge. “Your net income statement is like the speedometer … to let you know if profits are increasing or decreasing,” Dawn Fotopulos writes in Accounting for the Numberphobic: A Survival Guide for Small Business Owners. Check it whenever you want to know if your marketing, pricing, products, and customers are working, and for ideas about how to earn more by working less. “Your gas gauge [is] the cash flow statement … [It] works like your personal checkbook” to keep your aircraft from running on empty. Check it to see which expenses to cut and if you might need a loan during a slow season. The “oil pressure gauge” is your balance sheet, or your net worth, and tells you what you have invested into your business and what it is giving you back. Authors can also note intangible assets such as copyrights, works-in-progress, or an established following. Check this whenever you are wondering if your cash and intangible assets are growing in value, if you need to write a few more books, or if you need to create more offers. The oil gauge measures the life force of your publishing business.
Pro Tip: If you’ve never formally tracked your business income and expenses before, a Google search should bring up plenty of free templates for Excel, Google Sheets, Notion, or another platform that you can customize for your needs. Fotopulos’s Accounting for the Numberphobic: A Survival Guide for Small Business Owners also details how to set up your own budgeting documents.
Your dashboard can help you master your cash flow no matter your income pattern, but being aware of how and when payments arrive can help you make strategic and profitable decisions. Here are three common cash flow scenarios among modern indie authors—and the money management strategies they should keep in mind.
1. Delayed and Detective
Publishing royalties can arrive mysteriously slowly. Both authors who receive traditional publishing advances and indie publishers who distribute their books through distributors—IngramSpark, Baker & Taylor, Mackin, Follett, Draft2Digital, or PublishDrive—or directly through retailers—Kobo, Barnes & Noble, or Apple—will be familiar with payment confusion and delays. Even when everything goes right, authors who rely on these payments still often have to wait longer stretches between paydays. Kindle pays royalties once a month at the end of the month, approximately sixty to ninety days from when the book’s sales were reported, and other retailers have different waiting periods and payment schedules. New releases can also create a “launch trough,” wrote Joe Solari in his IAM guest series in March 2024, in which sales spike when a book initially is published, then die off quickly once the largest number of readers have purchased the title.
With an eye on your balance sheet, you can estimate your probable future income based on sales data, sales rankings, Nielsen scans, or royalty statements. Many distributors and short fiction or nonfiction markets withhold payment for thirty, sixty, or ninety days. Compare these expected sales numbers when the actual payments arise. Keeping track of current sales and withheld royalties may also help you find money that was never paid out and correct any administrative or banking problems. Your actual payouts may be lower than expected based on sales or “orders” data because of bank fees, foreign exchange fees, and/or reduction in royalties because of participation in a retailer promotion.
2. Micro, Then Mega
Micropayments are becoming more and more common in the indie publishing world. Author-owned subscriptions of a work-in-progress and paid regular content on sites like Patreon, Medium, or Substack can help offset later publication costs of the completed project and provide a monthly payment that smooths out erratic publishing income. On the other hand, library checkouts or retailer subscriptions, which pay authors based on page reads or minutes read, can supplement income with small, unpredictable, and/or delayed payments. Macropayments are always welcome but are even more unpredictable. Rights licensing—foreign language, new format, tie-in merchandise, or serialization—or pre-publication of excerpts, or short fiction in the same story world, fall into this category.
As part of a larger publishing strategy, micropayments between mega payments can keep money flowing in your business during slow periods, increase your net income, and boost your balance statement, giving you more to invest in your business later on. Knowledge about your cash flow is a kind of superpower. For example, a running tab of your micropayments could be the inspiration you need to keep producing your subscription content. With the details at your fingertips, you can strategize to save up micropayments to pay for an opportunity such as a conference or book fair that might lead to a windfall payment. Or you might invest a percentage of your micro earnings into developing a line of book-related merchandise to sell in your online store.
3. Feast and Famine
Feast-and-famine payouts are common for authors who use crowdfunding projects to launch their books and to pay for their business expenses. If you’re in the “feast” season of publishing, your balance sheet is your best friend to strengthen your business without exploiting the business owner—you. The temptation to pour all the money back into the business or to spend it all on an exciting vacation is real, but don’t get too excited before you check your cash flow. Tally up your projected expenses until your next expected income boost, via your project’s launch or your next crowdfunding event, and see whether you have already committed your resources. After you’ve divided up your winnings using your fixed percentages, consult your balance sheet to decide if it’s time for an owner’s equity draw, where you take money out of your business, or an increase in your salary percentage. Consider whether you want to reinvest some of the money into a professional membership, conference, contract, or software to make your business more valuable.
In times of famine, you may consider a new project. A when-will-this-break-even calculation can hone your focus and keep you from an avalanche of work that won’t pay off … yet. Ruling out a project for now can free up your creativity, lower your stress, and de-clutter your desk. Joe Solari’s Author Capital Planner may offer clarity about how long your newest idea will need in order to make a profit. The planner can also tell you whether your unexpected windfall has finally put you into position to launch a dream project.
Experience with your dashboard can tell you what you need to know and guide you toward creative decisions that are right for your talents and situation. “A business is a bucket for money,” writes Michael W. Lucas in Cash Flow for Creators. “Money enters the bucket irregularly. Some months it gets a drop or two. Other months, money pours in.” Keeping track of your cash flow can show you “how everything averages out” and what you need to make your publishing business fly. You’ll be able to see your ideal publishing trajectory, because you’re checking your net income statement, cash flow, and balance sheet, and you know exactly what you can do. In Michael W. Lucas’s case, “Experience has shown me that four books in a year lets me at least scrape by.”
Over time, your attention will pay off, and you’ll come to understand the ebb and flow of your income enough to divide earnings confidently and adjust for fluctuations, or even to explore new business strategies that will move you into a different payment pattern. In the meantime, knowing your business’s speedometer is working, your gas gauge is full, and your engine is running smooth and cool will free you to fly with confidence in the most treacherous publishing canyons. May the Force—and the cash flow—be with you!
Laurel Decher
