Flickr photo courtesy Images_of_Money

This week, I’m running a two-part series explaining what to takes to build a more lucrative writing business.

The basics are easy: make more and spend less. How to do that is the tricky part. Part one of the series looked at ways to boost your freelance writing income.

But what good is making more money if you’re spending a lot to do it? For a higher income to show up on the bottom line, you have to minimize what you’re spending to generate that income.

Here are 10 suggestions for cutting freelance expenses:

1. Do as little marketing as possible. This is where I break ranks with freelancers who write for dozens of publications each year and spend at least a little time every week – or even every day – marketing. By marketing I mean writing letters of introduction, sending out queries to new-to-you publications, researching new markets, etc. Since early in my freelance business, I’ve chosen a different approach. I specialize in a few subjects and write for a handful of publications who give me steady work. Last year I worked for five publications; this year I expect the number to be close to that. I’d rather do that than pitch new publications all the time. My bylines haven’t shown up in as many publications as some freelancers. But I haven’t had to put up with a lot of headaches that dealing with dozens of clients can lead to:  in the past four years, for example, I haven’t had to chase down a single client to get paid. Limiting marketing time means I devote more time to producing stories, and that’s good for my bottom line.

2. Go paperless. A few years ago, I made a conscious decision to cut paper out of my freelance writing business. I don’t print out notes. I also send invoices electronically and pay bills online. Not only has it been good for the environment, it saves me money on printer supplies.

3. Drop your landline. I’ve yet to take this step but I know other freelancers who have. You could save $30 or more a month by discontinuing your landline and using your cell phone, Skype or Google Voice for everything.

4. Use free software. I’m still a Microsoft Office girl. But I use plenty of other software that doesn’t cost anything. For example, I use CutePDF to turn documents into .pdf files and Jing to create screenshots of web pages or other images I need for blog posts or other work. More recently I’ve become a big fan of Google Docs and Yammer, web-based software that companies can use to set up private social networks, great for collaborating with far-flung work groups.

5. Cut out unnecessary subscriptions. I keep getting invitations to re-subscribe to the Wall Street Journal but so far I’ve resisted. I love the Journal and use it in my research and reporting. But that’s just it – I’m able to use it online for what I need, so why should I subscribe? And I’m afraid if I got it, I’d be reading it when I was supposed to be working.

6. Transcribe your own notes. I know many freelancers, especially feature writers, who pay a service to transcribe recorded interview notes. This makes sense in some respects. If you make $50 an hour writing and pay someone $20 or $25 an hour to transcribe an interview, your time is better spent writing than transcribing. However, I do most of my interviews by phone and type answers as I go. I use my own form of shorthand, and go over my rough notes after the fact to fill in words and clean up the spelling. As I do, I highlight quotes that I might want to use, and make other notes. It’s such an integrated process I couldn’t see shipping an interview recording off to a service and waiting for the notes to come back to do all of that. Plus, a lot of the writing I do is on deadline, so there’s no time to wait for a service. In the end, it’s cheaper for me to do it myself.

7. Eliminate other non-essentials. I normally take at least one trip per year to visit editors; last year I saw editors in New York, Chicago and Los Angeles. Those trips paid off in enough work to keep me busy through most of 2012, so I don’t expect to go on more than one such trip this year. As boring as it sounds, I rarely do work-related lunches – or even coffees – unless I’m meeting a source or editor. I do pay to belong to a half-dozen professional organizations, but I consider those good investments because it helps me keep up with what’s happening in the industry and connect with colleagues and publishers who might want to hire me. Organizations I recommend: the Online News Association, American Society of Journalists and Authors, American Society of Business Publication Editors, Society of American Business Editors and Writers and Journalism and Women Symposium (JAWS).

8. Wait as long as possible to upgrade office equipment. I just upgraded to a new computer and Microsoft Office 2010. My previous computer was so old that someone who saw a picture of it that I posted here called it “a relic.” Yes, it was – as I was carting the old monitor out of my office I noticed the label on the back said it was manufactured in 1997! But all that equipment was bought and paid for long ago, which means that for several my office/computer equipment costs have been nominal – well, if you don’t count the Android smartphone and iPad I bought in the interim. As long as I could get the job done I was OK with not having the latest technology. And when my outdated equipment started to hinder how I worked, it was time to upgrade.

9. Fund a SEP-IRA. Taxes are a big expense for freelancers, so anything you can (legally) do to pay less is a good thing – and funding a SEP-IRA accomplishes that and helps you save for retirement, which you should be doing anyway. Any money you stash into a SEP-IRA retirement savings account comes straight off your gross income and doesn’t have to be included as income on your 2012 tax return. The IRS allows you to put up to 25 percent of your gross income in a SEP-IRA, up to a maximum of $49,000 for the 2011 tax year (which you have until April 15 to fund) and $50,000 for the 2012 tax year. So if, for example, the total amount of your 2012 freelance income is $50,000, you could put $12,500 into a SEP-IRA and you’d end up paying taxes on $37,500 minus deductions.

10. Take all allowable business deductions. Speaking of deductions – make sure you’re taking everything you’re allowed. Save receipts for every book, software program, printer cartridge, taxi cab ride, plane ticket, parking meter and any other expense you incurred running your freelance business so you can claim them as legitimate business deductions on your federal and state tax returns. Don’t forget to include mileage if you used your car to drive to an interview, meeting or work-related class. the Internal Revenue Service increased allowable reimbursement to 55.5 cents a mile for the 2011 tax year. The more deductions, the less you’ll pay in taxes and the more money that stays in your pocket. Freelancers have different systems for saving receipts. I use Quicken and my bank’s website to track income and expenses and come tax time double check those online statements with paper receipts I’ve accumulated over the year.

How do you squeeze costs out of your freelance business?

Flickr photo courtesy yomanimus

If you’ve made a resolution to make more money as a freelance writer this year, congratulations! You’ve taken the first step toward getting there – setting a goal.

There are two basic ways to accomplish that goal: earn more and spend less.

This week, I’m running a two-part series on running a more profitable freelance writing business. Today’s installment focuses on generating more income.

Here are 10 suggestions for making that happen:

1. Up your rates. If you’ve been writing for the same clients for a while ask for a raise. Explain why you think you deserve a higher fee – you’ve never missed a deadline, you consistently come up with pitches they like, you’ve graduated to writing for a higher tier of publications and they all pay more. Whatever it is, be prepared to be your own best advocate in negotiations.

2. Increase your productivity. If you normally take 10 hours to research and write a 1,000-word assignment, try finishing in 8 hours instead. Do that for four stories in one month and you’ll have enough time to take one additional assignment – at $1 a word that would be an extra $1,000. Do that 12 times and you’ll make $12,000 more this year. Read my suggestions for speeding up your work in this post on how to write fast. Find it hard not to get distracted by Facebook and Twitter? Use apps like StayFocusd or Leechblock to block yourself from online distractions. Find out more about apps to block distractions and increase productivity in this post I wrote for SecondAct.com: Software for Social Media Junkies.

3. Work longer hours. If you’re already working a 40+ hour work week, I don’t recommend piling on many more hours. I spent 2010 doing that and although it was financially my best year ever, I was always tired and didn’t have enough time off to recharge. But if you’re only freelancing part-time, consider adding some hours or days to your schedule. Maybe it’s time to go from 2 to 3 days a week. If you’re freelancing on top of a Monday-Friday job, could you switch to a 4-day work week to give yourself one weekday for freelancing? If you’re a SAHM and writing as a way to get back into the workforce, could you hire a babysitter a few mornings a week, or let your kids stay in after-school care a few afternoons a week to give yourself some more writing time? Since you’ll be adding child-care expenses make sure you’re bringing in enough work to cover it with plenty left over. Here’s more great advice on part-time freelancing in a WordCount guest post by Gretchen Roberts: 5 ways to earn full-time income from part-time freelancing.

4. Write for publications that pay more. If you’ve spent the last year or two writing for publications that pay 25 cents or 50 cents a word, it’s time to break into higher-paying markets. If you’re not sure where to find them, try Susan Johnston’s ebook, The Urban Muse Writer’s Guide to Online Writing Markets.

5. Sell reprints. If you retain rights to your work, resell them to other markets. Regional parenting magazines are a good place to start, as many buy reprints. Here’s a post on making money from reprints from the WM Freelance blog: Make Extra Money With Reprints.

6. Repurpose existing material in other ways. Reprints aren’t the only way to make money from existing material. You can repackage stories or blog posts into ebooks, or use them as the basis for paid speaking engagements. Here’s a WordCount post on ebooks: How to write and market an ebook.

7. Run ads on your blog. This assumes you have a blog; if you don’t have one, get one. Read about starting a blog here, here and here. Join an ad network like Google AdSense or BlogHer (disclaimer: I’m doing a freelance editing project for BlogHer right now, though it doesn’t have anything to do with their ad network). If you’re interested in learning more about BlogHer read this: Thinking of joining BlogHer ad network? Here’s what to know. Or solicit advertisers on your own.

8. Branch out. As opportunities to write for newspapers, women’s magazines and other traditional freelance markets dry up, others are appearing. Specialty online-only news sites are everywhere and many use freelancers. Publishers who produce custom publications – in print or online – are booming, and some don’t have as many writers as they need. Not sure where or how to start? Writers’ conferences are a good place to pick up tips for branching out, and for meeting editors. Organizations such as the American Society of Journalists and Authors host annual conferences – I’m speaking at their Writing Boot Camp in April – but you don’t have to fly to New York to get this type of training. There are plenty of state and local conferences as well. See lists of writers conferences on Teen Writers Bloc and Thoughtful Reflections.

9. Specialize. I know a lot of freelancers who are self-avowed generalists, and some do quite well at it. I’ve taken a different tack and specialized in a handful of subject. The more you know about a subject, the more money you can command writing about it. Here’s more on how to be a niche writer.

10. Take editing work. If you’ve organized, work well with others, know the ins and outs of grammar, understand what goes into making a good story and can explain that to someone else, and have a handle on the content management systems (CMS) that most publications use today, you’ve got what it takes to be a freelance editor. Generally speaking, freelance editing work pays fairly well, and lots of publications farm out editing work. You can find out about editing gigs in the same places you find out about freelance writing work, in market guides, at writers conferences and online at sites such as Mediabistro, JournalismJobs, and Freelance Success ($99/yr).

Dear Santa:

I’ve been nice all year. I turned in work on deadline….most of the time. I tracked down headshots when requested, did re-writes without complaining and always included source lists.

So, if you’re wondering what to get me, here’s what’s on this freelancer’s Christmas wish list:

1. A new computer and monitor, and the time to transfer all my important data from the old one to the new one.

2. A week off of anything related to work between Christmas and New Year’s, including checking email.

3. Inspiration, to keep coming up with ideas for stories and this blog that editors and readers will like.

4. More time in 2012 to work on a few pet projects.

5. That all the publications I write for switch to direct deposit.

6. That all my assignments in 2012 pay $2 or more a word (hey, a girl can dream).

7. That all my current clients renew their contracts next year.

Fellow writers and freelancers, what’s on your Christmas wish list?

Freelance Union founder and executive director Sara Horowitz kicks off a series of articles in The Atlantic with a piece called The Freelance Surge is the Industrial Revolution of Our Time on how writers and other freelancers are transforming the economy, how corporate and government policies haven’t kept up, and how individuals must depend on a “new mutualism” to succeed.

I see this mutualism, or whatever you want to call it, manifesting itself in the content aggregators of the world, but also the small custom publishing shops and content strategy agencies that are cropping up offering work on a project or contract basis to writers, copywriters, graphic designers, etc. I see it in co-working spaces that let freelancers work together but apart. I see it on a more informal basis on the networks that individuals are forming with fellow freelancers that they use or recommend on a regular basis, i.e., the design work I pay freelance writer and web developer Ron Doyle for, or the freelance photographer I hire for headshots.

Other good reads from this week:

Online Journalism Awards names envelope pushing finalists (Tech Journal South)

How journalists deal with economists’ ethics (Reuters)

How to prepare to launch your start-up (Inc.)

On reading old stuff (How Does That Make You Buy?)

Google offers peek behind its search results (CNet)

Develop your link bait repertoire (ProBlogger)

If recession took it’s toll on your freelance work like it did on mine, chances are your income was down in 2009. I made matters worse by deciding to invest in some new toys office equipment and rev up marketing efforts by attending an out-of-town conference, both of which increased my expenses.

But I’ll talk about expenses in another blog post. For now I wanted to focus on income. Look close enough and you’ll see lots of stories hidden inside last year’s income. Analyze them and you can learn what you did right and where you went wrong so this year you can repeat your victories and avoid your mistakes.

In 2009, my overall income was down approximately 17 percent, due mainly to significant drops in the amount of work I received from two regular clients – the fall out from putting too many eggs in too few baskets coming back to haunt me. My biggest regular client cut what it paid me 43 percent in 2009; my income from another regular dropped 63 precent from the previous year. Neither one cut their per-word fees, they just assigned fewer stories, adjusting their freelance budgets to lower advertising revenue.

The numbers aren’t all bad. In 2009, I wrote for 10 clients, up from eight the previous year. In 2008, my two biggest clients accounted for 72 percent of my income, whereas in 2009, they represented only 49 percent, meaning I did a better job of spreading my work and income over more clients. In 2009, I worked with five new-to-me publications that accounted for about a third of my total income. Those new clients included several start ups, which was a risk on my part but turned out to be fun (and everybody paid what they owed).

Another reason the numbers aren’t all bad: by the end of the third quarter of 2009, I saw an uptick  in work coming my way, a trend that grew even stronger in the last quarter of the year when I signed a six-month contract for a freelance editing assignment that will help make 2010 one of my best years ever. I’ve heard from a number of other full-time independent writers that they too started seeing more work flowing in at the end of the year and are predicting a fruitful 2010.

Several other observations from analyzing last year’s income:

Last year, almost half of what I wrote – 47 percent – was for media properties that exist only online – not surprising seeing that’s where the industry is headed. The rest was for trade or business magazines that publish stories simultaneously in print and online, or in print first with a few weeks delay before the material was available online. None of work I did in 2009 was only for print.

I missed a personal goal of generating income from alternative revenue streams, such as adding ads to my blog or selling e-books or reprints. But I’ve already taken steps to make that happen in 2010. I joined the BlogHer ad network in February and have other income-generating plans in the works that I’ll share when the time’s right.

More than three-quarters of the work I did in 2009 – 78 percent to be exact – was for editors I’d worked with before, either at their present publication or a previous one. Some of those editors I’ve known for 10 years, others even longer.  There’s no better evidence than that of the power of networking.

If you’ve done your taxes, what stories does your 2009 income tell about your freelance business?

At last count, close to 65 of you chimed in on a poll I put up earlier this week asking what you’d like to read more of on WordCount: Freelancing in the Digital Age.

Close to a third (28 percent) said you’re most interested in seeing stories about running a freelance business.

An equal number – 17 percent each – said they wanted more articles about how to use Twitter and other tech apps, and Q&As with successful writers. And 16 percent said they want more links to other blogs and articles about freelancing.

Here are the complete results:

What subjects do you want to read about on WordCount?:

• Tips for running a freelance business – 28 percent
• How writers can use Twitter and other tech tools – 17 percent
• Q&A with successful freelancers - 17 percent
• Links to writing blogs & articles – 16 percent
• Other – 14 percent
• Writing basics – 9 percent

It’s interesting to note that a number of you marked “Other” and left comments asking for more, well, comments. That is, commentary on issues of the day that affect freelance writers, such as whether to write for content aggregators. Paul Berinstein, proprietress of The Writing Show podcast, says: “I’d like to see you continue to cover issues rather than offer advice. I also think we’ve seen way too many articles about how to use Twitter and other tech apps. Although you cover those topics beautifully, you’re way too good to waste your time on something so banal.”

Jesaka Long, a freelancer who runs the blog a.k.a. Writer, wants more posts on subjects like writing for content sites, and the great freelance rate debate. About a recent post on the latter, Long says:  “You presented a variety of opinions and gave readers an opportunity to form their own, educated opinions. It was so refreshing to see multiple sides of an argument presented in a more objective way that forced readers to think for themselves!”

Thanks again to everyone who participated. If you didn’t vote, the poll’s still open. (That’s the great thing about the Internet – the poll’s are always open.)

And stay tuned in here for more practical advice on the business side of the writing business, how-to tips, writer interviews – and, yes, plenty more comments.

With so much supply, it’s important to stand out. One way to do that is by offering some added value to work you perform for existing and new clients.

What’s added value? It’s some extra bang for the bucks you’re getting paid. It could be as simple as meeting deadlines or being pleasant and easy to work with – OK, sometimes that’s not so simple, but you get the idea.

Added value can be other things too. Here are 5 easy ways to add value to your freelance business – and 1 harder one, in case you’re up to the challenge.

1. Suggest art. Some magazine editors require this, especially if they’re small or trade publications. Beat them to the punch by including suggestions for photos or graphics in your pitch. As you do interviews, ask sources or their PR reps to forward art to you or directly to the editor or art director – they might not use it, but it’s there if they want it.

2. Include art in pitches. Rather than just collect art, offer to provide your own. If you can shoot photos or create charts, graphs or PowerPoint slides, say so in your pitch. And don’t forget to bump up your fee accordingly. Any news operation with a Website is interested in these kinds of extras.

3. Turn things in early. I have a Website client I write stories for every month. Stories as well as pitches for the following month’s work are always due around the 20th of the month. I shoot to file stories a couple days before the deadline and sometimes up to a week before so my editor isn’t slammed with copy she has to deal with at the last minute. Ditto for pitches. I know she appreciates it because even after her freelance budget got cut she’s still sending assignments my way.

4. Accommodate special requests.  Be flexible. Agree to a shorter or longer word counts or deadlines if something on the publication’s end changes. Yes, you may end up making less on an assignment, then again you may end up making more because they’re paying extra for a rush job or because they’ll now remember you as that can-do writer and say “yes” to your next pitch. Two editors at a trade magazine I regularly write for turned to me recently when other freelancers fell through. In one case, the original writer on a story had too many commitments and bailed so the editors offered it to me – I immediately said yes. In the other case, a different freelancer was late filing a piece for a certain section but I’d filed a piece for the same section earlier than my deadline, so they used it first.

5. Treat editors like friends. In some cases they are. In others, I try to cultivate a friendly working relationship so they’ll think of me as being low-maintenance and send work my way. I forward information to editors if I think it’s something they’d be interested in (but never chain email). I write LinkedIn recommendations if they ask – and if I honestly have something good to say. After all, they’re just as anxious as we are about the job market these days.

There are more difficult ways to add value too. With so much work moving online, you can add value to your writing by learning SEO basics, HTML, Photoshop, InDesign, blogging, podcasting or other multimedia skills that add dimension to your storytelling, and your portfolio. This added value is harder to attain because it’s not something you can just do – you may have to take a Webinar or class. But if that’s what it takes to help you stand out in a crowd, it’s worth it.

What are extras you offer clients to set yourself apart from the competition?

When the economy goes south, we worry even more than usual, especially this go round when on top of a recession that’s getting worse by the month the very nature of the publishing industry is changing and many markets that were historically good to freelancers are drying up.

Some writers I know are battening down the hatches, sticking with tried and true markets, going after corporate work or devoting time they normally would have spent sending letters of introduction or queries to volunteer work, exercising or brushing up on their German.

Then there are those who decide that if they can’t earn what they need from writing alone they’ll take another job.

And there’s nothing wrong with that. When it comes to paying the mortgage and putting food on the table, sometimes you have to do what you have to do. And you’d be in good company.  Anton Chekhov considered himself a doctor who wrote on the side. Stephen King was still a high-school teacher when he wrote his first novel. Joseph Wambaugh continued working in the Los Angeles Police Department’s detective unit even after his first books were published. If it worked for them, it can definitely work for us too.

In the last year I have writer acquaintances who have taken full or part-time jobs as:

* A researcher/investigator for private investigator agency
* A chamber of commerce marketing and communications director
* A university professor
* A university communications representative
* A retail sales associate – that would be Caitlin Kelly, who wrote a fantastic essay about the experience in the Feb. 15 New York Times.

Another freelance acquaintance has her name in for a job managing a sports complex. She’s been told that if she gets the job she could even do freelance work from her office when business is slow. But she wonders about how it would look.

At a time when the country’s losing hundreds of thousands of jobs, we should be beyond caring how to looks. It’s a job, and that’s huge. And since we freelancers are good at turning anything and everything we see or experience into fodder for stories, think how much new material having a job in a different industry will provide when things turn around and magazines and Websites start buying stories again.

For freelance writers and other self-employed people, the end of the year isn’t just about office parties and getting the Christmas gifts bought and wrapped. It’s also time to take care of some major business housekeeping before the calendar flips.

Here’s what’s on my to-do list:

Send cards to editors. Some freelancers send gifts as small tokens of their appreciation for the work that came their way during the year. I think a card to the editors you worked with this year with a heart-felt expression of thanks works just as well. And if you’re trying to go green in your business, consider virtual greeting as an option.

Take care of invoices. Mail or email any outstanding invoices before Dec. 31. Sometimes if I turn in a piece a day or two before the end of a month but the editor hasn’t had time to look it over yet, I’ll ask if it’s OK with them for me to send an invoice anyway, so I can put it on my books for that month. Nobody’s ever said no. If for tax purposes you want to defer income to next year, wait and send invoices in January 2009 for jobs you finished late in the month. Resend any overdue invoices.

File expenses. Do not wait until April 15 rolls around to sort through the expense receipts. Whether you use a spreadsheet, QuickBooks or a plain old pencil and paper, organize your business expenses for the year while they’re still fresh in your mind.

Make business-related purchases. If you’ve had our eye on an iPod Touch, Blackberry -  or like me a digital voice recorder – take advantage of holiday sales and purchase electronics and other office equipment now.

Create a business plan for 2009. This could be as simple as writing a list of things you want to accomplish during the  coming year. Or it could be a more elaborate review of where your business came from this year, how you want that to change in the next 12 months and how you’re going to accomplish those changes. If you’re not sure where to begin, check out freelance writer Heather Boerner’s blog, Serenity for the Self Employed, where she’s currently running a 30-day business plan challenge.

Update your resume and social network profiles. Once you’ve created a plan for how you want your writing business to run next year, redo your Facebook and LinkedIn profiles and your resume to fit the new you.

Update your blog – or start one. Last year, I spent the better part of New Year’s Eve day and New Year’s Day setting up this blog. Boring, yes, but it was time well spent, and it was easy to keep one eye on the college bowl games while doing it.

Clean your office. If you’ve got a lull in assignments between Christmas and New Year take advantage of the down time by giving your work space a once over. Nothing like starting the New Year off with a clean desk, papers filed, magazines organized and supplies sorted.

Send a letter (or 2 or 3) of introduction. Odds are some editors will be working through the holidays. Use the opportunity to catch a new-to-you editor when everyone else is on vacation and introduce yourself or submit a couple queries. I sent a LOI to an editor at an about-to-be-launched news service a week ago and got a note from her yesterday with a request for some story ideas.

Give thanks. In a year when hundreds of not thousands of working writers have lost their jobs, be grateful that you’re self employed and not at the mercy of  single employer. Working for yourself isn’t always easy but right now it sure beats the alternatives.