talking on CreateSpace-KDP print Migration, 24 September 2018

The subject pretty much says it all, but:

On 24 September, at 7 PM, I’ll be talking about migrating books from CreateSpace to KDP Print, including procedural, technical, and business aspects thereof, at the Grey Wolfe Scriptorium. “Talk” is a strong word here; we’ll have a couple remarks and then a back and forth discussion.

It’s a public event.

I won’t say I know everything there is on this topic, but I’ve been following it closely. The hard parts of my migration are done, and I should be ninety percent finished by then. We all know that’ll leave me with only ninety percent of the work left to do.

Pricing Shifts between CreateSpace, IngramSpark, and KDP Print

The massive KDP Print Migration is underway, and I noticed pricing differences straight off. While they initially infuriated me, once I gathered all the data I became much more mellow.

I put my short stories (8,000-12,000 words) in print, primarily so that comparative pricing makes the ebook looks cheap. Maybe folks won’t pay $0.99 for a short story in ebook on its own, but they will pay $2.99 for that same ebook if there’s a print version for $5.99. I don’t expect anyone to buy my shorts in print; that’s not what they exist for. I consider those folks who do buy them hard-core fans, though, and I try to make them as nice as possible.

How do I price these? Well, if someone buys one of these stories I want to make at least a dollar. (Yes, that’s difficult for ebooks–Amazon, for example, gives a 35% royalty on prices under $2.99 and 70% at $2.99 or more. Figuring all books are priced at $X.99, I can make roughly $0.35, $0.70, or $2.)

Print books are a little easier, though. I feed PDFs into the system, let it compute print costs, and twiddle the retail price until I make just over $1.

With the CreateSpace shutdown, though, I’m really noticing pricing differences. Let’s look at the first short I converted.

Spilled MirovarThe first Prohibition Orcs story was priced at $5.99 in print via CreateSpace, for 100 5×8 pages of orcish bootlegging. That gave me a profit of $1.44; perfectly reasonable.

I fed that into IngramSpark, and was rewarded with a net of $0.61.

Whoah. Cue boiling blood.

Before I go all stabby, though, let’s gather all the information. For an apples-to-apples comparison, I’m setting the CreateSpace price of Spilled Mirovar to $6.99, same as KDP Print and IngramSpark. We really need to make two comparisons. CreateSpace’s Expanded Distribution (CSED) is analogous to IngramSpark, and CreateSpace’s Amazon service is migrating to KDP Print.

 CreateSpace Expanded DistributionIngramSparkCreateSpace to AmazonKDP Print
US ($6.99 retail)$0.64$1.12$2.04$2.04
UK (£5.99 retail)n/a£0.96£1.97£1.89
EU (€5.99 retail)n/a€0.6€1.89€1.69

First off, it’s clear that IngramSpark smokes CSED–especially when you consider that CSED pays everything in US dollars.

It’s also clear that KDP Print’s European net is lower than CreateSpace’s.

This exposes a weakness in my “make at least a buck on a story” strategy. It sounds reasonable, but I never made a buck on CSED of short stories. I ignored CSED on these titles, because nobody was going to buy a stupid story about orcs bootlegging in 1927 Detroit. (I’m grateful to the people who proved me wrong.)

Once I impose that requirement on CSED/IngramSpark, everything gets more expensive. So while it initially looks damning, there’s no cause for outrage. Annoyance at losing margin on EU sales, yes.

The question is, what do I do with this information?

The obvious thing to do would be to price print books differently by channel, but online price-matching is rampant. The cheapest price I set in a currency is the real price I’ll be paid for. I’m not willing to give my work away.

My decision is, I’m not going to migrate most of the short stories to IngramSpark. My best-selling shorts will go on IngramSpark, but that’s it.

I’m still going to migrate everything to my ISBNs, because I want that control. Pricing will change, new channels will open, and with my own ISBNs on everything I will have the flexibility to take advantage of it. There’s a big comfortable difference between “finish this before an unknown deadline a few weeks from now, or else!” and “try to polish this off before 2019.”

What about larger books? Let’s check out my nerd cozy mystery git commit murder. While I should revisit the pricing in light of exchange rate changes, the comparison should still make sense.

 CreateSpace Expanded DistributionIngramSparkCreateSpace to AmazonKDP Print
US ($14.99 retail)$2.00$3.16$5.00$5.01
UK (£11.99 retail)n/a£2.48£3.87£3.88
EU (€12.99 retail)n/a€2.38€4.65€4.06

The difference between CSED and IngramSpark really shines on larger books. I make a penny more in the UK, and less in the EU? Uh, okay, fine, I guess.

Before someone asks why I make more on novels than short stories, it’s because 1) they took longer to write, and 2) bookstores make their money based on the sale price. A bookstore won’t handle a book unless they can make a few bucks off it. A book like git commit murder or FreeBSD Mastery: Specialty Filesystems has a narrow audience, and cutting the price to $0.99 is not going to improve my sales.

IngramSpark is definitely improving my sales. I’m selling print books through third parties in Asia and Australia, which I never really managed before. I’m being paid more for sales that would have gone through CSED. Additional IngramSpark sales have already paid back what I spent for a thousand ISBNs. I have only a small subset of my titles fully through their system so far, so I’m hopeful that’ll increase when the rest grind through.

The truly annoying thing about all this: CreateSpace and IngramSpark both use the same printing machinery, at the same companies. The different prices are entirely business decisions. I’m not declaring that my lower net on CSED books was absolutely Amazon’s attempt to discourage availability of my print books outside their ecosystem, but my lower net on CSED books was almost certainly Amazon’s attempt to discourage availability of my print books outside their ecosystem.

On the plus side of this migration: the Prohibition Orcs books have spiffy redesigned covers. I am well pleased. And the first one is only $0.99 in ebook.

CreateSpace Shutdown Plan

Beware: book industry neepery.

Yesterday, Amazon announced that they’re merging Createspace into their KDP Print program. A reading of the article makes it clear that the services aren’t merging, though. Createspace is shutting down and all accounts are migrating into KDP.

This presents problems for me. KDP does not offer the same services as Createspace. The ones that present problems for me include:

  • Payment will be delayed an extra 30 days: annoying, but I’ll deal.
  • Small books will increase in price in Europe: I’ll have to pass this on to you. Sorry, folks.
  • Title Information: They’ll screw up my metadata, in new and exciting ways.
  • Orders: I will no longer use Createspace for books not available on Amazon–fine, whatever.
  • Expanded Distribution: I’ve heard from more than one source that KDP Expanded Distribution does not work outside of the US. This is a critical deal-breaker for me. I have non-Amazon readers around the world.

      Fortunately, this merger isn’t a surprise. The Digital Reader has been warning us about this for months, so I’ve had this percolating in the back of my brain. This is why I bought a block of ISBNs at the end of 2017.

      Here’s the plan for all Tilted Windmill Press books.

      1. Join ALLI. For $99/year, I get unlimited free IngramSpark access.
      2. Reissue everything using my own ISBNs. (Remember, you can get 1000 ISBNs for the price of 50, so think long term. Also, ISBN pricing is a ripoff.) Start with the best-selling titles, and go down the list.
      3. Distribute all print books through IngramSpark. Everything issued in 2018 is already available on IS, so this isn’t a big deal.
      4. Also distribute all print books directly through KDP Print. I don’t want to migrate, because they’ll mess up my nonfiction metadata. (Amazon’s offerings are clearly geared towards fiction. Nonfiction is wedged in.)

      As a test, I already followed this process for FreeBSD Mastery: ZFS and FreeBSD Mastery: Advanced ZFS.

      The problem books will be Sudo Mastery and DNSSEC Mastery. I’ve already talked about issues with these books, but to make a tediously long story short, availability of the print editions outside the US will be limited until I get the second editions out. That’ll start as soon as I finish the jails book. If you want the current edition in print, order now.

      The thing to worry about here is scope creep.

      I really need to revisit the covers on some older titles, like the Montague Portal and Prohibition Orcs books. Title text design standards have changed since 2010. The books that I’ve already designed alternate covers for will get them as part of this upload. Others will have to wait.

      And if I’m changing the covers, shouldn’t I also change them for ebooks?

      Yep. But that requires re-uploading books to every site. That’s a mindless job, and can be done in the evenings. It should also be combined with an audit of which books are on which sites, because I’m certain I missed some retailers for some books. (Fifty-odd titles. Several ebook retail distributors, which have changed over time. Yeah, there’s gonna be holes.)

      So, this means a giant spreadsheet. With a list of titles and checkboxes and distributors. Oh joy oh rapture.

      The really annoying thing here is that I’ve started making real progress on the jails book and on the next Beaks novel. Once I have momentum, I need to keep it going. So I have to really focus my time for the next few weeks to get this done.

      Because I only have a few weeks. What’s the drop-dead date? That’s a great question, but Amazon learned how to communicate with small authors from The Prisoner. “That would be telling.”

      Had I started with my own ISBNs, this would have been much simpler. I had no way of knowing in 2012 that this ridiculous business model would actually work, though. I would strongly encourage any self-publisher to own and control their own ISBNs, even if you have to buy them in blocks of 10 or 100.

      Now if you’ll excuse me, I have a load of work to do…

I must credit Walmart

It’s very important to encourage people and organizations when they do something correct. Even when it’s an organization you don’t care for. I never thought I’d one day be compelled to say something nice about Wal-Mart.

But, as they say: here we are.

Walmart is implementing their ebookstore. It’s powered by Kobo, one of my very favorite ebook retailers.

Here’s the Walmart catalog entry for Ed Mastery as of today.

Ed Mastery entry at walmart

It’s categorized as “Books/Computers & Technology Books/System Administration/Linux & UNIX Administration” – all sensible, and what I entered.

Now here’s the catalog entry for the Manly McManface edition of Ed Mastery. I entered its category as “Books/Computers & Technology Books/System Administration/Linux & UNIX Administration.”

walmart catalog for ed mastery manly mcmanface

Walmart has it filed under Books/Computers & Technology Books/Security/Viruses & Malware.

I’m not sure, but I think Walmart… has started trolling MRAs?

New podcast interview

Apparently August 2018 is Shamelessly Shill Yourself Month. I appeared on the IT in the D podcast last week. A fun time was had by all–well, at least by me. And that’s the important thing, right? We talked about my books, decades of IT, SSH, ed, and general nerdery.

I worked with Dave and Bob almost twenty years ago. Somehow they’d forgot just how painful it was to work with me and invited me on the show. And if you think I’m being self-deprecating there: the Michael Lucas Oversight Committee was an integral part of the company. Some of you require managerial oversight: I need a freaking team.

Really, it’s best I’m self-employed. I’m clearly not fit for civilized company.

Meanwhile, Bob and Dave went on to try to improve things for technology folks in Detroit. It’s like they’re better human beings than I am or something.

Tuesday, 21 August 18: me, on ed(1), at SemiBUG

The headline pretty much says it all, but:

Next Tuesday, I’ll be presenting on ed(1) at the SouthEast Michigan BSD User Group, semibug.org. 7 PM, Altair Engineering.

I doubt that any user group or conference will want me to show up to talk about ed(1), even though it is the standard text editor. So, this is probably your one and only chance to see this talk.

Bookstore Reading

My first ever reading at a bookstore happens this Friday!

I’ll be at the Grey Wolfe Scriptorium in Clawson, MI, at 7 PM this Friday, reading from git commit murder. The bookstore is really easy to get to, maybe a mile west of I-75 on 14 Mile Road.

If people show up, I’ll read aloud and answer questions. Otherwise, I’ll just sit quietly and read to myself. They have a whole bunch of books. Maybe I’ll get gelato afterwards. Wait–there’s no gelato near Grey Wolfe? How do people even survive?

Well, I’ll find something. You could join me for that. Even if it’s not gelato.

GWS is really heavily into Michigan authors and publishers. If you’re in Clawson some time that isn’t for my reading, stop and peruse their shelves.

Burn it down! Burn it all down!

I burned yesterday and redesigned my web sites. What was www.michaelwlucas.com, blather.michaelwlucas.com, www.michaelwarrenlucas.com, and mwl.io have been consolidated in a single site, mwl.io. Fiction, nonfiction, FAQ, and blog, all coexisting as one happy family.

Happy families are the ones most likely to stab each other in their sleep. But anyway.

I have a whole slew of redirects on the old sites, so my incoming links should work. My Tiny RSS reader even caught my test post, so I’m pretty sure blog subscribers will continue to get my posts.

Spending a couple days working on this mess wasn’t fun but maintaining four sites, the correlated interdependencies, and all the trivial little difference was eating up too much time. I’ll make back this time in a year. I also took the chance to fine-tune my web server’s TLS configuration, as 2012’s iffy algorithms are downright dubious today.

Also, I’d like to thank Let’s Encrypt for making TLS everywhere a reality. This integration would never have happened without an infinite supply of web site certificates. If you’re not using them, you should.

Web Empire Redesign

I just went through and switched all four of my personal web sites to WordPress’ 2017 theme, getting rid of Atahualpa and Evolve. They were fine for their time, but 2017 supports everything I need and most of what I want.

My sites still need help, though. And I’m reaching out for guidance from people who design web sites.

(I also have tiltedwindmillpress.com, but that needs to remain separate. It’s a company, not a personal site, even though the company exists only to handle my books. It needs some help and updates, but that’s a separate problem.)

I started with a blog. Once the blog seemed to work okay, I converted my old raw HTML site to a real web page for my books. When I split my fiction off under a slightly different name, it seemed to make sense to set up a separate site for that. When I found I was duplicating information between sites, I set up mwl.io to act as a central information/traffic direction point.

This is all annoyingly complex. People are having a terrible time finding information about me and my books. I really need to bring everything back together. Probably under mwl.io, because that’s nice and short and easy to type on a cellphone.

The question is, how to organize the information?

Today, both my fiction and nonfiction sites have genres across the top. The drop-down menu on the tech site leads to a page for each book. The fiction site has single pages, one per genre, with multiple books. Given how many books I have out, one page per genre seems more sustainable in the long run.

Ah, seems… a lovely word that means “I look so simple, but I’m going to come back and bite you.”

I’ve thought of hiring someone to do a web site reorg, but ultimately, I’m responsible for it. I have to understand what’s going on. Plus, people are fragile; whatever happens, I need to be able to either take it over or explain it to another contractor.

So I’m asking my esteemed readers. If you were responsible for this kind of information, how would you organize it? As a reader looking for information on books, how would you do it? I mean, if I had to handle this for an employer, I’d quit–but that’s not really an option here.

Suggestions? Ideas?

Writing Business Cashflow

Most craft businesses fail. It’s not surprising. Being an expert knitter doesn’t mean you should open a yarn shop. Lots of those hobbyist stores go broke in the first year because the excited, enthusiastic storekeeper doesn’t know how to pay himself and the landlord. In business, cashflow is king.

Writing is a craft business.

Kris Rusch’s writing business blog has a lovely article about business capitalization and implosion. As an IT nerd who survived not one but two dot-com crashes, and as a writer who’s been paid increasing amounts for his work since 1995, I’ve seen exactly this problem hit people in both the technology and writing businesses.

Kris makes wonderful points, but she skipped something. How, exactly, do you manage cashflow in your writing business? Specifically, how do you pay your bills? How do you get groceries in the fridge and pay the copyeditor? How do you decide when you can afford to expand your writing business?

This is roughly how I do it, in both my long-gone consulting career and as a professional writer. I did not invent this method; rather, I accumulated it over decades of largely involuntary exposure to business. It covers how I decided I could afford to become a full-time writer, because that decision is an utterly critical part of cash flow management. There are other methods; I am not offering you the One Word of Truth here.

Every successful business plays some variant of this game. The only difference is how complicated the spreadsheets are.

Premises

You’ll not only have good months and bad months, you’ll have good and bad years. Understand this all the way down into your toes. Burn it into your soul. If you want your business to survive, you must have actionable plans to endure bad years.

Have a business organization, with a separate bank account. Big thick books are written on business organization, and I’m not going to pretend to advise you on the right organization for you. The important thing for this discussion is that the business receives every penny of your writing income. If you’re not doing that, start now.

Start with money in hand. If you don’t have cash in your greasy mitts to pay your bills your business will fail. End of discussion. I had a year’s expenses in my business bank account before I went full-time writer. I accumulated those savings by… wait for it… not spending my writing income. Maybe you have a supportive spouse, and don’t need a full year of expenses. Maybe your savings are in your personal account rather than your business account. Modify my example to fit your reality.

The Cashflow Game

You don’t write for a living. You make a living so you can write, but you play a game for a living. The game is called “Keep The Bucket Full.”

Money irregularly enters the Business Account Bucket. Some months it’ll get a drop or two. Other months, a torrent arrives.

Money leaves the Business Account bucket at an (approximately) fixed rate. Your rent isn’t going to go down just because your books aren’t selling.

When money leaves the Business Bucket faster than the bucket refills, you’re losing.

When money enters the Business Bucket faster than the bucket drains, you’re winning.

Playing the game takes two numbers: how fast the bucket drains, and how fast it fills.

You can be a successful craftsman and produce professional-grade work without playing this game. True professionals are paid, though, and you cannot be a successful professional craftsman without playing the game.

Draining the Bucket

Start with your expenses. Go through your last six months of spending. What do you need, and what do you want?

Only you know how much money you need to pay your bills, and which of your bills are necessary. You require health insurance and you must fund your retirement. I don’t have cable TV, but if you have kids the Disney Channel might well be a wise expenditure. My family lives in Detroit, because of the low cost of living. That might not work for you. On the other hand, my tech writing means I need thirty megabit of bandwidth. You might need much less Internet. You might read a good book on financial decision-making.

Brutally honest self-reflection is essential here. What did you need to spend, what was excessive, and–the hardest category: what did you not strictly need, but you know damn well you’re going to buy anyway even if it’s not in the budget? In my younger days, I most frequently blew my budget by buying books. My budgeting vastly improved once I allowed for that.

Make your choices. You can and will change them later, but at least start.

Perfection isn’t necessary. A starting list is. Preferably, a starting list with pessimistic-but-not-apocalyptic assumptions. Maybe all of my favorite authors will release a book in the same month, increasing expenses, but if I catch wheat rust everything blows up anyway.

Group these expenses into a two-by-two matrix: business and personal, versus “essential” and “stuff you’re willing to surrender if it means you get to keep writing for a living.” Again, you can and will change these later.

expense categoriesbusinesspersonal
essentialessential business expenses (copyediting, book proof fees, accountant)base pay (food, rent, health insurance)
nice-to-havefull business expenses (better covers, more promotion)full pay (vacation, pocket cash, someone else to mow the lawn)

If an expense can be a legitimate business expense, declare it a business expense. This is not a tax blog, so none of this is legal advice, but in general: those writing conferences? Business expense. Microsoft Word and InDesign for your writing PC? Business expense. Lunch while you’re writing? Personal expense–you’d have to eat anyway. Read a book like Tax Savvy for Small Business and consult an accountant.

Arrange them by month or by year. Yearly is more effective for the long view, but many people find monthly more comprehensible. Divide those annual expenses, like tax preparation, by 12. You’ll save money for them throughout the year, so that sudden $500 bill is not a nasty shock to your wallet.

Separately total up the four categories.

Your essential business expenses? That’s how much money the business needs to survive. I’ll call this “essential business expenses.”

Your nice-to-have business expenses? This, plus your essential business expenses, is how much you’d like to spend on the business each month. I’ll call this “full business expenses.”

Your essential expenses? That’s how much you must pay yourself. I’m going to call this “base pay.”

Your nice-to-have expenses? That, plus your base pay, is how much you want to pay yourself. I’m going to call this “full pay.”

Your goal is for the business to pay its full expenses every month, while paying yourself full pay every month.

Armed with this information, visit your accountant. If you’re unsure, ask them to verify the legitimacy of your proposed business expenses. It’s much better to pay a few bucks for a proactive check than have the local tax agencies add you to their list of “Suspicious Bastards We Need To Closely Watch.” Then have the accountant look at your base and full pay. How much must you to pay in taxes to pay yourself each of those?

Your full pay, plus the taxes on that pay, plus your full business expenses, are your expenses, as shown here. The numbers don’t reflect my reality. I chose them to make the examples simple.

expense categoriesbusiness expensespersonal expensestaxestotals
essential$500$2000$500$3000
nice-to-have$500$1000
essential plus nice-to-have$1000$3000$1000$5000

Ideally, I want my company to support $5000/month in expenses. I’m willing to accept $3000/month to have the job I love, though.

Worst Case: Don’t Refill the Bucket

Suppose the business account has $30,000 in it. With no income I can survive six months at full expenses, or ten months at base expenses.

Total annual outgo is $60,000 at full expenses, or $36,000 on base expenses.

Wow. That extra couple grand a month got big real quick, didn’t it? This illustrates one of the most important principles of cashflow: fixed recurring expenses will murder your business.

Filling the Bucket

Now that you know how quickly money goes out, look at the history of your business income.

If you made over $60,000, especially for multiple years, it’s realistic to think that you can probably pay yourself your full expenses.

If you’ve routinely made over $36,000, it’s realistic to think that you can probably pay yourself your base expenses.

If you made under $36,000, your business is in trouble before it starts. It’s better to know that you can’t survive before starting. It’s also better to know what you must change to make your writing a viable business. Now you know why I live in Detroit and not San Francisco. More than one writer I know personally lives in Thailand specifically to destroy their fixed recurring expenses.

Yes, once you’re writing full time your income should go up. The word should destroys more businesses than any other. The year I wrote more books than any other year, my income decreased. The next year I wrote fewer books, and my income increased. The books I’d written the previous year finally started paying off. You can’t control how well a book will sell. Hope is nice, and dreams keep we artists going, but seriously, spending in anticipation of an income surge will tank your finances.

Winning and Losing

Winning at your craft business is easily defined: you can stay in business, living the life you want to live. It’s okay to not meet goals like “write eight books this year,” so long as you keep going. Don’t define “winning” by increased income: remember, you don’t control how money arrives in the bucket.

You might find that being a full-time writer is not for you. That’s okay. It takes a peculiar particular sort of person to sit alone in a room and hammer out words forty hours a week. That’s not unique to writers. My wife’s favorite bead store went out of business after three years specifically because the store owner realized she wanted to play with beads, not manage cashflow. She was successful, but hated the actual work. Today, I can only presume she’s at home reveling in her glorious bead collection.

But then there’s failure.

Failing isn’t the worst that can happen. Most businesses fail. My first three businesses failed, but I learned from each.

But worrying about failure can destroy your creativity. Not releasing new books will also destroy your business. Reduce the worry by setting a Yellow and Red threshold on your bank account.

When your business account balance is above the Yellow threshold, you’re the Green zone. Pay yourself your full expenses. Life is good.

When your business account drops to or below the Yellow threshold, you cut your expenses to the base level. You pay only for essentials. Yes, it’s possible that you can get in a situation where the rules say you bounce Yellow and Green each month. If that’s the case, I’d suggest you stay at base expenses for a while until you get a comfortable cushion.

Hitting Yellow is also a good time to revisit your expenses. When I had to commute two hours a day, a good car was a necessity. Now that I only drive to and from the dojo, a new car is a waste. Inside a month any car I drive is gonna have that faint yet utterly penetrating aroma of “Eau de Sweaty Bludgeoned Lucas,” so why bother? Killing the car payment sufficed to drag me back into the green, no problem.

Again: monthly recurring expenses will murder your business. You control those expenses.

When your business account drops to Red: you’ve lost. It’s time to get a straight job.

How do you set these levels? I set them by months. My Yellow level equals one year’s basic expenses. I’m willing to live simply for a year, with zero income. This gives me time to cope with emergencies.

Job hunting while flat broke is terrible, though, so define your Red level accordingly. How long will it take you to get a job? My background is in technology, so my Red threshold allows for two months of base expenses with no income. Plenty of time for a techie like myself to choose the least loathsome employment. If you wanted your old job as a high school teacher, though, your Red level would be much higher. Schools hire teachers once a year.

The advantage of this system is you get to stop worrying. We artists are temperamental, high-strung critters. By setting thresholds, you can quickly know how things are going. When I start to freak out about this month’s cashflow and ask myself if I should return to corporate serfdom, I can check the bank balance. Most often I say something like “Oh, I’m at twice Yellow, everything’s fine” and get back to making words.

The nice thing about losing Fill The Bucket is that you don’t lose at writing. You wrote when you had a straight job before, you can write during that job again. Next time you try, you’ll be better prepared.

Increasing Expenses

Cash Flow Doom sounds like good news.

“A million dollars just landed in the Business Bucket! We’re rich! Maseratis all around!”

“I signed a Hollywood shopping agreement for my novel, I’m gonna be rich!”

Or, most insidious of all: “I don’t like doing this work.”

All of these encourage you to head down the same awful path: increasing your fixed expenses.

Fixed expenses are what kills a business.

Never increase expenses based on expected income. That way lies failure. Maybe you had a massive spike in your Amazon sales this month–but what happens to your business if next month Amazon decides to suspend your account and not pay you for that spike? Act only based on cash in hand.

Increasing your fixed expenses means that your Business Bucket drains more quickly, every month–and that your bucket will continue to drain at that rate, forever, until you reduce expenses. You’ve turned up the difficulty level on your game of Fill The Bucket.

That $5000/month for your full expenses? You hire a flunky, and suddenly it’s $10,000/month. What would have lasted you a year will now last six months. Your flunky doesn’t have base and full expenses, either–they expect their full paycheck, every week. That expense is truly fixed.

Your Red and Yellow levels change. And that person you hired? As people, employees are human beings and not disposable. Treat them with respect. Their employment with you, though? That’s totally disposable. Employees are Yellow-level expenses.

I know more than one writer who hired a friend to handle their scut work. When their income dropped, they chose to let their writing business tank rather than fire that friend. Placing your friendship ahead of your business is a valid personal decision, but think ahead of time what your decision will be. Firing a friend sucks. Don’t hire a friend unless you can cut them loose when times get hard. Worse, good employees tend to become friends. You’ll care about them.

Don’t hire employees unless you can bring yourself to fire them.

Company car? How do you feel about it being repo’d during the next stock market crash?

My rule of thumb is: don’t increase either full or base expenses unless I have enough cash in hand to keep the business above Yellow for an entire year at the increased level, assuming zero income for that year.

Also judge how those increased expenses affect your long term dreams and goals. I have a dream of writing enough to pay off the mortgage. (It’s a dream because I influence but don’t directly control my income.) Hiring an employee would make that dream much more difficult.

That’s why Tilted Windmill Press has no employees. I’ve assembled a team of consultants for cover and interior art, an entire editing and copyediting team, an accountant, and all the other bits I need to have a functional company. I also have a whole list of awesome artists on tap for when Brad is inevitably eaten by a grue, so please don’t send me your portfolio.

Firing a consultant is much easier than firing an employee. You just don’t hire them again.

I had some medical issues last year, and have been in something of a slump since. If I’d hired someone during that flush year, and couldn’t bring myself to fire them, I’d be out of business. As it is, I’m doing okay.

All this doesn’t mean you can’t reward yourself. It’s been a good year and you want to replace your decrepit computer? That’s a one-off expense. If you can afford it, and it doesn’t interfere with your long-term goals and dreams, proceed.

Help, My Bucket Overflowed!

If you play this game even moderately well, you’ll find yourself with money in the bank. Keep your accountant up to date on what’s happening.

Many businesses invest in new equipment in December. One 28 December I bought a new laptop, a filing cabinet, a bookcase, and a thousand ISBNs. I needed them anyway, but my income was higher than I thought. Spending that money in that year helped cut my taxes.

Eventually you will need to revisit your business structure. Even one-person author businesses eventually need to incorporate, for tax reasons if nothing else. You’ll need to consider investments, like index funds or your niece’s Schoolyard Savings and Loan. (Sixth graders often charge fifty percent interest, so get in on that if you can.)

Adjust your model as money changes.

Help, My Brain Overflowed!

The first time you do this, it’s a pain. It takes hours.

That’s okay. It gets easier.

Revisit your plan at least once a year. Successful business people review their plans quarterly. Expenses tend to creep upward while you’re not looking. Find and squash the unnecessary ones, or at least classify them appropriately so you know what to cut when you hit the Yellow threshold.

Eventually adjusting and revisiting your full and basic expenses, along with your Red and Yellow thresholds, becomes easier and easier. Soon it becomes reflex. That recurring subconscious wish to hire your favorite cousin will start to drift towards your conscious mind, only to be intercepted and devoured by your finely trained and deeply ravenous Fixed Expense Hunter-Killer Instincts.

And you’re going to need that instinct if you’re to survive as a full time writer.