Frank,
There are many, many books written on "how to write a song". In some cases you will garner some great insight into lyric writing. Some will leave you with more questions than you can imagine. Amazon dot com is probably your best online source for books on the subject. Most upper end books stores will have at least a few in the music and/or reference sections. Plus there are a ton of lyric writing forums and help sites on the Internet.
How do you know when a lyric/song is finished. Well, frankly, (no pun intended), you don't. All you can do is pour your heart into it and hope your lyrics have accomplished their goal. As others here on the board, I have hundreds of snippets and starters, broken verses, busted choruses and bent bridges all piled up around my desk. Not to mention notepad.
There comes a time in a lyrics life that you just have to pony up and say, Ok, I've done my best. But no matter what you write, if you ask, someone will always make suggestions on "how" to make your lyric better. The best advice I can give from my meager experience is to be brutally honest with yourself. If you're happy with your results, then go for it.
You could spend a life time re-writing a lyric to get it just "so-so". Thats all fine and well, if thats the only lyric idea bouncing around in your head and your final goal is to write one good lyric. But if you're into writing lyrics, write it, set it on the shelf a couple of days. Go back, re-read it. Does it make sense? If not, re-write. Cycle it again. But don't beat yourself over it.
If you think of it, the odds of creating a great ever-lasting lyric/song is really slim. Look at Gordon Lightfoot. GL is one of the greatest lyricists in the last 50 years. Two of his songs from well over 20 albums have been "hits" in the commercial world. The song The Wreck Of The Edmund Fitzgerald was written in three days. Neil Young pens tunes in 25-30 minutes, calls it done and makes a killer record. Gordon once said, "you haven't written a song until you've written 400 of them".
So when do you know your lyric is finished? You don't. But go for it anyway!
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Les