How to Prepare for a Recession as a Freelancer
There are lots of arguments for the respective benefits to freelancing versus full-time employment. It still seems like there are more freelancers every year, and fewer people get to choose. And in any case, one of the notable downsides of freelancing is the marked lack of stability.
There are warning signs that freelancing way of life might soon become more difficult, according to a piece in Forbes that warns of a “recession” for contract work. They’ve set the date for the end as somewhere around 2020, quoting numbers from CNBC:
Most economists on Wall Street still believe a recession won’t occur until 2020 or later but they are getting increasingly worried about economic conditions and higher rates as the stock market sells off. But, while the banks and brokerages try to calm the negative animal spirits of the market, the S&P 500 is poised for the worst annual market performance since 2009.
Basically, as budgets shrink, cutting costs by eliminating freelancers from the budget is an appealing choice to managers, one that will look better than eliminating staff positions (not that that doesn’t happen). If you haven’t felt the end coming yet, now is the perfect time to prepare yourself.
Maybe Get A Full-Time Gig
Again, this isn’t for everyone. You may be unable to find full-time employment, or the circumstances of your life make freelancing the best option. However, if you have an opportunity, taking that position and riding out this forthcoming recession wave may be a good option for now. If you’re still thirsty for outside work, freelancing on the side is often possible, and it will keep your portfolio diversified and up-to-date as you also enjoy company benefits.
Save That Money
Full-time freelancers are familiar with advice on budgeting and saving for the lean times; if this projection is correct, there are some very lean times ahead. Which means that if you’re at all able, it’s time to save more than you think you need to. Maybe make a nest egg labeled “recession.” If it never comes, you’ve got a bunch of extra money two years from now. You can also do a serious audit of your life and reduce your expenses where it’s possible. Pay off an old debt so it doesn’t weigh you down in future. Basic financial stuff, but with more focus.
Consider How Your Business Could Improve
As long as we’re reflecting, how could your business offer more? How much are you spending on what you do versus what you make in return? Forbes writes:
There is a half-life to every expertise, and you want to know whether this is the time to make a change. Is your business organized correctly from a financial perspective, or are you spending too much money on discretionary equipment, customer contact or marketing, or other categories? If you are working with a digital talent marketplace, is this a time to review whether it has met the objectives you’ve set, and if you should make a change or add a second or third marketplace to build your business?
Don’t overextend yourself, but be aware that if cuts are being made, they’re more likely to happen to services that aren’t indispensable. Now is the time to make yourself more useful.
Check In With Clients
Personally, I’ve always found it hard to check in with managers at companies where I freelance, so this is difficult advice to take. But asking how you’re doing and where you can improve is a normal part of most full-time employment. Why not make it part of your freelancing? That might give you direction when you’re trying to figure out how to grow:
It may be uncomfortable to ask “Why do you hire me?” and “When don’t you hire me?” but you’ll learn important information on how you are seen by your best clients and therefore by the market. Don’t be afraid to ask the obvious next question: “What are the skills I need to develop or improve to continue to be seen as an important member of your company’s freelance team?”
Expand Your Network
This is hard, too, especially if you work from home, but don’t get complacent just because you have enough work now. You should always have other things cooking, so if a big contract ends, there’s someone to reach out to. Maintaining those relationships may make all the difference when you need to find more work.
One of the most difficult aspects of freelancing is feeling like you’re always looking for a job—but that can be what’s kind of exciting about it, too. Let’s just limit the excitement level with a little more preparation.