Are You Doing Risk Management in Your Writing Biz? You Need To.

Minimise Risk in Your Writing Business

Freelance writers wear many hats as self-employed people. One important hat to don on occasion is the risk management hardhat. Most businesses have a risk management department that attempts to mitigate risks. Especially when your earnings are not mere hobbyist earnings… you need to seriously consider doing the same — to protect yourself.  Here are some areas to consider:

How much money have you got out in receivables right now?

Are you keeping close enough tabs on the money owed to you? The best way to minimise cash flow crunches of your own is to stay on top of things at all times. I keep a list of overdue invoices and follow up regularly until I’m paid. I’m also very careful about setting terms with new clients to protect myself.

What’s your payment policy?

Is there room in your payment policy for substantial loss? Too many freelance writers only set a policy after a substantial loss has taught them a lesson. And far too many break their own rules and open themselves up to potential loss (I did this myself recently and regret breaking my own rule! Lesson learned). By at least requiring a deposit from new clients or clients with a lousy payment history, you minimise risk. It’s fine to put clients on terms once they’ve proven they’re trustworthy but even then you need to closely watch your receivables to make sure you have a constant flow of cash coming in and to make sure that you don’t let one client get too far in debt with you. If you sense potential danger on the horizon, act fast to protect yourself!

How much of your income comes from one source?

While it’s great to have a steady client that pays great and keeps you busy, what would happen to your business and your earnings  if they suddenly stopped doing business with you? Would you be able to rebound quickly? Most freelancers would agree that you need to not only diversify your income sources but you need to have a Plan B “just in case”. Do you have a backup source for work if the main egg in your basket slows, halts, or goes belly up and can’t pay? Do you have cash reserves in case someone who owes you a substantial amount takes longer to pay than usual?

Is Your Writing Business Green?

Are you green in that you’re new? You’ll want to learn from the pros regarding risk management ASAP. Are you green in terms of being sustainable? That’s what you want!

Looking at your freelance writing career as a business will help you with business continuity and sustainability. Risk management is vital! There will be times when you wear a salesperson’s hat to wow a new prospect, a collection agent’s hat when clients get tardy with payments, and even a drill sergeant’s helmet (to kick yourself in the butt when you’d rather be surfing than writing or to be tough on clients because you need to be). Make sure you set your own risk management policies with rules that you’ll always follow to reduce risk and maximise profitability.

Tagged as: freelance writing, risk management, writing business

Article by Dana Prince

Dana Prince is a writer, web marketing consultant, and prolific blogger. She’s so prolific that she’s actively seeking a 12-step program for blogoholics. (Really, she's only pretending to seek such a program. Mostly, she just likes to talk about her addiction.)

Dana has written 43 awesome articles for us at Get Paid to Write Online

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