I first became a full-time freelancer by accident. I was working in the encyclopedia industry and (you know where this is going) I got laid off. They then offered to rehire me as a freelancer.
Sounds like I was getting screwed, right? The thing is, I was horribly bored editing, but I was too risk-adverse to move on to something else. The layoff was the kick in the pants that I needed: I decided to go to journalism school. But of course I needed to earn a living in the meantime, so I jumped at the offer.
The pay was good, there was a ton of work to do, I already knew the job, and I could do it from home. Excellent!
Except that this was the place where the people who needed freelance work done were in NYC, and the people who paid the freelancers were in Ohio. The Ohio crew didn't care whether or not the work actually got done (in fact, that project got trashed after it was finished instead of going to the printer). Sure enough, the checks started coming later and later and later....
What with the layoff and all, I had a pretty good idea that this company was going down, so I had already started freelancing for other people (or freelancing more--everybody moonlights in publishing). I caught some flak for this from the poor encyclopedia editor, who wanted me to work on his project all the time. But I was like, I have to pay the rent at the first of every month no matter what those jokers in Ohio do. Sorry, but...
I must have many clients.
I didn't realize it at the time, but I was being quite astute. Years later I was reading through a business magazine, and they had an article on how to run a successful small business, and one of the major pointers was:
You must have many clients.
Why? Because that way if one client screws you, you don't go down in flames.
The temptation is not to diversify--it takes work, and people are lazy. And if GinormoMegaCorp offers you a huge, extremely lucrative contract to work with them, you of course will get all excited and wriggly like a puppy and you will drop all your other clients and you will run right over to latch yourself onto the GinormoMegaCorp teat. And you will forget that she's actually just a big old bitch who will snap at you and take off whenever the mood strikes her.
All small business people struggle with this. All of them.
All of them struggle with the fact that you never have start-up capital when you're actually starting up. All of them struggle with the fact that you don't know when--or if!--you'll start making money with your business. All of them have to remind themselves to Keep costs low when there are so many enticing ways to spend money. (Spending that will help the business "in the long run"--you know, like after you file for bankruptcy and a creditor swoops in and takes over your brand and profits off all that start-up spending. Happens all the time.)
The nice thing is, they talk about it. You are not alone! There's a whole section on the U.S. Small Business Association's Web site about funding your business! There are countless articles and Web sites about running a small business! (There are also countless people who want to take your money, but ignore them.)
You don't have to reinvent the wheel. Yes, contemporary self-publishing is a new business, but it's still a business. You can learn from other business people.
Let's take You must have many clients as an example. This is why I get nervous when people act like they should retail and market only through Amazon. Of course I don't ignore Amazon--Amazon is important. But the minute you start acting like Amazon is your only client, you are setting yourself up to have the rug pulled out from under you.
Plus, you're losing sight of the fact that Amazon is not actually a client--your clients are your readers, and Amazon is just one way to reach one group of clients. Likewise traditional publishers are not clients, they are just one way to reach another group of clients.
There are so many other examples of small business advice that applies to self-publishing:
Your competition is not your enemy, or even really your competition. Works if your products aren't interchangeable, which books are not. Crate & Barrel and The Container Store boost sales by operating side-by-side. Think of the Chinese food district. Can you do something like that with your books and books by other authors?
Get diverse perspectives. Writers tend to talk to other writers--that's our "affinity group." Most readers are not writers: They don't haunt bookstores and worry about the future of editing; instead, they go to feed stores and hang out in gun forums.
Existing clients are your best clients... They're cheaper to reach and easier to sell to. This is why writing lots of books works so well: You've got a base already. It's also why I think it's worth it (if you can afford it--see Keep costs low above) to have multiple formats available: People will indeed buy the same book twice if they want to give it as a gift or listen to it while they exercise.
Track promotions. That seasonal business article actually has some good advice on that one--the more you do, the less money you will waste. Derek Canyon shows you how to track returns on advertising expenditures, and Lindsay Buroker outlines the revenue-per-customer limitation--if you're paying a dollar in marketing for every client acquired, those clients need to be giving you more than 35 cents.
More generally: Realize that there's a community and knowledge bank out there. What you're doing isn't easy, but many, many people have faced similar challenges. They may wear suits and be Rotarians and refuse to read fiction, but they are your people. You can learn from them.