Seven ways freelancers and gig workers can survive an economic downturn
“Keep your side hustle steady in times of uncertainty by setting goals and budgeting regularly.”
Abigail CukierJun. 15, 2021
5 minute read
Freelance writer Robyn Roste says her career choice isn’t for the faint of heart.
“I am financially risk-averse, so this is a stretch for me. That is why I stick to a plan, to make sure I’m prepared,” says the Abbotsford, BC resident, who has been freelancing full-time for 3 years.
Roste is one of many Canadians freelancing or taking temporary, task-based jobs — gig work as their primary source of income. A 2017 study by staffing company Randstad Canada found that freelance, contract, temporary and other contingent workers make up 20 to 30% of the Canadian workforce.1 Some are looking for more flexibility and independence while, for others, full-time work is simply not available.
No matter why they choose this path, freelancers are especially vulnerable to an economic downturn and to personal setbacks such as unexpected car repairs or delayed payments from clients.
It's critical they are prepared for this unpredictability.
Here are 7 ways freelancers can set themselves up to survive a downturn
1. Create a budget to ensure you can meet your most important expenses
Calculating the minimum amount of money you need to live on in a month will help you budget for expenses, savings and emergencies. Order each monthly expense by priority and allocate your money to the most important items first. This way, when you have a lower-income month, you’ll be able to cover your most important expenses.
2. Set and work toward a goal salary
When Roste started her business, she set a yearly earnings goal, factoring in expenses such as marketing, internet costs and taxes. She decided how many hours she would work and figured out the minimum hourly fee she would have to charge clients to reach her salary goal. Each month, she pays herself 60% of her earnings and sets aside 5% for a quarterly bonus, 15% for taxes and 20% for operating expenses.
“If I need a new computer and it goes above that 20%, I don't buy it or I wait until I have the right amount,” says Roste. “You have to run your business in a way you can afford it. If things change suddenly, that will get you through the initial crisis and allow you to pivot.”
3. Save for dry spells and emergencies
If possible, put a certain amount of money into a savings account each month, recording it among your other expenses. If this isn’t possible, whenever you have extra money, put it into a savings account that you can use to meet your minimum income during a dry spell or in an emergency. When you land a big project, set aside money for taxes, splurge on a fancy dinner and put the rest into your emergency fund.
4. Expand your scope to increase your income
During the COVID-19 pandemic, many freelancers have seen their work disappear. Even in good times, gig workers are often worried about what they will do when a contract or assignment ends. Roste suggests diversifying your services. For example, a writer who contributes to magazines could write marketing copy for businesses, or a residential landscaper could take on commercial clients. Roste usually manages a client's social media profile. While that is on hold, she’s writing a blog post for their website instead.
“Look at your existing skills and see how you can apply them to a new market or industry,” says Roste, adding that freelancers should see how they can make their client list more balanced with clients coming from different industries or by providing more services within the same industry.
5. Lean on your network to find new opportunities
When the pandemic hit, Roste lost 3 clients within the first week. She reached out to current and past clients, leads and fellow writers who she follows on social media.
“Because I'm connected to them, when I reached out to check in, I was able to refer to specific things they were doing online and encourage them in their work. My motivation to connect transformed from one of desperation to find new work into compassion for them and their business,” she says, adding that through this effort she was able to secure enough work to replace her lost income. “The simple act of connecting seemed to remind them about me and that they could use help.”
If you’re just getting your business started, you can ask friends and family whether they know anyone who needs your type of services.
6. Investigate federal and provincial financial support programs
If you’re struggling to make ends meet, don't feel bad about lowering your rates. But be sure to view it as a short-term solution while looking for better-paying work.
Roste has chosen not to lower her rates. “There is a case for it in some situations, but usually, I would look for a different client rather than a lower rate. That is time you could use on other projects or even prospecting for higher-paying projects,” she says.
“This is why it’s good to have that goal salary. That way, when a financial downturn hits, you aren’t making emotional financial decisions and sticking to an objective plan. Maybe you just have to be more creative, but you won't cut rates or take assignments that ask you to drop your moral standards. Base it on your actual financial needs, and it will serve you when the pressure gets turned on.”
Freelancers tend to be resourceful and inventive. During difficult times, be proactive, build relationships and broaden your scope. You’ll be able to survive the downturn and be poised for growth when the recovery begins.
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