Being a writer is one thing, having a writing business is another. Read any business book, magazine, or blog and you’ll quickly figure out that growing your business means reinvesting your business profits. Big businesses do it all the time and they even have a fancy finance term for it - retained earnings. Growing your business isn't the only good reason to reinvest your freelance earnings, but reinvesting you can also increase your income faster than you'd have earned interest a savings or investment account.
How Much to Reinvest
The amount you put back into your business depends on how much you make and how much of your money goes toward taxes and required living expenses. If you routinely have a surplus, then you can decide to reinvest a certain amount each month, like $50 or 10% of your surplus, for example. If you can’t immediately come up with extra funds to reinvest, look for ways to increase your income or cut back on your spending.
Once you've allocated money for reinvesting, you can either reinvest immediately as you earn or you can save up if you have a big project in mind.
Remember that as a sole proprietor or partnership, you’ll owe taxes on everything you earn even if you retain it to spend on your business. Your business expenses are typically tax-deductible on Schedule C, so keep a record of your business spending.
Ways to Reinvest in a Writing Business
Pay someone else to do your non-core work so you can focus on your core work. In other words, outsource. You might pay someone else to: design a template or logo for your blog, design your business cards, create an infographic based on data you’ve gathered, do your accounting, or even write or edit some articles for you. The less time you spend on these things – which may take you longer if you don’t do them well – the more time you can spend writing, for yourself and for your clients.
Don’t be afraid to give up a little control if it means you’ll get more in return.
Start a new blog. You can buy a new domain for pretty cheap and if you already have an unlimited hosting plan, then that’s one less cost to worry about. Setting up the domain and installing the CMS, e.g. WordPress, can be done in less than 30 minutes. But, you might consider outsourcing the rest of the work like template design and installation. In the meantime, you can start writing posts and working on a monetization plan.
Spend more on marketing and advertising. This might mean redoing your business website, purchasing online ads (e.g., pay per click or banner ads), printing some flyers (maybe pay someone else to design them or even to put them around town), creating brochures, or creating a webinar or video to promote your business or blog. You might even hire writers to create content for your blog. (I wouldn’t hire people to write for my clients unless both the clients and the writers knew I was doing this.)
Learn more. Look for classes and seminars both online and offline that will help you hone your writing skills, learn more about running a business, or teach you more about your niche. You can also take an informal approach to learning by purchasing books, or even college textbooks. If you look hard enough, you may even find free courses or at least a syllabus for a course. Then you can use the money you designated for the course for something else to help your business.
These are just a few ideas. What ways have you reinvested money (or thought of reinvesting) back into your business?