A Quick Guide to a Break-Even Analysis
Guest blog post by Gina Akao
One of the best tips I received from my mentor, a project manager, was to create a Break-Even Analysis before starting a new business endeavor. A simple spreadsheet in Excel can track how much you must make in order to break even with the costs to launch your project, product, or book.
In February 2013, I published my memoir, Tales of a Law School Dropout, as an eBook on Amazon.com with Kindle Direct Publishing (KDP). Why did I choose to publish an eBook instead of a print book? Well, it is completely free to publish an eBook on KDP, so you literally have nothing to lose! You have no printing costs. Plus, if (God forbid) you find a typo in your eBook after you have published it, you can easily go back and post an update within days. If the update is significant, you can even notify your readers who have already bought the book. Think of your eBook as a beta version to the launch of your print book. However, keep in mind that although it is free to upload your book, you will need to budget for associated publishing expenses, such as the cost of a photographer.
I tracked my book publishing budget in â€śthe cloudâ€ť using a simple spreadsheet in Google Drive. You donâ€™t need to own Microsoft Excel to make a budget. All you need is a free Gmail account.
Next, I created headings for items on which I anticipated spending, their budgeted cost, and their actual cost. Every time I came up with a new expense that I hadnâ€™t initially planned, I would insert a new row and recalculate my costs.
Then, I totaled my eBook sales (KDP allows you to easily look up your royalties in a downloadable report). I added up my sales and my freelance editing income, and voila! I was quickly able to determine exactly when I broke even. Iâ€™m also proud to announce that, yes, I did break even, so the rest is profit!
One thing to keep in mind, however, is that I started out with a WordPress.com blog, which is free, but it is an extra $18 a year to buy a domain that builds your personal brand. Building a WordPress.com blog is like renting a houseâ€”WordPress.com controls what you can and cannot post.
Your business is your investment, so if you donâ€™t mind spending more for hosting, you can â€śownâ€ť your content by setting up your blog on WordPress.org. I looked into BlueHost, which costs $4.95/month, but if you add the extra protections, it will cost you $218.18 for three years. Is it worth the investment? In my opinion, yes.
I recently discovered that my current blog at WordPress.com is not compatible with AWeberâ€™s subscription form. AWeber is an excellent way to run email campaigns, organize your subscription lists, and maintain an ongoing relationship with your blog readers, and it costs $50 for three months. I signed up because I wanted to take advantage of AWeberâ€™s autoresponder service that would easily send out my free gift to my subscribers, so I wouldnâ€™t have to manually email them. However, because WordPress.com does not allow you to post Java Script in the sidebar of your blog for the subscription form, it would be beneficial to switch over to WordPress.org for better freedom and control. I decided to keep my WordPress.com blog, but invest in my future by buying the â€ślandâ€ť from Bluehost to set up my WordPress.org website, www.writingandeditingtoday.com. This new business site will focus on my virtual assistance and freelance writing and editing business, which I factored into my budget.
To see my spreadsheet to date, please see the picture below.
Happy blog budgeting!
If you liked this blog post, or would like me to set up your blog and budget for you, please contact me for virtual assistance at http://ginaakao.com/contact.
Gina Akao holds a MA in Educational Leadership from the University of Nevada, Reno. She is the author of Tales of a Law School Dropout, owns a freelance writing and editing business, and provides virtual assistance to authors who need to set up WordPress blogs. She is also featured on Dâ€™vorah Lanskyâ€™s Virtual Book Tour Hall of Fame. To receive your free gift, â€śTop Ten Career Tips,â€ť visit www.GinaAkao.com and subscribe today!