Navigating the Financials Ups & Downs of Your New Resume Business

One of the hardest adjustments people have to make when starting a small business – or becoming an independent writer – is that you are no longer receiving a steady paycheck.

Much like owning a retail store, service station, or any other type of business that relies on a rather random customer base, being a resume writer means that you typically have no idea of what your revenue will be month to month.

Some people make this adjustment relatively painlessly; others never get used to it. But the truth is, all of us would probably prefer to keep our monthly income relatively steady, if for no other reason than it allows us to plan our finances effectively.

For that reason, this in-depth article provides some tips and strategies for minimizing the peaks and valleys that are simply a by-product of doing business with a fickle customer base. While you might never find yourself depositing the exact same check every two weeks the way your friends with 9-to-5 jobs do, you'll at least be able to go to sleep at night without worrying when your next paycheck will be coming in.

Income vs. Advertising

For writers who don't subcontract, monthly income can be an exercise in horror.

Busy months, slow months, in-between months; how can a person possibly turn this mess into a steady income?

Well, the first thing is to identify the causes of the uptimes and downtimes.

Do you use Google Adwords?

If so, odds are your income is higher the first three weeks of the month and then slows down when you reach your ad budget limit.

Are the periods between Thanksgiving and New Year's, and July 4th and Labor Day, especially slow for you because people are either focused on the holidays or away on vacation?

Then you might want to shift some of your advertising budget to really blast the marketplace during those times and bring in some extra customers.

Do you find business picks up when you run special ads in magazines, newspapers, or trade publications?

If so, then you might consider moving your advertising dollars to those areas that produce the greatest return on the dollar. Or, if these special ads are too expensive to run all the time, run them during the months that are normally slowest for your business.

Work vs. Payment

If you're the kind of person who doesn't do well with an up and down pay cycle, or payments that all come in at one time of the month, consider changing your payment dynamics.

For instance, do you take all of the payment for a resume order in the beginning or when you deliver it?

Well, maybe splitting the billing (half up front, half on delivery) will help spread things out for you so that income is coming in every day.

If the companies you contract with all pay at the end of the month, ask if you can switch to a bi-weekly payment cycle. Even if only some of the companies agree, at least you won't have everything coming in all at once.

Learn to Save

This is possibly the most valuable tip of them all. Anyone who is in business for themselves needs to learn how to 'save for a rainy day.'

Even if all your monthly revenues come in all at once, it's critical to develop a budget so that all those funds last for the entire month. Otherwise you're going to find yourself pulling out your hair during that week before the next check comes in.

Online Help:

Having trouble creating that budget and sticking to it?

Though this piece is from 2006, the advice is solid for those who deal with irregular income like resume writers:

http://www.gettingfinancesdone.com/blog/archives/2006/09/budgeting-on-a-self-employed-or-irregular-income/

Branching Out

One way to avoid revenue droughts is to have backup business services for the slow times. Sure, your main business is writing resumes and cover letters. But offering additional services means other options for those times when the resume orders aren't coming in. Here are some common ones:

Lectures — Contact local libraries, schools, and business organizations and see if they are interested in having a resume expert come in and give a talk about employment search strategies, resume writing, or career changing. Most organizations will pay an hourly fee for this.

Market Your Expertise — Write articles on resume preparation, career search strategies, and anything else you know about and then sell them to online and print publications.

Get a Newspaper Job — No, we don't mean quit your day job. But contact your local newspapers and see if they'd be interested in having your write a monthly or bi-weekly column about the employment sector.

Use Your Skills — Look for part-time, work-from-home jobs in proofreading, editing, fact checking, or other areas where your skills as a writer and proofreader will be of value.

Put Your Time to Use — Do you work from home? If so, is there something else you can do at the same time that you're sitting in your office staring at the computer screen? Could you babysit? Pet sit? Work on arts and crafts projects that you can sell? If you have a home-based business, there's no reason you can't have more than one at the same time.

Catch Up With Customers — We all have customers who have placed orders but either never completed them or not gotten back to us, meaning we haven't been able to fully bill them. Well, now is the time to send out reminders. Slow periods are also a good time to run through your list of past customers and send out an annual reminder that it's time to update the resume – this can lead to dozens and dozens of orders that might not have come in otherwise.

Maximizing Your Spending ROI

Part of keeping a steady income is also minimizing your spending, which can counterbalance decreased income. So tracking the return on investment (ROI) for your advertising, marketing, promotions, office supplies, travel, and all other costs of doing business is essential in order to effectively allocate funds.

1. Marketing & Advertising. We've already spoken briefly about this, but it's critical to get the most out of your advertising dollars. What ads perform the best? Which times of year do you see the biggest response to ads? What's working better for you, print or web advertising? Besides tracking these yourself, utilize any tools available to you. For instance, Google Adwords offers monthly statistical breakdowns.

2. Monitor your spending. Running a business costs money. Computer equipment, office supplies, travel expenses, utilities – the list seems to never end. And while income might go up and down during the year, most of your expenses remain steady. Taxes, utilities, printer toner, paper, telephone costs – while they might be higher than you'd like, they are predictable. So you can budget dollars for them.

But what about unexpected expenses?

What happens when your computer breaks down or you have an opportunity to travel to a conference?

It is Murphy's Law that these things will happen during a month when you're struggling to pull in customers. The best way to handle these emergencies is to keep a special fund or account ready, one that you fill up when times are good and utilize when times are bad. That way unexpected costs don't have to impact your regular monthly paycheck.

3. Vacations. Much like unexpected costs, vacations can be the bane of the self-employed worker.

People with 9-to-5 jobs are always jealous of us because they think we can take off work whenever we want, but they forget that when we go on vacation, unlike them we're not getting paid.

A week or two out of the office can have a big impact on monthly income – not only are you losing all the business you would have done that week, but you're losing additional business from the people who call for information, find you out of the office, and then move on to a competitor, who eventually wins their business only because they were in the office at the right time.

We all need vacations to keep our sanity, so I'm not advocating working 52 weeks a year.

But there are ways to balance those down times, financially.

Some writers will work extra hours before and after a vacation.

Others will take a laptop wherever they go and at least keep in touch with customers and respond to emails. And some will treat a vacation like a business expense, setting aside extra money during the year to cover the downtime.

Each person has to figure out what works best for them.

Business Incorporation & Your Paycheck

There is one final way to assure yourself a steady paycheck even if the money coming in from your business isn't steady, and that is to incorporate your company and then pay yourself a salary.

Doing this is easier than most people believe – fill out a few forms, pay a small processing fee in your town, and boom!

You're incorporated.

However, there is a bit of a downside.

You can't pay yourself 100% of the money that comes in to the company. Because of various tax laws, now you have to keep your business expense money and your paycheck money separate.

Which means that you need to once again budget for current and future expenses before you pay yourself.

You also need to consider how you've set your company up. Is it a sole proprietorship? LLC? Partnership? S-Corp.? C-Corp.?

Each of these types of companies has different tax, payroll, and benefits laws, so you need to look into them all very carefully before making a decision. In fact, it would be wise to consult with your accountant first and get their advice.

Once you have your company set up, then you can determine how much money has to stay in the business account at all times to cover taxes and expenses.

Let's say your monthly expenses are $500, and your monthly taxes are $1,000. Then you'll want to keep an additional 'emergency' amount in there each month as well, maybe $200. So at the end of each month you know you have to have $1,700 in the business account after you pay yourself a salary.

Now, let's say in January your company makes 18,700. Subtract your $1,700 and that leaves 17,000.

Do you need $17,000?

You might be tempted to say, no, but I sure could use it!

However, your revenue tracking from earlier shows that in February your sales usually dip 20% from January.

That means you'll only be making approximately $15,000. Minus $1,700 leaves you with $13,300.

That's a lot less than $17,000.

So it might be wise to pay yourself $14,000 per month, and on months when you have more than that available you can hold some cash aside for the months when your net is less than $14,000.

That way, you can pay yourself the same amount each month, which is the goal you've been striving for.

At the end of the year, if you have cash left over you can either give yourself a well-earned bonus or roll it over to next year.

Because let's face it, with the economy the way it is, who knows what next year has in store?