Part 1: Key Principles & Business Fundamentals

Welcome to the Ultimate Book Marketing Guide, my multi-part series on how to market your self-published fiction books. This guide distills the most effective current marketing strategies into a complete, step-by-step system. A good system is a blueprint that translates useful information into actionable form, thus providing consistent, reliable results. Instead of remembering what to do—or viewing facts and concepts in disconnected isolation—we can focus on execution.

This system is founded upon thousands of hours (and many dollars) of personal testing that spans 50+ titles, multiple pen names/clients, and a variety of genres. We’ll cover every essential piece of book marketing, complete with action exercises. As you might suspect, that takes awhile; in its entirety, the Ultimate Guide to Book Marketing runs 50,000+ words. It aims to be the most comprehensive book marketing resource in existence—better, even, than high-dollar paid courses. I’ll let you be the final judge of whether I hit that mark.

I have spent many hours trying to make this guide as simple and clear as possible. Do not mistake this simplicity for a lack of sophistication or effectiveness. If you’re anything like I was a few years ago, you have a random collection of bookmarks, scribbled to-do lists, Excel sheets, and notes all pulling you in twenty different directions. Whether you’re an experienced author or just starting out, this guide cuts through pages of nonsense to focus only on one thing: getting you results.

Marketing is not an arcane art; it is a learnable skill based upon well-established and tested principles.

So enough preamble. In this section, we’ll cover:

  • A Brief Introduction to Me (And Why I Wrote This)
  • Three Core Principles
  • The Trifecta of Indie Success
  • Fundamental Business Principles
  • Strategy and Execution

A Brief Note

Marketing is a skill. Or, rather, a set of many sub-skills. Much like writing itself, it is a skill that demands time and experience to master. While this guide is laid out with step-by-step exercises designed to improve your skills as quickly as possible, do not be discouraged if your first attempts are met with indiscernible results. That would rather be like going to the gym once and expecting to be shredded. That is not how anything in life works, and while the legions of super-long internet sales pages proliferating like rabbits might suggest book marketing is exempt from this rule, allow me to dissuade you of that notion before we go any further.

That being said, like anything else in life, if you’re patient and put in the time, you will improve significantly.

So let’s get on with it, shall we?

A Little About Me (And Why I Wrote This)

This guide isn’t about me; while it draws heavily upon my experiences, I spare the anecdotes and focus on the data. That’s because this is all about getting you results. But you might be wondering why you should spend hours reading a very lengthy guide that you perhaps stumbled upon at random. So here are the basic broad strokes:

  1. I’m a sci-fi and fantasy author.
  2. My micro press has sold 100,000+ books and published 50+ titles.
  3. I’ve hit the USA Today Bestseller list.
  4. I’ve spent $100k+ of my own money refining these principles.
  5. I’ve personally tested and implemented almost everything in this guide (in the rare instances where I mention something else, I try to note this)

Why I wrote this is simple: writing these guides helps me organize my own marketing ideas and strategies into a usable format. If I can’t explain something, it means I don’t fully understand it – or it’s actually BS. And we all know far too well that BS and myths proliferate like rabbits. I’ve kindly omitted them from this guide.

But even when something is effective, things in this business rarely rarely stay static for long. To that end, I’ve torn down and rebuilt this guide multiple times since the initial version published back in 2017, with each iteration featuring new strategies, principles, and the latest marketing info. Rewriting these guides has helped me continually refine my principles and strategies.

In short, the guides are helpful learning tools for both myself and (hopefully) readers. That’s a win-win.

Since learning more about me won’t help you get better at marketing, let’s switch gears and talk about the three core principles this guide is built upon.

Core Principle #1: The 80/20 Rule

I’m big on streamlining and simplifying everything to its absolute essentials. In this information-rich world, curation is 100x more valuable than information. And amidst the noise and spiraling complexity, it’s refreshing to understand that, in any discipline, there are probably less than a dozen core principles that we must master to get the results we want.

Often, it’s even less.

The 80/20 rule, also known as the Pareto Principle, is the reason why. For the uninitiated, this rule states that 80% of your results come from just 20% of your actions. The numbers vary (e.g. 1% of your actions can produce 99% of the results). The key takeaway: a select few actions have a disproportionate impact on your results. You cannot do everything, nor should you even try; most tasks are worthless. Small, marginally effective tactics are, in fact, liabilities, as they thieve time from high impact, ultra-valuable tasks.

Doing everything is not a recipe for overachieving; it is a recipe for achieving nothing.

While the 80/20 rule may sound like a BS business term or productivity hack, the math behind this rule is fairly robust (economist Vilfredo Pareto first observed the principle in relation to land ownership in early 20th century Italy—about 20% of the population owned 80% of the land) and can accurately predict/model input-output relationships in a range of disciplines.

80/20 is what’s known as a power law. This means these core actions aren’t marginally better than their superfluous counterparts; they’re literally 100x or 1000x more potent.

Focus on the wrong things and you’ll get poor results. While hustling is a staple of entrepreneurial culture, hustling produces negative effects if the core 20% is ignored in favor of garbage. One hour of work spent on the essentials beats 100 hours of “work” spent changing the fonts on your website.

At its heart, the 80/20 rule is really about identifying the fundamentals and leverage points in any discipline, then relentlessly honing them until you achieve your desired outcome. Focusing only on what matters allows you to simplify and streamline your entire schedule—saving you time and energy while massively increasing your results.

How do you identify the key 20%? A few sections from now, we’ll go over the three core areas (productivity, craft, and marketing) critical to your success. But within each area, identifying the core 20% is an exercise in testing. The truth is, it’s impossible to identify what matters and what doesn’t when you’re new to a discipline.

What you need to do, then, is use a technique I call shotgun, then narrow. To find out what works and what doesn’t, you need to consume a lot of quality resources and then start putting promising ideas into practice as soon as possible (rather than sitting on vast quantities of notes). The last part is critical: most people consume information, get excited by the possibilities, then promptly sit on it for months. You need to either take action or eliminate it. To be clear, even with good resources at your disposal, there is a lot trial and error involved in finding what works for you. Narrowing your focus too soon usually leads to focusing on the wrong things, because you simply don’t have enough experience or skill to understand what truly matters. BS, unfortunately, doesn’t announce itself as such; it is often wrapped up in plausible explanations and enticing case studies.

Try an array of techniques, then eliminate what doesn’t work or doesn’t make sense, and double down on what does.

When you find things that work, you should continue testing new ideas while iterating on your current process to find ways to improve. Don’t remain stagnant. The learning process should never stop. Because you either keep evolving, or your business dies.

For much more on the 80/20 rule, check out Perry Marshall’s excellent 80/20 Sales and Marketing. I reference this book several times during the course of this guide; it is one of the Top 10 books (not just business books) I’ve ever read.

Core Principle #2: Life is Dictated by Evolution

Life is dictated by evolution: Success in indie publishing—and, presumably, life at large—is not about being the strongest, fittest, smartest, or quickest. Success results from being the best adapted to the current environment. You must be willing to try new, uncomfortable things. This business constantly changes. You can adapt, or you can die.

Evolution is all about constantly asking yourself how do I get better?

This all sounds well and good, and perhaps fairly obvious in our fast-changing world. But where most guides go wrong is they don’t offer an answer to the burning question at hand.

How does one evolve?

Simple: 80/20.

Devote 80% of your time and budget toward things you know work. Fundamentals. Ads that are proven. Strategies that reliably make money. Principles that haven’t changed for decades.

Devote 20% of your time to testing new ideas. These shouldn’t just be random ideas; they should be good ideas. Your best ideas. Why? Because even your hit rate on seemingly good ideas will be depressingly low. This number can actually be anywhere from 5% – 20% (or even beyond 20%) of your resources, depending on how much risk you want to assume.

But the hits? They become part of your core 80%—they upgrade your bread and butter. Perhaps they’ll even replace some of your tactics and strategies.

And if you don’t have anything that works? Flip the script: 20% to principles that you’re almost sure are true, then 80% finding what works for you.

Remember, shotgun and narrow. You evolve by testing new ideas and putting in the hours, slowly eliminating what doesn’t work. Persevere, but iterate. You can’t simply be grinding away at the same things. Best case scenario, you’ve found something that works that eventually will change. Worst case scenario, you haven’t found anything that works, and you’re spinning your wheels in a mud pit.

Ultimately, evolving is a question of mindset. Once we find something that works, or assume a core belief as part of our identity, change becomes difficult. To adapt, we must have strong beliefs loosely held. That means we have the confidence and strength of mind to double down on what’s working right now while being able to pivot the instant the market renders them obsolete or false.

Core Principle #3: Compound Interest Rules the World

You’ve probably heard about compound interest.

Even those well-acquainted with its impressive effects often underestimate its jaw-dropping power, however.

Compound interest applies to everything from money to newsletter subscribers to skill acquisition. Get 1% better per week; 1% per week compounded over 5 years is a 13x increase. Initial progress is modest—until you hit critical mass (an inflection point), which people mistakenly call “overnight success.”

Compounding is one of the reasons the 80/20 rule works mathematically—success tends to automatically consolidate. When an individual gains an edge over their competition, they gather more fans and receive more revenue. At the beginning, these advantages over the competition might be small; over time, however, these small deposits compound into massive differences between the most successful authors and the midlist hopefuls.

Note that compounding assumes you’re iterating and putting in the time, as outlined in the discussion on evolution above. If you’re not making constant deposits into your skills account, so to speak, there will be nothing to build upon.

It’s easy to quit long before you reach the inflection point. The initial burst of motivation and feel-good energy from changing your life or embarking upon something new quickly wears off. And after peaking much lower than you originally thought, things crash back to earth (the valley of despair). The situation might even appear worse than when you started: when you start exercising, investing time in your writing, or doing anything with a long-term payoff, you often end up seeing negative short-term results.

If you exercise, you’re sore. You can’t eat all the foods you want. And you see no discernible results for months. In the short-term, everything is negative.

Compounding demands time. Expect this to take five years.

This doesn’t mean waiting five years. It means putting in your three hours a day.

The inflection point won’t announce itself. Suddenly, you’ll look at your sales charts, your productivity, your craft, and realize damn, I’ve elevated my game to a whole new level.

Compound growth is fractal. A fractal is something where the part is similar to the whole. That means that straight line you see on the right hand side, where everything goes vertical? If you zoom in, really, the same sequence will play out over a shorter time frame: you’ll plateau. Relinquish some of those gains you fought so dearly to acquire (e.g. the 5 – 20% of your time spent testing new stuff to replace shop-worn old ideas with new ones). And enter the valley of despair once more.

But once you’ve been through the process, you’ll understand that despair is fleeting. And you’ll be off to the races again. For the person who hasn’t experienced this cycle, however, you must keep pushing. Much like finishing a novel irrefutably proves to your brain that you can be a writer, pushing through the valley and meeting with success on the other side shows your brain that compounding is, as Einstein once said, the eighth wonder of the world.

The Trifecta of Indie Success (The Core 20%)

80/20 sounds great and all, until you realize that finding the essential 20% can be a harrowing odyssey in trial and error. I’m not going to pretend that you can avoid this process; trial and error is an absolutely crucial part of discovering what works for you (e.g. the core 20% within each of these three areas). I won’t leave you to discover the main areas on your own, though, which are productivity, craft, and marketing. These can be arranged in a handy pyramid:

We can add business principles such as money management and strategy as the soil upon which the pyramid rests. If your understanding of business is shaky, the rest of the structure will teeter.

Marketing is relatively simple if you regularly produce books that your target audience enjoys.

Marketing is remarkably difficult if you fail on the consistency or quality fronts.

Yes, it’s possible to push a sub-par book up the charts via clever marketing. However, a long-term career is built on sellthrough—that is, readers purchasing and reading the next books in the series (or your backlist). If your books are bad, then they won’t buy the others. And if your backlist is nonexistent because your work habits are poor, then readers will have nothing else to purchase from you and be forced to move on to another author. Should you go long enough between releases, the fond memories of your book will likely fade from their consciousness altogether.

All three elements are vital to your success; none is more important than the other. And each of these elements act as a multiplier; they’re not additive. 10 + 10 + 10 doesn’t equal 30; 10 x 10 x 10 = 1000. You must be strong in all three areas to maximize your chances of success.

You will notice, however, that productivity is the foundation of the pyramid. That is not a mistake: without the ability to consistently show up and do the work, it’s impossible to improve your craft and deploy marketing campaigns.

Both productivity and craft are beyond the scope of this guide. However, if you have weaknesses in either area, it pays to shore them up—doing so will strengthen your marketing chops. I’ll mention two simple tips that might be helpful if you’re struggling with either area:

PRODUCTIVITY: Focus on getting in three hours of quality work done each day. That time can be split between writing and marketing: two hours of writing and one hour of marketing, for example. You can also translate this into a daily word count (somewhere between 1,000 and 3,000 words, depending on speed) and marketing quota (creating three ads, posting two graphics to social media, and so forth).

Three hours sounds like preposterously low bar, but many will find, upon attempting to reach this mark, that they are putting in far less actual quality work during their “ten hour” workdays. You can certainly invest more time, but make sure you’re producing three quality hours a day before pushing more volume. And if you only have one hour to spend after family and work obligations, the same basic principle applies: make that hour count.

Finally, if you’re overwhelmed, implement one thing at a time. Being productive is not about quantity, but about doing things that matter. It’s better to be good at a couple things than terrible at fifty.

CRAFT: First, if you’ve never finished a novel, your number one priority should be reaching THE END. Even if it’s terrible, the simple act of finishing a book proves to yourself that you can do this novel-writing thing. You also know that you can accomplish hard, complex tasks. The ensuing certainty that accompanies this confidence is powerful. After this first step, completing a few more novels is the best way to practice and upgrade your storytelling skills at a rapid pace.

Once you’re a more experienced writer (five or six novels in), however, you’ll often find that your skills stop progressing as quickly. This slowdown is natural in any complex discipline. At this point, it’s beneficial to break craft into its component parts, then choose one specific weak area per novel to practice. The five core components of craft are character, story, plot and scene structure, setting, and dialogue (some might also include theme and voice). Each of these has numerous little sub-skills that our favorite authors have mastered. Focusing on one area of practice allows you to dive deeply into these nuances.

This does not mean completely ignoring the other components during your writing and revision process; it means setting specific objectives in that single area (while allowing the others areas to unfold as normal). Honing one area produces a halo effect; tightening your dialogue, for example, will help craft richer characters, enhance the depth of your setting, and assist with pacing.

But even when you’re already proficient in productivity, craft, and marketing, you can still get derailed. That’s because the presence of randomness makes selling books a tricky beast to pin down.

Managing Probabilities and Variance: Play Poker, Not Roulette

Many of us hold an inherent belief that skill should be rewarded. Over time, this is true. But even when you do everything at a high level, you can’t guarantee a win. In fact, you will still fail (or come up short of expectations) more often than you’d like.

This can feel shockingly unfair and uncomfortable in the moment.

One of the hardest things to come to terms with in self-publishing is variance. As that word likely suggests, that means results in this business are not constant; they vary. Even with a good process and marketing strategy, a book can still flop. And when we put a dollar into our marketing expecting two, but instead get zero, it can be a jarring experience.

Indie publishing is ultimately a probabilities game. By improving your skills in the core three areas—productivity, craft, and marketing—you can significantly raise the probability that each book you release will be successful. But that probability will never reach 100%.

Our brains aren’t great at intuitively grasping probability. They’re pattern recognition machines tuned to look for cause-and-effect. This is a basic hard-wired survival instinct: if Bob ate the red plant in the forest and died, we probably avoided eating red plants, too. This is later reinforced by society: we do good work, we receive a reward (grade, job, promotion, praise et al.).

Being able to identify these types of cause-and-effect relationships is a big reason why we’ve survived for thousands of years.

But self-publishing—and marketing in particular—doesn’t work like that. Often what looks like a pattern is, in fact, noise. Or the cause of a marketing campaign’s success or failure can be totally opaque, offering no lessons at all. Or, most confusingly, it can be completely random: perhaps Amazon picked the book up for a deal we didn’t know about, or a popular author shared our title, thus blasting it into the ranking stratosphere.

Thus, even marketing campaigns designed using the same strategy and principles can produce wildly different outcomes.

This leads some authors to oscillate to the other extreme: that skill hardly matters at all, and that self-publishing is all luck. That conclusion, however, would be incorrect.

Instead, this game is a combination of luck and skill akin to poker.

A pro level poker player will win more often than he loses against amateur players. That is because he has an edge—that is, his skills are higher, therefore his probability of winning is higher. But because of variance (e.g. the inherent randomness of the cards he’s dealt and the unpredictability of the people playing), it’s entirely possible for a novice to beat the best player in the world at a hand. It’s even possible (though not likely) for them to win an entire game.

This is much like someone’s first novel becoming a lightning strike success with minimal marketing. These stories get a lot of ink and internet traffic precisely because they’re so uncommon. That can make this path seem like the norm (or even likely). It isn’t.

A counter-argument might be that such a method is not impossible. I wouldn’t disagree. You can, after all, also head over to the roulette wheel, bet it all on black, and emerge a wealthier individual. But this isn’t a strategy; it’s a wish. A losing wish, over time, given the probabilities.

And what people often ignore is that your career is not defined by a single temporary success, but successfully surviving (and thriving) long-term. $100,000 a month in royalties can turn into $1,000 as that surprise success is overtaken on the charts by next month’s breakout hit. The real measure of skill, then, is whether the percentages remain in your favor after playing thirty games—or publishing your thirty-seventh novel.

That’s because only time—and playing enough hands—can smooth out variance and reveal our actual skill in games where luck is a factor. If we are truly skilled, we will come out ahead. If we are not, then we won’t. But we must play enough hands (e.g. publish enough books and do enough marketing) to find out. And, hopefully with each progressive book and marketing campaign we create, we learn how to tilt the odds in our favor by iterating along the way.

Now that we’ve talked about luck and skill, let’s go over what treating your writing as a business actually entails.

Business Fundamentals

If you’ve been in this game for more than a couple months, you’ve no doubt come across someone imploring you to treat your writing like a business. It’s good general advice, but it’s almost always offered without any sort of explanation about how one goes about doing this.

Let’s shed some light on that subject, then.

First, let’s talk about what business is not: it’s not about wanting to make a lot of money or appearing successful (e.g. hitting a bestseller list or getting an award). Having lofty aspirations is fine, but it doesn’t make you a savvy business person.

Instead, running an effective business involves four primary administrative tasks.

(1) Know your numbers. Every business needs to know its numbers well. Most don’t.

This is a simple task—just enter your book sales, profits, expenses, and other critical numbers into a basic Excel spreadsheet on a regular basis.

What does “regular” mean?

  • Instant: I recommend logging expenses in your Excel sheet the minute they’re charged. This gives you a clear, real-time snapshot of money going out the door, and prevents a mad scramble to do your taxes.
  • Daily: I track numbers daily under two circumstances only: for books I’m currently advertising via pay-per-click (PPC), or for a book that just launched (I track the first 30 days of the launch).
  • Weekly: For marketing analysis, I track numbers weekly (by series, rather than individual books, which can get unwieldy with a larger backlist).
  • Quarterly: For taxes and final numbers (after page read and currency exchange rates are finalized), I track revenue and sales numbers quarterly. I then use these quarterly numbers to produce yearly and lifetime records in separate sheets.

If you don’t have your own system yet, you can use mine as a template.  From there, you can—and should—experiment with various tracking methods and intervals to suit your own needs.

While you can use your existing personal accounts, opening separate bank and PayPal accounts for your publishing business makes bookkeeping easier. To start out, you can use a standard free checking account—it doesn’t have to be a special business account if you don’t have your DBA, LLC, or corporation established. It’s worth talking to an accountant about whether certain business structures can benefit you from a tax or liability perspective. In fact, a good accountant is vital to your business. However, setting up official business paperwork can be an excuse for procrastination. In the beginning, you don’t want to get bogged down in administrative stuff. Get started. You can always establish a more formal business structure down the line.

The main metric and your core focus should always be on profit. While businesses focused on attracting outside investors might pursue growth at the expense of current profits (to the point of running at a substantial loss), the purpose of a small business is to turn a profit (e.g. put money in your pocket). If you are incinerating dollars, this is a red flag that something is wrong and needs to be fixed before your business goes under.

As a final note, know that, when it comes to taxes, you can usually write-off most of your publishing-related business expenses such as covers, formatting, advertising, web design costs, business services, and so forth. Properly expensing eligible items will substantially lower your tax bill. Talk with an accountant to confirm which items you can expense for your business; it may vary by country and based on your business structure. Doing so, however, is well worth your while: it can save you tens of thousands of dollars.

(2) Save a solid percentage of your profits. Rough rules of thumb break down as such:

  1. 30% of profits for taxes. This might sound excessive, but self-employment taxes are often higher than tax rates on employees. If your country’s self-employed or business tax rate is higher than 30% (don’t forget state and local taxes), you’ll need to set aside more. Consult with a good accountant for more precise figures.
  2. 10% of profits for savings. You want an emergency cash fund.
  3. 10% of profits for retirement. As a self-employed individual, you’re responsible for funding your retirement. US residents should look into tax-friendly retirement planning options designed for self-employed individuals like SIMPLE, SEP IRAs, and the Solo 401(k).
  4. What doesn’t go to key investments in my business, living expenses etc. I try to keep in cash—as outlined below, having steady cash flow allows you to capitalize on good opportunities when they arise. It also acts as a buffer against unexpected down months. Your month-to-month royalties will fluctuate wildly. Don’t spend freely during boom months only to be caught without funds during the inevitable lean ones.

Yes, I understand this means setting aside 60%+ of your profits. That’s a lot. You can get away with putting away 0% for retirement or a rainy day fund—for a bit. Eventually, you’ll have a bad month, or you won’t be able to release a book due to injury, or a new release will flop, and your business will be toast.

This is all about surviving—and thriving—long-term. If you’re currently blowing through everything you earn each month just to survive, saving this much might appear ridiculous, to the point of impossibility.

That’s why you start with a bearable amount: put away 1% or 2% in one area this month. It’s easiest to save when you immediately transfer the money to a separate account right after Amazon/the other retailers deposit it. If you wait until the end of the month, quarter, or year, the tendency for most people—myself included—is to find it’s already long gone. When it’s out of sight, you don’t miss it. This also frees you from any complex budgeting systems or focusing on eliminating hundreds of small transactions (e.g. coffee, candy bars, lunch) to save money—five minutes per month, and a couple clicks, and you’re ready to go. Your lifestyle will adjust automatically with minimal pain.

Bump up the percentages on a monthly or quarterly basis. If this sounds like it lacks the pain/personal sacrifice aspect that’s gospel among popular financial gurus, that’s for good reason. Ultimately, changing your behavior is about adherence—the more pleasant a habit is to integrate into your existing life, the more likely it is to become a permanent part of who you are.

You don’t want to notice any change in your day-to-day lifestyle—other than the fact that you can now pay your taxes on time and are no longer panicked about money thanks to having a nice nest egg, of course.

As a final note, make sure you have health insurance. This can be expensive, so if you’re going full-time, factor in this expense—and don’t “self-insure,” because that’s playing with extreme fire.

(3) Manage your cash flow.

The heartbeat of any business is cash flow. Without a steady stream of available cash to pay bills and invest in favorable opportunities, you’ll struggle to grow (or worse, go backward). On a basic level, an author’s monthly cash flow can be boiled down to:

Seems simple enough, right?

Unfortunately, retailers’ various payment schedules make cash flow challenging to manage. This is because most retailers pay you 45 – 60 days after the current month ends (Google pays you 15 days after). But you’re often out money for even longer. When you buy a cover two months in advance, you won’t see the money it produces in your bank account until four or five months later. If you pay for an ad on April 1, you’re not getting that money back from Amazon until June 29—almost 90 days later.

Suffice to say, that’s a long time.

A substantial war chest—either a salary from a day job or money you’ve saved/received from other sources—can greatly ease cash flow crunches. But even with a nice block of cash to play with, you need to manage your cash flow properly to maximize the potential of your business.

Thus, you need to log when your royalty payments are arriving, and plan your expenses and advertising campaigns accordingly. I log all my personal living expenses (rent, health insurance, estimated utility bills and so forth) in my cash flow sheet, since I’m a company of one.

Then I subtract these expenses from the monthly royalty deposits arriving that month. Note that I treat royalties arriving on March 29 as effectively arriving in April. Payments from D2D and Google Play arriving around April 15 would be counted in April, too.

I also subtract set percentages of that month’s estimated profits for savings, retirement, and taxes.

You might choose to calculate cash flow differently if your circumstances differ. The main takeaway is that you need to know what money is going out the door and what’s coming in each month so that you can plan your other important business expenses accordingly.

Thus, a more detailed cash flow equation looks like:

Monthly royalties – personal living expenses – recurring business expenses – mandatory scheduled expenses (e.g. a dentist visit or a renewing annual subscription) – 30% of profits to taxes – 10% of profits to retirement – 10 % of profits to savings = net monthly cash flow.

Visually, this can be organized like so in Excel (all numbers fake):

Monthly cash flow is the amount I can invest in business items like advertising or proofreading that month. If cash flow is negative, I have a huge problem: I can’t invest in my business that month, it can’t grow, and (perhaps most alarmingly) I also can’t cover some of my mandatory monthly expenses.

In this fictional example, some of the numbers for April 2019 are pre-filled, while others are blank. This is not an oversight on my part—instead, it’s because I know approximately (pending currency exchange rates) how much Amazon will be paying me in April (on March 29, technically) by February 15. I also know my rent and health insurance costs, since they’re consistent. Thus, I fill these amounts into the sheet early, so I can start projecting my cash flow well in advance (and thus plan accordingly).

You may notice that for taxes we’re taking 30% of a profit number that doesn’t account for substantial one-off expenses like covers, editing, advertising, and so forth. When we factor these expenses in, our actual profits will be lower—which means our taxes owed will be lower, too.

And yes, if you invest your retirement into a tax-friendly vehicle, that will lower your tax bill, too.

This means we’re actually setting aside more than 30% for taxes/10% for savings/10% for retirement.

This is by design. Doing things in this manner streamlines your cash management. When your royalty payments come in, you transfer the estimated taxes into another account that you don’t touch until you pay the government. Done.

If you wait until the end of the month, when you know what you spent on one-off expenses like advertising, you often find that you used the government’s money to pay for these one-off items.

This is common. It is also not good.

In addition to ensuring you actually save money for taxes, this method also builds in an automatic safety net in the event your tax rate ends up being higher than the estimated 30%. Saving more is never a bad thing; it’s better to have the money and not need it, than be thousands short and have no way of paying it.

Important note: the cash flow sheet is not a tax document and has nothing to do with actually filing taxes. It’s a business health indicator that allows you to clearly assess which months you can invest heavily (e.g. commission new covers and ad spend) and which months you’ll have to ease off the gas. It also gives you rough estimates of what you should be depositing in your tax, retirement, and savings accounts.

While all this may sound confusing, once you do the arithmetic it’ll become clear. You’ll see that, oh yeah, you had -$650 in cash flow during September—which was why you couldn’t scrounge up more than a few bucks for that promotion.

(4) Never run a credit card balance. Never charge anything that won’t be paid off at the end of the month. There are zero exceptions to this rule.

People often try to paper over poor cash flow management and savings habits by using credit cards. Don’t do this; it will come back to bite you in the form of excruciatingly high interest rates (ask me how I know).

If you cannot pay cash, find an alternative to get the services you need: barter, save, sell old stuff on eBay/Amazon, start a book-related side hustle (formatting, proofreading, cover design, consulting, working as an assistant etc.), or simply go with a cheaper/no-frills option. And should none of these options prove appealing, then search for another way, or wait if there’s no viable method of funding your publishing business right now.

Do not rack up debt; it is a noose that most small businesses cannot escape.

If you take just one tip from this entire guide, please make it this one.

Beyond administrative tasks, there are two additional business concepts you should familiarize yourself with: strategy and execution.

Your Strategy Flows From Your Objectives

Business can be distilled into two core elements: strategy (your system—the specific steps you’re going to take to achieve your core objective) and execution (actually implementing your strategy effectively).

At the heart of this is, of course, your core objective. This guide assumes that you want to make a part-time or full-time income. There are many other objectives to pursue in this game; just know that they are often at odds with one another. Writing whatever you want, for example, is a fine objective; just know that it rarely reconciles with making money unless your tastes align with the market’s.

Most authors stumble in establishing a clear objective. Someone who wants to make a million dollars a year will need to adopt a vastly different strategy than the person who wants a small side-income that maintains work-life balance. Every choice comes with a trade-off.

There’s an old proverb that says chase two rabbits, catch none. Unsurprisingly, trying to chase sixty-five rabbits at once is not a secret way to hack this and turn things into your favor.

Thus, your objective, whatever it is, must be crystal clear.

Strategy involves making decisions in the following areas that help you achieve your core objective:

  • Indie or trad: whether you’ll self-publish your work or pursue a traditional publisher (or do both as a “hybrid” publisher)
  • Kindle Unlimited or Wide: whether you’ll be exclusive to Amazon or publish on all retailers (or a mix of both)
  • Release frequency: the number of books you’ll release per year
  • Genre, series, and length: what genre will you write in? Will you remain in one sub-genre, or branch out into many? Will your books be in a series? What will the approximate word count be?
  • Newsletter: how are you going to generate new subscribers?
  • Marketing: what platforms do you plan to focus on—e.g. you could focus on paid Facebook Ads, creating a reader magnet to grow your newsletter, or building up your Bookbub followers
  • Production budget: will you purchase professional covers, editing, proofreading? How much will you invest?
  • Advertising budget: will you advertise? Where and how much?

To design a strategy, you must consider your core objective and then eliminate all choices, options, and tasks that do not help you reach it. If this seems daunting, don’t worry; this guide will help you answer these questions. By the end, you’ll be able to design a strategy specifically tailored to your personal strengths and core objective.

All the components of your strategy should be pulling in the same direction. To use an analogy, imagine a team of sled dogs. When they pull as one toward a common destination (the finish line), they make consistent progress. Perhaps they win; sometimes they lose. Sometimes the elements come into play, and wreak havoc. But they make progress.

However, if a few of the dogs stop pulling their weight, progress is slowed significantly. The team is now at risk of running out of resources or energy before reaching the finish line. And if a few of them start running in the opposite direction to chase a deer they spotted, then the whole operation stalls, and everyone dies of frostbite.

Thus, it pays to streamline your strategy to its absolute essentials. Remember the importance of 80/20: if the BS crowds out the core 20%, your results are going to be very poor indeed.

After you have a basic plan of attack mapped out, you need to actually put it into play.

Execution is the art of doing what you planned to do (and doing it well).

Most people blame poor discipline for their execution problems. But the root cause is often a bad, unrealistic strategy. It is easy to design a strategy that does not match your existing skills and resources. Jumping beyond your current capabilities or employing overly complex methods are both tempting. As Tim Ferriss notes, “People tend to abandon the good system they’ll follow in search of the perfect system that they will quit.”

A simple, effective strategy that dovetails with your strengths is far better than the ultra-optimized one you’ll never use.

Great execution flows from great strategy—which in turn flows from a clear objective.

If you build a strategy around monthly releases, but can only write four books a year, that’s a strategy problem which results in poor execution.

If you plan to run thousands of dollars in ads, but have no plan in place to secure those funds, this is a strategy problem that inevitably leads to poor execution.

It should be noted that your strategy is not a fixed document; it is a living organism that evolves as the marketplace changes and your skills grow. This is a feedback loop: you start with a strategy, execute, use lessons you’ve learned to revise the strategy, and then rinse and repeat.

Finally, every aspect of your strategy needn’t be written out in pinpoint detail. This is not a business plan. You just want to reflect on what you’ll need to do to achieve your core objective.

What’s Next?

Almost 7,000 words in and we’re finally ready to talk about marketing. And there’s no better place to start than with the two formulas that form the foundation this guide. Thus, after you’ve completed the action exercises below, we’re ready to hop into Part 2: The Ultimate Book Marketing Formula.

Key Takeaways

  • The Indie Trifecta of Success: productivity, craft, marketing
  • 3 Key Principles:
    • 80/20: a few actions have much more impact on your results than anything else
    • Compound interest: consistent, small improvement (kaizen) is key to success, so be patient and get 1% better every week until you hit critical mass
    • Evolution: try new + different things to adapt and evolve to a changing environment
  • Put in three quality hours of work a day
  • If you’re overwhelmed, implement one thing at a time. It’s far better to master a couple strategies and principles than be trash at 50 different things.
  • Finish your first novel to prove to yourself that it can be done
  • Once you’ve finished a few novels, the five core components of craft are character, story, plot and scene structure, setting, and dialogue; focus on practicing one area of weakness per novel.
  • Play poker, not roulette.
  • Treating your publishing endeavors like a business entails four things:
    • Knowing your numbers
    • Putting money aside for taxes (30%), savings (10%), and retirement (10%)
    • Managing your cash flow and keeping some money in cash allows you to invest in good opportunities that arise
    • Never charging money to your credit card
  • Your goal as a small business owner is money in your pocket – better known as profit
  • Make sure you have enough money for health insurance
  • Your strategy is your system and the specific steps you’ll take to achieve your core objective. Execution is about actually doing these tasks. Great execution flows from great strategy—which in turn flows from a clear objective.

Action Exercises

 

  1. Log your expenses, sales, and royalties for the past year.
  2. Calculate your net monthly cash flow for the past three months.
  3. Set a timer for 10 minutes. Then map out a rough draft of your strategy for the next year by writing out the following on a sheet of paper:
    • Your core objective
    • Whether you’ll launch your books wide or in KU
    • Whether you’ll write in a series and, if so, the planned # of titles
    • What length they’ll be: novels, novellas, serials, or short stories
    • The number of new titles you’ll release, with approximate word counts
    • The sub-genre(s) you plan to write in
    • Your core three traffic sources
    • How you plan to build your newsletter
    • Your production budget for each title
    • Your advertising budget for each title

Answer as best you can, but don’t spend hours deliberating, researching, or otherwise worrying about making it perfect. This exercise isn’t a set in stone document. Rather, it’s a benchmark that we’ll return to.

If this guide does its job, by the end you’ll have the necessary tools to confidently answer each of these questions, thus giving you a rock-solid, personalized strategy to work from going forward.