The Commandments: Thou Shall be Profitable

Along with my recurring column called “The Business of Editing,” I’ve decided to start another series titled “The Commandments,” in which I, and perhaps some guests, will discuss commandments I (we) believe editors and authors should follow.

The series begins with this commandment for editors and writers, although I will couch most of it in terms of editing: Thou shall be profitable! It is primarily aimed, of course, at editors who have their own businesses, but is worth keeping in mind even for in-house staffers.

What good is it to be in business and not be profitable? Being profitable is more than just having a steady income. It means earning more than it costs you to run your business, and it means earning at least what you would earn if you were working for someone else — that is, more than the minimum wage!

The question of profitability is difficult, but the reality is that, if you cannot earn enough to cover business and living costs, including such costs as health insurance and retirement, then you are not profitable — and being profitable is probably the one inviolable commandment for any business.

I understand that there are other rewards of being self-employed, not the least of which is not being employed by someone else and being able to set your own schedule. But these are really illusory benefits if you do not earn enough to afford what are considered today the basics of life. If you are not profitable, the answer is not to give up, but to adjust your approach to the business of editing.

I remember my very first months as a freelance editor. In those days, I had no clients on day one. My first year as a freelance editor was a lean year — I didn’t earn enough to pay my mortgage, let alone feed my family. My turnaround year was my second year, when I doubled the gross of my first year, which was followed by my third year, when I doubled the gross of my second year.

In that first year, I had to make a decision: Pay the mortgage or use the money to promote my business. I went back and forth about what to do. In the end, I decided to skip the mortgage payment and use the money to promote my business. My thinking went along these lines: If I paid the mortgage, I put off for one month the loss of home for just one month; if I promoted my business, I gave myself an opportunity to put off the loss of home permanently, because the cure for my problem was more (profitable) work. As it turned out, I made the right choice.

This is the kind of choice that every business faces: Do you pay a current bill and hope enough business comes in to pay future bills, or do you invest in something that might encourage more business to come your way (or make the business you do have more profitable)? It needs to be noted that part of the problem for editors is that editing is a hands-on profession. It requires, like all crafts, that person-time be spent on the material. After all, if someone doesn’t actually read the manuscript, it will never be edited.

Spending person-time, however, also acts as a limiter on precisely how much work an editor can handle. Unlike manufacturing widgets, it isn’t possible to simultaneously read two pages from two different manuscripts and edit both — at least not do so and provide a professional edit. Consequently, editors need to find ways to speed up the work they do, do the work more efficiently and productively, and thus make room in the schedule for more manuscripts to edit.

In other words, profitability is the result of a combination of factors: a constant flow of manuscripts, to be edited at a price that will give the editor the potential to be profitable, and which will be edited efficiently and speedily.

Few editors I know have taken the time to analyze exactly what is the point of profitability for their business. One telltale sign is that the editor charges by the hour rather than by the page or the project or the word. Consider this: A person who works for a large company may earn $20 an hour, but, if you analyze the company’s books, you will discover that the employee costs the company another $15 to $20 an hour — or more — which means the company has to earn the equivalent of $35 to $40 an hour just to break even on the employee.

Self-employed editors do not think in those terms. They think that they have earned $25 an hour for 30 hours of work this week and so they have made $750 this week. But they haven’t really made $750. Approximately one-third has to be set aside for federal, state, and local taxes. That reduces the amount earned to $500. Because we all rely on the Internet these days to send and receive manuscript files and to find the resources we need, for example, to verify that a word is correctly spelled or used, there is the cost of the Internet connection. I grant that cost can range all over the place, but for minimal service, I suspect it runs at least $25 a month, so for this week, let’s allocate $6.25. Similarly with telephone service. Most editors I know have a cell phone. Again, plans and costs can vary widely, but I suspect that, on average, the cost runs $80 a month. For this example, let’s allocate $20.

I don’t want to go into each and every detail; you get the idea. But even with just these three allocations, that $750 has become $473.75 — and we know that there are more costs of doing business that need to come out of that sum, such as an allocation for rent/mortgage, for electric/gas, and for insurance, not even counting health insurance.

And there is one other problem with looking at this week’s earnings and projecting: It is not safe to assume that, if you earned a gross of $750 this week, you will earn at least that same gross each and every week. Experience indicates that some weeks will match, some will be less, and some will be more (which is why we pay an estimated tax).

Instead, editors need to determine what their hourly costs are and what their profit above that cost should be. That, then, becomes the amount you need to earn as an effective hourly rate (Remember our discussion of effective hourly rates? See Thinking About Money: What Freelancers Need to Understand and In Editing, It’s the Little Things That Count), which is a truer indicator of your profitability than the hourly rate you charge.

If you are not going to run a profitable business, why run a business? If your editing is not profitable and you do not take the steps to make it profitable, should you not rethink your career plan? I know, as I said before, that there are other reasons for being self-employed and for being an editor. And these are important. For example, there is no sense being an editor if you hate reading and dealing with author foibles. On the other hand, as much as you may love what you are doing, do you not also need to eat?

Consequently, this commandment: Thou shall be profitable! And if you are not, you will think about how to change your business plan so that you do become profitable.

The Business of Editing: The Rule of Three

I’ve decided to start a new occasional series called The Business of Editing. In this series, I will share with you my thoughts about the business aspects of being an editor. My 28 years of experience as editor were preceded by 14 years in the business world in various capacities, which gives me a more diverse perspective than you might otherwise expect. However, my experience as an editor is perhaps more limited than yours in that I only work on long-form nonfiction for publishers; that is, I do not work on, for example, journal articles and similar short-form material, and I do not work directly with authors.

On the other hand, one lesson I learned early in my career as a freelance editor is this: business is business. There are certain fundamentals to running a business that remain true across all business types, just as there are things that are unique to the editing business. When the discussion centers on something that seems inappropriate to your editorial business, don’t dismiss it. Think about it and think about how it can be made to apply to your business. A good example of this is today’s topic – what I call “The Rule of Three.”

My Rule of Three applies generally to two things in my business: whether I should keep or fire a client and whether a client is profitable for me. The two are intertwined. My Rule of Three is one factor in the answer to whether I should keep or fire a client, but it is the determinant in whether a client is profitable for me. If a client is not profitable for me, the client is fired; if the client is profitable for me, I may keep or fire the client based on other factors that I consider.

So what is the Rule of Three?

The Rule of Three is this: I never make a decision about a client, especially about the profitability to me of a client, until I have edited three manuscripts from that client. Experience has taught me that one or two manuscripts are not necessarily indicative of the types of manuscripts I can expect to receive from a client. The first manuscript may be so problematic that I am lucky if I earn minimum wage, let alone my desired effective hourly rate. (For a discussion of the effective hourly rate, see Thinking About Money: What Freelancers Need to Understand.) Or it may be so deceptively easy that I surpass my goal easily. Or it may fall somewhere between the two extremes, which is what usually happens.

But wherever the first project falls on the continuum, I need to look at additional projects to determine how typical/atypical this first project was.

When I first started my editing career, I was advised that I needed to review manuscript from any job offered before I accepted the job, and if I accepted a job that turned out to be much more complicated than I expected, I needed to be wary of taking on more projects from that client. I was given this advice by several experienced colleagues and I followed it for a few months — until I realized (a) how much time I was wasting on attempting to evaluate the difficulties of manuscripts and (b) how many clients I was considering firing because their manuscripts were not as “advertised.”

It was at this point that I implemented my trusty Rule of Three, and I have never looked back. I stopped trying to evaluate manuscripts in advance. I discovered that the bits and pieces of what I previewed were not necessarily representative of the manuscript as a whole. Look at it this way: I typically work on multiauthor books, where each chapter is written by a different author or group of authors, that run 3,000-plus manuscript pages. When I was sent sample chapters to evaluate, sometimes I got chapters that were well-written, sometimes I got chapters that were problematic because English was not the author(s) native language, and sometimes I got a little bit of both. But what did three chapters out of 130 chapters really tell me? Nothing very useful.

So I took the path of the Rule of Three and now I simply say I’ll do the project. By keeping careful records, especially of the time I spent editing, I found that I could make a reliable general conclusion about a client by evaluating my records after having edited three manuscripts. Three manuscripts seem to give a good balance of what I can expect to receive from a client over the course of time.

This is not to say that I do not occasionally “lose my shirt” on a project or run into a manuscript that is so troublesome I would like to make the authors and the in-house production editor run with the bulls, but I can look back over my 28 years and say that the clients with whom I have stayed (and who have stayed with me) are profitable for me and let me exceed my goal effective hourly rate over the course of the year.

Like most businesses, editing has a rhythm. Once you find the rhythm with a client, it can be made to work for the editor rather than against the editor. Regular readers of this column know of my praise for macros (see, e.g., The Professional Editor: Working Effectively Online IV — Mastering Macros). Macros let you take advantage of the rhythm. The Rule of Three lets you find a rhythm and macros let you take advantage of having found that rhythm.

When you think about the Rule of Three, also think about this: Just as you are evaluating a client, a client evaluates you. Clients continuously evaluate editors. Similarly, I apply the Rule of Three on a continuing basis; after all, clients and manuscripts do change. The key is keeping careful and accurate records and not being misled by one manuscript (or part of a manuscript). You need to look at and for patterns and trends. You need to stay ahead of the curve, and when a good client becomes a bad client, you need to be willing to cut your losses.

Similarly, just because a client was unacceptable three years ago doesn’t mean the client isn’t acceptable this year. Try again and apply the Rule of Three again before automatically declining work.

The Professional Editor: Working Effectively Online IV — Mastering Macros

Mastering macros has been discussed before (see, e.g., the previous articles in this series, notably The Professional Editor: Working Effectively Online II — The Macros), but it is worth repeating. This time, let’s consider how macros can save you time and thus make you money — especially if you charge by the page or by the project. (If you charge by the hour, using macros can make your job easier but they won’t necessarily make you money; in fact, using macros might cost you money by reducing the number of hours you work on a project and, thus, the amount you can bill. See Thinking About Money: What Freelancers Need to Understand and In Editing, It’s the Little Things That Count.)

I mentioned in an earlier article that I often work on exceedingly large chapters. Recently, I worked on one that had 78 pages of references — 801 references in total. (To see the original reference file as provided by the authors, click here: REFS original.) In the usual course of editing, I have to read all of the references to make sure that all of the required information is present and that they are in the proper style. Included in the criteria, because I was working on a medical textbook, was the requirement that journal names conform to the National Library of Medicine’s (NLM’s) abbreviation. For those of you who are unfamiliar with the NLM database, it contains more than 10,000 journals from a variety of science and medical disciplines. Although the database is readily accessible, over the years the one truism about manuscripts I receive for editing is this: authors use their own abbreviations for journal titles.

Before I created my Journals macro, I had to lookup every journal name that I didn’t know and I had to manually make necessary corrections. A very time-consuming process; not so bad when you have 50 references, but a nightmare when you have hundreds. Although I could remember a lot of journal names, I couldn’t remember the vast majority, especially those rarely cited.

Because I charge a per-page rate for my editing services, time is of the essence. It doesn’t take the loss of a great deal of time to drag an effective hourly rate down to minimum wage and lower. Consequently, I decided I had to steel myself to learn to write macros.

The key to a macro is this: seeing a pattern that you can explain to the macro. If you cannot decipher a pattern for the problem area, then it is unlikely that you will be able to draft a macro to solve the problem. Remember this: macros are dumb! They will look for only what you tell them to find — nothing more, nothing less. Consequently, if you tell a macro to search for N. Engl J. Med (note the periods), it will not find N Engl J Med (same text but no periods). (It is possible to write a wildcard find that will find both variations, but it is still finding only what you have designated.)

Not only do you need to decipher a “find” pattern, but you also need to determine what you want the macro to do when it finds a match. This can be as simple as a replace or something more complex, such as applying various colored highlighting.

Ultimately, the Journals macro was created. My PubMed Journals dataset contains more than 7,700 entries. What that means is that when I run the macro against the submitted reference list, the macro will highlight in green journal names that found in the dataset that are correct as provided by the author. Seeing a name in green lets me skim over the journal title because I know — visually — that it is correct. Running the Journals macro on the references file took 4.5 minutes to complete and resulted in the file you can see by clicking here: REFS after Journals macro.

But if the name is incorrect, it either corrects the name or ignores it; which it does depends on whether the incorrect variation is in the dataset. The corrections are not only done with Tracking on, but corrected journal names are highlighted in cyan, which tells me that the name had to be corrected but is now correct.

An even more telling example, using the same original references file, is shown in REFS to AMA style. In this case, the journals had to conform to American Medical Association (AMA) style which is the abbreviated journal name in italic and followed by period (e.g., N Engl J Med.). If you look at the original reference file, you will see that none of the journal names are in italics and only a handful have the correct abbreviation followed by a period. Yet I was able to make the change to most of the journals in the reference list by using my Journals macro along with my AMA style dataset, which contains more than 11,400 entries, in less than 5 minutes.

What this all means is that when working on the references, only a handful require me to check the journal name or to manually make corrections. Every cyan and green highlighted journal name means money in my pocket because I do not have to spend time verifying the journal name. Unfortunately, running the journals macro doesn’t mean that the reference as a whole is in proper form. Nor does the macro catch every instance of a journal. As noted earlier, macros are dumb and will only find exact matches that meet all of the find criteria that form the pattern, which is more than just the journal name.

Yet the point I want to make remains unchanged: It took less than 5 minutes to run the macro and to relieve myself of most of the work otherwise necessary and that I would have to do manually. Think about how long it would take just to type the correct journal names even if you could recall every one without having to look them up, or to manually italicize each journal name, or even to manually add a period after each journal name.

In the end it comes down to this: Mastering the world of macros is time and effort saver for editors as well as a money maker.

Sometimes the macro we need is too complex for us to write; after all, few of us are programmers and that is what macro writing is — programming. My advice is to learn macro writing beginning with simple macros and progressing to increasingly difficult macros, and to learn to program as complex a macro as you can — but do not spend so much time at it that you are taken away from what should be your main focus: editing. If you can use a macro now to help with multiple projects that have the same or very similar problems, consider hiring a programmer to write the macro for you. Hiring isn’t inexpensive, but it doesn’t take long to earn back the cost, plus it can give you a model that you can learn to adapt to other needs. If someone has already written the macro you need, don’t reinvent the macro — buy it.

Whether you write the macro yourself, buy it, or hire someone to write it for you, the process is the same. First, you need to describe a pattern and variations on that pattern. Second, you need to be able to describe the action you want taken. In other words, you need a communicable plan of action or a checklist of criteria against which you can assess the macro as it is developed.

The more you can macroize, the more efficient and profitable your editing will be. The place to get started is with Jack Lyon’s Macro Cookbook for Microsoft Word.