Budgeting Your Finances As A Freelancer
New freelancers and business owners have a long row to hoe. The learning curve can be shockingly steep in the beginning. Getting control of the finances
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In a matter of weeks, COVID-19 seems to have completely taken over our lives.
And with so much uncertainty or fear swirling around, it’s only natural to feel a bit uneasy about your future as a freelancer.
Yes, some of your clients may go out of business. Other clients may cancel their contracts with you. Past due invoices may start piling up.
These will be the kinds of challenges freelancers have to face in the coming months (and maybe years). It could get ugly.
However, in the wake of every challenge, there are opportunities for those who seek them.
In fact, I’m a big believer in not feeding on our own fears (or the fears of others) which is why I believe one of many questions you should ask yourself right now is:
What opportunities will open up to me in the wake of this COVID crisis?
Please let me be clear: there are companies right now who have chosen to capitalize on fear in order to boost profits. I am NOT suggesting you take this route.
Instead, I’m suggesting that in the midst of all this confusion, you may want to take a moment to pause, reflect on your freelance business plan, and do your best to predict where this all may lead for your freelance business specifically.
Will you cave under the pressure of economic slumps or will you rise to the occasion, pivot, adjust and come out on top in the end?
I hope you choose the latter.
To help you get thinking about how to pivot your freelance business in the wake of COVID-19, I’d like to share a few opportunities I’m already seeing (and a few I predict may come) that will play to your strengths as a freelancer.
To give context to these ideas, let me share that I’ve been coaching freelancers for over a decade and working closely with thousands of freelancers through my blog for even longer.
Additionally, I’ve worked closely with other freelancing experts lately in an attempt to identify where this is all headed.
Together, we’ve identified just a few likely positive scenarios which you can find below.
Unfortunately, for some large companies that have over-extended themselves, it only took one or two weeks before the lay-offs began.
It’s heartbreaking for employees who never saw this coming.
However, layoffs at companies almost always result in an increased need for contract workers such as freelancers.
Middle-management at large companies will begin to lose team members due to lay-offs, but their financial goals will likely remain the same—or even increase to compensate for a sluggish first half of the year.
This is where freelancers come in.
Naturally, many short-staffed teams without enough budget for a full-time team member will turn to freelancers to fill in those gaps.
Building a presence on sites like Fiverr now may put you in a good place in a few months when freelancers are in high demand. You may also want to try networking at a local meetup and marketing yourself well to ensure companies know you’re available for work when they come up short-staffed later in the year.
Some people have already said that for a while, time will be measured by “before Coronavirus” and “after Coronavirus.” Honestly, they’re probably not far off.
Those of us who lived through the great recession have heard this rhetoric for years: everything changed in 2008.
The key is trying to identify what kinds of tasks will get left in the past and which new tasks will emerge once this pandemic is behind us.
Will more people quit their jobs and start their own small businesses? This could increase the need for independent workers who can support small business.
Will large companies and organizations see the benefit of having remote workers on-staff and switch to long-term remote teams? This could lead to unique problems that don’t yet have solutions.
Will the education, entertainment, and medical industries make massive changes after being forced to rethink their age-old practices? This could lead to new opportunities in some of the biggest industries in the world.
It’s hard—nearly impossible—to predict exactly what changes we’ll all experience once this is over, but one thing is for sure: things will change. They already have.
Although remote working has become extremely common in the last 5-10 years, never before have so many employees who never even considered working from home been forced into this new and sometimes challenging lifestyle.
Such a huge shift in how people work is bound to cause a ripple effect we’ll see for years.
Among other things, I believe remote workers will be seen as far more “normal” than they have in the past.
Instead of being viewed as unconventional or even radical, remote workers will naturally become more relatable after everyone gets a small taste of what it’s like to work from home for an extended period of time.
This could lead to more respect, higher wages, better technology, and more job opportunities for freelancers who live a remote-work lifestyle.
When you’re a freelancer, you tend not to think like most people. Most people think you have to punch a clock or be in an office every day from 9-5 in order to make a living.
Freelancers know you can build a business that caters to your lifestyle, instead of the other way around.
And because we’re not pigeonholed into these widely accepted notions of what work looks like, we often have the ability to come up with unique solutions to complex work-related problems.
I presume this will continue to be even more true as the world regains its footing after the COVID-19 pandemic.
Companies, organizations, schools, and entire industries will be faced with unique challenges and questions they’ve never faced before.
Freelancers—particularly consultants—face an opportunity to be an out-of-the-box problem solver for troubling questions and problems companies will surely face in the coming months and years concerning how to adapt in a post-COVID world.
I don’t mean to speak like we’re all going to be past this whole thing in a matter of weeks and everything will be sunshine and roses again.
I genuinely hope things get “back to normal” soon—but I’m also realistic enough to know that they might not for a long time.
In that case, it’s important that freelancers recognize there are more ways to make money than through traditional client work.
In a pre-COVID world, it was probably enough to follow the standard freelancing method:
That’s what work looks like (or looked like) for a lot of us.
In a post-COVID world (especially in the months or years immediately following) you may need to get creative about how you bill clients or how to make money without client work.
For example, you may want to consider experimenting with recurring revenue for clients, allowing them to pay a smaller monthly fee instead of a large one-time payment. This brings predictability to your business and allows your client to budget more effectively.
You should seriously consider your business’ ability to generate revenue without you. Start by asking if you’ve really built yourself a business or if you’ve just built yourself another job.
Building systems and processes and even hiring your first employee can be good steps toward removing yourself from your business so it can survive and bring in money even when you can’t complete client projects personally.
On top of that, you may want to explore passive income opportunities you can spin up quickly to generate extra income.
For example, you could create a course on Udemy that you send to clients who decline your higher-priced services. That way you rescue a bit of revenue when a client can’t afford you by offering them a DIY option.
You might also explore marketplaces where you can sell previous work over and over again with little additional effort on your part. This works particularly well for designers, illustrators, photographers, videographers, and other artists trying to make extra money.
I wish I could say the worst is behind us with this whole COVID thing. And, honestly, I secretly hope that it is.
But I fear (and believe in all practicality) that we will probably experience aftershocks from COVID long after we can all go back to the movie theaters again.
So while I wish I could say adjusting to a post-COVID world as a freelancer is going to be easy, I don’t believe it.
But if history has taught us anything, it’s that economies do bounce back (including the gig economy and freelancing) and often reach higher levels of prosperity than previously achieved.
But it will take time.
It will take effort on your part to not only survive, but thrive.
Together, we can do this. I know you’ve got what it takes.
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