Following January’s theme of "New Year, New Plan," D2D interviewed freelance writer and author Gwen Moran. Along with Sue Johnson, Executive Director of the Raritan Valley Community College Small Business Development Center, Gwen co-wrote the October 2005 release "The Complete Idiot’s Guide to Business Plans."

D2D: Tell us a little about yourself.

GM: I started freelance writing in 1998, and went full-time, after closing my marketing business, in 2002. My specialties include business, money, women’s issues, and humor.

D2D: Tell us about your latest book, "The Complete Idiot’s Guide to Business Plans," and what inspired you to write it.

GM: Small businesses are a passion of mine. I love to see someone who believes in her idea take it from a bit of inspiration to something that sustains her financially, professionally, and emotionally. In my years of consulting with, teaching, and writing about small business owners, I was struck by the difference in success between those businesses with a plan and those without. The entrepreneurs who put careful thought and structure into their businesses usually did far better than those who adopted a shoot-from-the-hip approach.

D2D: How might this book specifically benefit freelance writers, from those at the helm of a start-up to seasoned pros?

GM: If freelance writers want their businesses to generate an adequate income and fit in with their lives, they need to put careful thought into how those business will operate, especially if those freelancers are mothers with young children: How much money do you need to bring in? How will the work be done and how many hours a week will the business be in operation? How will you market to clients? By thinking about all of these aspects of your business, and looking at how much time you have to devote to that business, you can better allocate your time to all of the things that need to be done.

D2D: Since you freelance and also write and promote books, can you describe how a writer might incorporate time to work on books into her business plan and workflow, particularly in the pre-contract, non-earning phase?

GM: Coming up with ideas, writing book proposals, and promoting books are all part of marketing your business. Without marketing, the business doesn’t grow. You need to allocate time for this in your planning (see previous post).

D2D: What concerns or issues do you hear from other writers that indicate that they need to either establish or revamp a business plan?

GM: Most writers are either afraid that a business plan will take too much time or think that they don’t have a “real” business, so they don’t need a plan. If you’re self-employed, you need a business plan. It doesn’t have to be elaborate – it really needs to outline your goals and objectives for the business, and cover how you will get clients, earn money, and perform the job in a manner that will keep customers coming back for more.

D2D: Assuming there is such a thing, describe the pitfalls of too much business planning.

GM: Planning is only a problem when it takes the place of doing. Some people can spend years on a business plan and use it as an excuse to never get off the mark to start their businesses. Also, it’s important to be flexible when planning. If something in your plan doesn’t work, change it. Your plan should be a living, breathing document.

D2D: Can you share any mistakes you made when starting out that better planning might have prevented?

GM: I’ve always been a planner. And some mistakes happen whether you have a plan or not.

D2D: Can you compare how you first drafted a business plan to what you do now?

GM: My first business plan was for my marketing business. It morphed over time into a bigger plan, as my business got bigger. It helped me manage and helped me get financing to grow the business when I needed it. Now, my plan is more for me than for my bank, so I’m more narrative and focus on more personal goals as they relate to my business.

D2D: Can you note concrete ways in which a business plan improves a writer’s business (in terms of increasing efficiency and earnings, etc.)?

GM: A plan can help you see how to better divide your time, whether your profitability-per-client is increasing, decreasing or staying flat and whether your business is moving toward your long-term goals or meandering aimlessly along.

D2D: Calculating and forecasting earnings can be one of the biggest challenges a freelancer faces. How might a freelance writer calculate a minimum "hourly wage" through business planning?

GM:  What makes or breaks every project’s budget is information. It’s essential to have a clear understanding of what one is being asked to do, how much time that will take, and what one’s hourly rate is.

I’d say that the last piece of information is the most essential. What is your minimum hourly rate? Most formulas I’ve seen estimate that a consultant/soloist service provider can really only work 1100-1400 billable hours per year. That’s based on a 40-hour week, less two weeks for vacation, national holidays, two weeks’ sick time, and about 20 percent time for admin and marketing work, that’s not billable. So, let’s say you need to make $40,000 per year, to choose a round number, in order to meet your financial obligations. Add about 1/2 of your gross income to cover overhead (taxes, insurance, etc.), depending on your circumstances. That’s $60K that you need to bring in. Divide that by 1200, to keep the numbers round. That’s a minimum of $50 per hour. If you take on a project that nets out at $40 per hour — you are LOSING money. It’s literally costing you $10 per hour to do that job because you’re not earning enough to support the $60K number that you need to meet your financial obligations.

That’s why it’s essential that YOU set your prices. If you need to make $60 or $70 or $125 per hour, you need to find clients who are a match for that and not slash your rates because someone has contacted you about a job and can only afford to pay half of that. It doesn’t matter what other people charge — the marketplace is such that there’s room for Hyundais and Cadillacs. A Cadillac dealer will politely give a prospect with a Hyundai budget directions to that automaker’s lot.

The second and third parts of the equation go hand-in-hand. It’s essential to have a clear understanding of what one is being asked to do. Writing a four-page newsletter where the (dream) client hands over a package of clips and contacts is an entirely different project than one that’s described in a sketchy manner and for which the writer has to hunt down contacts and do all of her own research. Which is it? How much time will need to be devoted to simply getting the project organized enough to proceed? These are essential questions that could ruin the profitability of a project.

Then, as writers, it’s our responsibility to know how long it takes us to produce. How long does it take to do an interview and crank out 500 words? How long does it take to research and write a 7,000-word paper? How long does it take to interview and write a 2,000-word cover story? If you don’t know, then you need to spend some time getting a handle on that, and what factors affect the amount of time it takes to do something. Then, address those factors with the client.

When we approach in this 1-2-3 format, there’s rarely a question as to what to charge because the fees are what they are. Afraid of underpricing? If you think the market can bear more, raise your prices. Personally, I’m more interested in finding clients who will routinely pay the rate that I’ve set for myself, rather than seeing if I can find one or two who will pay significantly more as one-shot deals. Deal with clients fairly, and be sure that you’re compensating yourself well.

Do I always do this? Of course not. I still find times where I’ve underbid, or when a project turns out to be a major pain and I’m left holding the bag. But I do follow my own advice more times than not, and it’s served me well.

Gwen’s web site is: www.gwenmoran.com

DON’T MISS OUT ON OUR LATEST CONTEST! We’re giving away a copy of Gwen’s book, The Complete Idiot’s Guide to Business Plans, on Feb. 14. The registered member who writes the MOST POSTS on our message boards between Feb. 1 and Feb. 14th wins a copy of Gwen’s book. If you think her interview was helpful, imagine getting more of those insights in a book!