An American Editor

May 29, 2013

Business of Editing: Solopreneur or “Company” (II)

Filed under: Business of Editing — americaneditor @ 4:00 am
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In “Business of Editing: Solopreneur or ‘Company’ (I)”, Ruth Thaler-Carter made her case for solopreneurship. There are a couple of fundamental points that I want to address.

An underlying premise of Ruth’s argument is that she is satisfied with her level of income. Although not stated this way, I think that is an implicit recognition that there is a income-limiting factor that is self-imposed by the solopreneurship. That limiting factor is the focus on the smaller projects.

Consider it from just one angle. When Ruth takes on a 25-page journal article, the work is finished in a (relatively) short period of time and Ruth now needs to find additional work. The nature of dealing with small projects it that there is a frequent cycle of work-no work. Ruth may be able to find another project in a day or a week, but the point is that because the project is small it provides a finite return and requires faster return to self-marketing.

When I take on a 6,000-page project, that project could provide work for months, depending on the number of editors needed and the schedule. Large projects limit the work-no work cycle. From a financial perspective, too, the larger project is better because it assures a steady income for a longer period of time.

But that is only one aspect of the large versus small project scenario Ruth discussed. (I am ignoring her statement, “As an editing company, I might miss out on smaller projects that I really enjoy doing.” because it assumes — falsely — that only small projects are enjoyable. Personally, I find book-length and longer projects significantly more enjoyable than short projects. It also falsely assumes that an editing company cannot or does not do small projects.) Ruth’s foundation is that both the solopreneur and the company work on one project at a time. I think that is more true of the solopreneur than of the company; it certainly is not true of my company where we work on multiple projects — or the equivalent — simultaneously.

The single-versus-multiple project is important only from a revenue-generating perspective. If you can only work on one project at a time — and, let’s admit it, an editor can only edit one project at a time even if the editor has three projects in-house for editing; in that case, we edit them sequentially, not simultaneously — and your hourly rate is $30, the most you earn is $30 for one hour of work. On the other hand, if you are able to have work done simultaneously on multiple projects, you can earn that same $30 plus a portion of the other projects.

Another assumption made in the solopreneur argument is that all companies are similarly structured. It does not account for the various arrangements that can be made that can make up a company. The argument confuses the presentation to the world with the arrangement between members of the company. A company can be a traditional employer-employee arrangement or it can be an association or it can be one of myriad other arrangements. But regardless of the arrangement, the presentation to the world of clients is a presentation of unity. It is not safe to assume, as Ruth did, that, depending on the arrangement, she couldn’t end up with “the whole fee [for her work] in [her] pocket, rather than some of it going to colleagues, employees, or subcontractors.”

Consider one possible arrangement. The agreement between the editors is that the editor who brings in the project receives 25% of the fees generated by the project. In this case, the editor has to do nothing to earn the 25% except find the project and sign it on. But suppose it is a project that requires three editors, and the finder is one of the three editors who will edit the project. In this case, the finder would receive 100% of the fee for the material she edits plus 25% of the fee generated by the editing of the other two editors. Doesn’t the finding editor still get “the whole fee in pocket” plus some?

Even if the finding editor received no fee from the other editors’ work, she still would be receiving “the whole fee in pocket” for her work, just the same as if the client’s in-house editor had divided the project among three editors rather than the finding editor dividing the project.

Another assumption Ruth makes to the company approach is that company fees are higher and authors might not be able to afford them. Just as easily, the fees might be significantly lower than those of the solopreneur. Considering the lack of standardization of fees in the editing industry, I’m not sure how one can draw this conclusion. Ruth’s rationale is that companies have overhead and other expenses that solopreneurs don’t have.

Again, this depends on how the company is arranged. In the association-type company where one editor finds the work and then subcontracts parts of the work to other editors, the only increase in costs would be the cost of check writing to pay the subcontractors, a very nominal sum in view of the increased work and fee opportunities. Even in a traditional structure company there need not be significantly greater overhead. In fact, based on my own experience, I can see where the overhead of a traditional company could be less, as well as more, than that of the solopreneur. The solopreneur has to bear any health insurance costs, which can be staggering (until recently, e.g., I was paying $1500 a month) whereas a company doesn’t need to offer it at all. On the other hand, companies do have costs that solopreneurs do not have, such as being required to carry worker’s compensation and disability insurance and contributing half of the cost of Social Security to anyone receiving wages. I suspect that in the end it balances out.

There is no easy, single solution. What it comes down to is trying to predict what the market is going to require in the future. The trends I see increasingly point toward collaboration among editors in some type of arrangement as a company. I think it will become increasingly difficult for the solopreneur to find sufficient amounts of work that pays enough to keep the lights on. The reasons for being a solopreneur will not change but the economics of solopreneurship will.

The argument about solopreneur versus company, however, misses a key point. The primary purpose of a company of editors is to create opportunities to increase work availability and income. This is done by relieving diminishing in-house staff of the responsibility of finding and managing multiple editors. The arrangements between the editors are not what matters; what matters is that a cohesive group of editors who can work together when needed do so and present themselves to potential clients as having that capability. In addition, it enables editors with different areas of expertise to contribute to the group by expanding the areas in which the group can comfortably work.

It is at least something to think about and not dismiss by simply saying, “I became a freelancer so I could work on my own,” especially if what you are earning is less than what you would like to earn or need to earn.

11 Comments »

  1. I think which business model is best depends on your personality. Some people go freelance because they tire of office politics. They may be willing to earn less money in exchange for freedom. So the idea of joining another company may not be appealing.

    When I was starting out, I did a lot of work for McGraw-Hill. Their rates were low, but I’d finish one book and call them up, and Sylvia, the in-house person, would offer me a choice of the titles on her desk. I was willing to exchange lower rates for convenience and steady work. Well, steady work until they eliminated their entire Editorial Services department, including Sylvia, without warning, and freelancers lost their contacts.

    But steady work at low pay wouldn’t work for everyone. If you’re putting kids through college, income may be more important than convenience.

    Re those 6000-page manuscripts. One problem with huge projects is that if the book turns out to be dreadful and dull, you’re stuck with it for months. At one point I was editing for a medical journal, and I enjoyed the fact that each article was different, with different challenges. And when I got a real dog, at least I knew the job would last only a few days. So for me, those smaller jobs were better.

    Again, it’s personality. Is your main goal earning as much as possible? Or is it reading interesting material? Or is it working at 3 am? Or is it the challenge of bagging a big project? We’re all different, and different business models may work best for different people.

    I’m a little confused by your math. Yes, the finding editor gets 100% plus the 25% of the total. But doesn’t that mean the other editors get only 75%? Or do you somehow bill the client for the extra 25%?

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    Comment by Gretchen — May 29, 2013 @ 6:54 am | Reply

    • In the example I gave, the other editors would receive 75%. However, that is just an example. There are many ways it can be done, including much different splits. In essence, the other editors are paying for not having to do the marketing themselves. In addition, I am assuming (which I shouldn’t) for the example that the finding editor also pays like I do, which is immediately (no waiting) and regardless of whether the client ultimately pays or when the client pays. Don’t forget that in the example, there is no reason why the finding editor has to always be the same editor. It may always be the same editor, but there is no reason why the finding editor cannot be different for each project.

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      Comment by americaneditor — May 29, 2013 @ 8:05 am | Reply

  2. Ah, but “Ruth” and her ilk🙂 can always raise our rates or go after more projects or different kinds of projects.

    The personality factor is key. Some of us simply don’t want to run companies. It isn’t that we’re necessarily happy with steady work for low pay, because most of us prefer not to make that trade-off; I aim for steady work at high pay, and I’m sure that’s Gretchen’s ultimate goal as well. It’s that we’re just happier and more comfortable on our own. I don’t want to manage other people. The most I want to manage is myself. I don’t want to manage huge projects. That’s a preference and a personality aspect of my business.

    A company owner can certainly still take on smaller projects that might be more fun or lively a genre than something like huge medical texts (which I don’t think are uninteresting; just overwhelming to me, and often pretty dry).

    It might make sense for more of us to think big than currently do, but I still think the future will have room for the solopreneur to succeed, and at better-than-nominal incomes. Editing companies will still need … editors, so the solopreneur may well still have a place in the future of the editorial world on that level at the least!

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    Comment by Ruth E. Thaler-Carter — May 29, 2013 @ 9:51 am | Reply

    • Like Ruth, I don’t want to manage other people, even though I’m good at it. And I don’t want to be managed by other people. So the hermit business model is right for me.

      Again, we’re all different (well maybe some of us are alike others). I have a friend who always had 3 or more projects going at once. She’d work an hour on one and then switch to another, because she got bored doing one thing for a long time. I couldn’t do that. I like to focus on one thing at a time.

      I knew someone who made a good income editing annual reports. I’d rather work at McDonald’s than edit annual reports. I also stopped editing computer books with a shelf life of about 10 minutes and readers who don’t give a hoot about proper English.

      We have to find what works for us.

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      Comment by Gretchen — May 29, 2013 @ 12:12 pm | Reply

  3. I read this post and Ruth’s post yesterday with interest. I’ve worked both ways and see myself now as a sort of hybrid of solopreneur and company. In fact, legally there is no distinction; the IRS sees sole proprietors as business owners whether they work alone or sub work out or have employees. Same with LLCs or other corporation structures: you may be incorporated and be the sole person in your corp. or sub work out or have employees. This is probably not new information to the readers here! But it’s always in the back of my mind that I am a business owner and I can choose to run that business in different ways, even at the same time.

    Currently, I am running more of a solo operation, but do call upon long-time colleagues when I’m overloaded, and I sometimes get work with them in mind (large, multi-editor projects). Even when working solo, I never have only one project at a time; that wouldn’t work to bring in a consistent, full-time income and send kids to college (#2 has one more year). Also, if I need a break from one job (those engineering books can get pretty intense), I can work on another that is in-progress.

    The income problem I’ve addressed by focusing on smaller company clients in niche fields that do no off-shore outsourcing and are happy to pay higher rates (than the traditional publishers). Professional associations, nonprofits, and NGOs make up the majority of my clients. (I generally don’t charge by the hour; I mean higher word, page, or project rates.)

    Gretchen’s post reminded me of my early years proofreading and editing, when McGraw-Hill Professional Books was my first and only client. They sent one manuscript or set page proofs after another (on paper!), and they paid a flat fee (take it or leave it); I had a nice, predictable part-time gig. Then came the drought when M-H was sending no more work, and in those days before email and widespread Internet (I had AOL on dial-up and felt advanced for the time), I couldn’t figure out what went wrong. (We did all our communications by phone, but I was too shy to ask the supervising editor why such a dry spell — something that I wouldn’t hesitate to ask today.) Finally, I met another freelancer who worked for M-H and learned that because of some merger, they had to use all the editors they had just laid off as freelancers. That was a big wake-up call for me to never put my eggs in one basket. By that time, I had two other publishing company clients and realized that if I wanted to get steady work and someday increase to full-time, I’d have to hustle and get more work from them, find more clients, and never turn down work (yes, Rich, I took your advice!).

    I’ve found that I enjoy juggling work, which is a good thing, because otherwise, it’s pretty hard to make it as a freelancer, editorial services business owner, or whatever we want to call it.

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    Comment by Teresa Barensfeld — May 29, 2013 @ 9:53 am | Reply

  4. […] a great pair of posts over on An American Editor that discusses the pros and cons of staying a “solopreneur” or becoming part of a group […]

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    Pingback by The Pricing Saga | Grasp the subject, the words will follow — May 29, 2013 @ 11:38 am | Reply

  5. Rich, from where I sit, your essay makes as many unsubstantiated assumptions as you ascribe to Ruth’s.
    In contrast to some of your key points:
    A solopreneur can subcontract work to others and thereby earn more than his or her personal hourly rates.
    Many of us solo editors manage a steady stream of projects, with little to no time spent marketing or “finding” the next assignment. If you’re good at what you do, the work comes to you. (In 20 years, I never advertised and never went without work on deck. Word of mouth kept me busy full time. Finding work wasn’t a problem–finding time off was.)
    Healthcare costs don’t have to be crippling. Many solopreneurs join group plans specially designed for the self employed. Or we rely on coverage provided through our spouse’s employment, a common arrangement whether you’re self employed or you work for a small company that doesn’t offer such benefits.
    Solo editors aren’t limited to small projects. I routinely single-handedly took on multi-volume environmental impact statements, legislative reports, planning documents, and text books, some of which ran for a year or two. They did not preclude fitting in smaller projects along the way.
    Project size is rarely the determining factor in an editor’s income. Much more important is the nature of the service provided. The best clients are willing to pay top dollar for expertise in a particular subject, high-quality work, expediency, confidentiality, and flexibility. In the public policy arena, for example, high-profile, hot-button projects pay well, regardless of how “small” the job may seem on paper or in calendar days.

    I suspect the range of editing/writing/communications work situations is far too diverse to allow predictions about the “best” overall business model. The devil’s in the details.

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    Comment by Will Harmon — May 29, 2013 @ 2:53 pm | Reply

  6. Great article for discussion. There are a few points missing related to being a solopreneur.
    * What a client pays the business and what the business pay the business owner are not the same. There are four categories that all businesses share — management, finance, operations, sales/marketing, i.e. four hats to wear at different times. For each activity, the business owner is an employee of their own business and for each, they need to be paid for their time. When doing editing, one becomes an employee doing the operations of the business.
    This hourly figure needs to be markedup to cover all the other business expenses. There is a guideline ratio for establishing the minimum markup in order to make, eventually, a profit. The ratio/ spread between what the client pays and what the business pays to do the editing is what covers the other expenses of the business.

    What this means that to be a solopreneur, one need to have a business plan. If you are in the US, I suggest to contack SCORE.org with its 400 offices in the US. This is a free business advisory service associated with the US Sm Bus Adm. On their site there is a tab “find the closest SCORE chapter.”

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    Comment by Alan J. Zell — May 30, 2013 @ 7:35 pm | Reply

  7. […] the prior two articles on this topic (see Part I and Part II), the discussion centered around the what (what it means to be a solopreneur or a company). As one […]

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    Pingback by Business of Editing: Solopreneur or “Company” (III) | An American Editor — June 3, 2013 @ 4:01 am | Reply

  8. […] be — solopreneur or company (see, e.g., Business of Editing: Solopreneur or “Company” (I), Business of Editing: Solopreneur or “Company” (II), and Business of Editing: Solopreneur or “Company” (III)). As I pointed out in prior essays, […]

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    Pingback by The Business of Editing: Opportunity Knocks | An American Editor — December 18, 2013 @ 4:01 am | Reply

  9. […] The Business of Editing: Why a Company?, Business of Editing: Solopreneur or “Company” (I), Business of Editing: Solopreneur or “Company” (II), and Business of Editing: Solopreneur or “Company” (III). The beginnings of the answer to the […]

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    Pingback by The Business of Editing: Do You Tell? Ethical Considerations & Subcontracting | An American Editor — July 28, 2014 @ 4:01 am | Reply


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