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Start your edit at the big picture. If it’s not clear what the main character wants, what the problem is and who opposes her or him, then no amount of line editing is going to help. Work on the spine of the story first. Is the structure solid? One book I like is Elizabeth Lyon’s Manuscript Makeover. She raises great questions that can help to get to the next draft. Also very helpful before or after you write your draft is Donald Maass' The Breakout Novelist.
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Let some time pass between your first rough draft and the first edit. This allows your brain to look at the draft with fresher eyes. The amount of time you wait is a personal choice. The longer you let it sit, the more you’ll gain the perspective to read it like your readers would. But wait too long, and you’ll be a different person. Some people wait two weeks; some wait a year.
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Find a writer’s group, preferably an in-person group of supportive writers who are close to your level. They will become your beta readers and they can often shortcut the rewrite process by their honest feedback.
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If you live in a remote area, then maybe it's impossible to have an in-person writing group. You might have to make your connections via the computer. Or maybe you’ll first find these writers by meeting them at a conference or convention. Afterward, you can carry on by using email and maybe plan your own once-a-year retreats.
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If you live near a University, see if they have extension program classes. Not only will you learn while taking the class, but you’ll meet other writers in your area.
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After you’ve let your manuscript sit, when you’re ready to read it, try to go through it the first time without marking the pages. Allow yourself to be a reader and feel the story. If you must, make notes on a separate pad but no line notes. One of the most common weaknesses in a first draft by a beginning writer is simply this: not saying what you mean.
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Once you’ve finished reading it through, this is the time to make notes to yourself about how far it is from what you first intended. Don’t worry, you won’t be alone – every artist goes through this process.
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Some writers don’t want to show anyone their first rough draft and that’s fine. If you’re the type who is confident you can see what’s wrong and correct it on the next draft, do that. But most beginning writers benefit from the feedback. When you get it, listen to it. Take notes without questioning or defending, go home and type them up so they’re legible. Let the notes sit a few days or a week before you reread them. This process will take the emotional sting out of the criticism. The comments won’t seem so personal and you’ll be able to accept them more easily. Decide which notes resonate with you (especially ones that were repeated by more than one person). Learn to separate the suggested fixes from the problems with the draft. Often the fix isn’t right but the beta reader found a problem that should be addressed.
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The office supply store is your friend. Arm yourself with Post-it ™ notes and 3x5 cards because you want to be able to get down and dirty. You have to be willing to tear apart your structure to come up with something better and stronger. You might chop off the first chapter; move chapter five to become chapter one; write a whole new ending. Be brave.
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Never forget that your manuscript is fluid.
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Once you have the structure the way you want it and the story seems to be working for you, get a fresh read from a couple of new readers. Repeat the process of revision until you are satisfied and your writing buddies are begging you to take it out on submission.
Don’t worry, you will be going through this process again… once you sell your project to an editor.