Dreaming about being your own boss but dependent on receiving a steady paycheck? It’s exactly that conflict that keeps many chained to the desk, locked in the cubicle.
“Clap along if you feel like a room without a roof”<cubicle>Happy by Pharrell Williams
Breaking free from your “room without a roof” will require a complete paradigm shift to go from wage slave* to a business owner.
For some, it’ll be difficult to make a clean break. Most filled out their first W-4 form during that summer youth employment program. They’ve collected a paycheck ever since.
Conditioning aside, hourly or salaried work is ideal when it is profitable. Or when it allows for time well spent.
In his book, “Art of Profitability,” Adrian J. Slywotzky suggests before you plan your business, you should plan for your profits.
The majority of W-2s are in the business of selling their labor. Yet many wage-earners don’t plan for profits.
Instead, we hope we have enough money for the basics, bills, loans, and entertainment. Oftentimes, we find we have more months than money. We, then, spend the rest of the month worrying about money.
Not profitable and not time well spent.
We stay on the job, hoping a steady paycheck will help us stay ahead or catch up on our bills.
Sort of like a dog who chases his tail.
If we don’t catch up, then we borrow. Debt derails any possibility of being profitable.
Slywotzky has it right. We have to plan for our profits to get off that hamster wheel.
In personal finance, a profit is called disposable income. As writers, we must change that mindset. We’re constantly creating “products.” This means we’re in business. Therefore, our surplus income isn’t disposable. It is profit that we must invest in our writing business. A writing business can be fluid. Therefore, any financial investment instrument should be a liquid asset. (Hire a professional if this isn’t your area of expertise.)
As a Thriving Writer, profit is what is going to allow you to consistently produce.
Think “PIE” | Profit= Income –Expenses.
Profit is what’s left of your income after you’ve paid all your expenses.
Profit leads to solvency.
Solvency is the state of being able to pay debts. (Merriam-Webster) In Finance or Business, solvency is the degree to which an entity or individual’s current assets exceed the entity or individual’s current liabilities. Solvency is also a corporation’s ability to meet is long-term fixed expenses and to accomplish long-term expansion and growth. (Wikipedia)
Solvency = Assets exceed Liabilities.
A writer’s number 1 financial goal is to be 99.9% solvent. It will mean the difference between being a broke writer and a thriving writer.
*From Merriam-Webster: Wage-Slave – First known use 1882 a person dependent on wages or a salary for a livelihood.
Copyright (c) 2016 MH