Freelancing in a Recession


Newtown Photo Shoot - Sept 2007

With the financial world in extreme crisis and various government running around in what can only be described as blind panic, one would could be forgiven for joining the mass panic.   Granted that when the world economy does slide into recession that it is going to be tough generally.

However having been through three down turns I can give a few pointers that maybe helpful in these times of crisis. Particularly for people in Australia and New Zealand:

  • Don’t Panic

    First off, stop and consider anything you are going to do with a long term view point. You know that share markets go up and down.  Remember the sun will come up tomorrow, you still have your health (well I hope you do) and you will still have the skills you had yesterday.  Yes sure this one is very severer, combined with the fact that we are no longer living in a world where there is a separate regional economies.   The world is now one large global economy.   The interesting aspect of all is that this could be the first recession of the hyperconnected age.  It will be interesting to see where people place the value of the web in household budget.

  • Be Conservative

    Now you know that things are going to be tight.  Clients are going to be late in paying.  The cost of software, books and equipment is going to go up.   You know these are a given.  So it’s time to be a little more conservative.   Yeah that means cutting back a little on those geeky gadgets.  But trust me you may need to.   Also look at the software and hardware you are using, do you really need to move up to Adobe CS4 (for instance), maybe there is a cheaper alternative.    I know in the downturn in the early nineties I had a very close look at what software and hardware I was using and its cost.  Now one area you shouldn’t cut is education and professional development.  To do this will mean you find yourself behind the times when the recession lifts. So try and keep the conferences and networking going, even if you don’t have the latest phone.

  • Last in First Out

    As a freelancer there is the temptation to go run and hide; taking up full time employment at the first sign of a recession.  If I where you I would very strongly consider the following points before you did this. When a firm fires someone they generally look at the people that have joined recently, mainly because these people are usually not fully integrated in the team yet and they have no real emotion attachment to that person, plus the payout is usually less.   The last person in would be you.   So just consider this unless you manage to grab a government position you may just be back where you started, but with no client base.

  • Try Contracting

    If you are still thinking about bailing from freelancing then consider long term contracting. In some of the previous down turns I did from time to time take up a number of longer term contracts (1-2 years).   Now these are ideal if you can win them, as they give you a constant  cash flow.   The work maybe a little mundane, but if you are savvy you will leverage the quiet times to improve your skills or even branch into new areas.

  • Consider Post Graduate Study

    Sometimes it’s a good idea if things are really going pear shaped, and you can afford it, to go back to full time study.   Maybe do a Masters or the like.  Sure this does have the problem of the University fees bill at the end of it all.  But you will have a shiny new post graduate qualification at the end of it all, just in time for when things are on the up and up.  The secret is to pick the right subject to work on that will maintain your skill set or better yet enhance it.  Traditionally the market is very conservative when it comes out of a recession, so they tend to look for the people with the bits of paper.

  • Look Overseas

    This is very topical for  Australian and New Zealand.  Now if the exchange rate is  favourable for prospects in the UK and US, then you really should be considering looking for clients overseas as well.  Now I would also be only be considering working with teams made only of people from places with a comparative exchange rate.  So I would build the team locally to do jobs overseas.   Sure they will have a depressed market, but if your prices are half that of the local (overseas) freelancer you are bound to get some interest.

  • Web Sites are Cheap

    Developing, design or realigning a web site is a cheap form of marketing.  When times get tough the bigger ticket items in terms of marketing budget tend to fall by the wayside.   But the web is in relative terms a low budget item, so in many cases it will remain.   Also traditionally in tough economic times big business does suffer.  But it is the medium to small business, because of their agile nature, is able to survive.  Improving their web service is often a good way for these businesses to get the jump on the big end of town.

  • Get Tough

    As times get tough I would be researching any client or agency that comes to you to ensure that they have the money to pay.   If you are in the slightest bit suspect, I would be asking for 80%-90% up front. For the bigger jobs maybe a credit check is in order.   On the reverse side, cut your payment cycle down to say 14 days, this way people will stretch it to 30 days (back where it was).   I would also be very pig headed with late payers.  Ring them every day when it is late, don’t email them, ring them. Ask them when you are going to be paid.  If they say tomorrow, then tell them you will be ringing tomorrow if it hasn’t arrived. And do just that.  This works well if they have a separate accounts section, Also don’t talk to the person processing, take it to their management.  You get the gist, get tough it is your money.

  • Freelancers are not Employees

    Speaking from experience, employees are expensive when the times are tough and they are just sitting around not earning you a dollar.  But freelancers on the other hand only work when you have a project and hence are a lot cheaper.  Plus they come with all the costs up front.   This is great for a business that is finding it a little tight.   So in some ways Freelancers are preferred in times of a recession as they are generally cheaper for the speculative ups and downs of a fluctuating marketplace.

  • Australia is not the US

    Finally remember that Australia (well from my view) is not the US.   While our economy is  still part of the global share market and the rollercoaster that is associated with that.  From a private business and government view our economy is a lot more stable, and doing  very  well.   Yes times maybe be a little tough.   But we have the capacity and innovation to weather this better than any country in our region, if not the world. Let the US panic, we can just sit here with our beer be all chilled and relaxed.  We just have to think a little outside of the square.   But Isn’t that what we are good at.

So that’s a short list of things to consider, I’m sure you have a few things that you do when times are a tough as well, why not share them.

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  1. Great Tips, Gary! I really do think the most important one to remember is your first point, “DON’T PANIC!” It reminds me of The Hitchhiker’s Guide To The Galaxy. The end of the world is coming, “Don’t Panic”. Because, ultimately, it’s not an end at all.

    As you said, economy rises and falls, it’s a part of the cycle and the trick is to weather the storm. If you reflect on past history of ‘depressions’ you’ll notice that over the long term we always come out ahead. That is the thing to remember.

    In the now it’s important to “Maintain Fundamentals” and “Go Back To Basics”. These might sound similar but are two differing practices.

    Maintaining your fundamentals is all about taking care of the little details. Keep up with your book keeping (even if it’s a little bleak), be dogged about invoicing, keep sending out queries, and continue to do the day to day activities that make up your usual business practice. Just because times are tough does not mean you need to make dramatic changes to the things that work and will continue to work.

    Getting back to basics however is about going simple. Did you upgrade to a 20 gig download plan on your internet? Cut back, you can live without the latest episode of Heroes and can save a chunk of cash on a lower plan. Did you get into the habit of having a rich slab of steak each week? Nothing wrong with Bangers and Mash! Honestly, we spend so much cash on luxury items because we learn to live in a higher income bracket. If you get back to basics for the time being you could save a great deal of money and find yourself financially well off when the fog of economic breakdown lifts.

    I’m sure there are many other ideas that help get us through the tough times in a tighten your belt economy. Now is the perfect time to reflect and take action on them. 🙂

  2. i was freelancer in IT before. there are other issues

    1) what is a big problem for a freelancer is when the market is dead, literally dead. Then someone as a very average employee may have a chance to stay even if there are layoffs, while almost all contractors are out of work. They will always as priority retrain employees even if they have absolutely no knowledge and layoff all contractors/consultants (i have seen it in some companies). It is the “temporary resource” side of contracting which i do not like.

    2) another issue is overspecialisation and overexperienced.
    When you are very specialised with lots of experience you have to normally to ask decent rates (at least more than junior people), the problem is that many clients prefer to hire JUNIOR people with no experience for various reasons. Sometimes its even. Simply there is only a very small market for senior experienced people. This is someway a marketing issue. Furthermore if you have very specialised skills, you have to travel a lot or work very long time for the same client (then its better to be an employee). Also do not believe the bullshit in freelance magazines.

  3. @Alain Thanks for stopping by. Interesting comments, I don’t have a view point from the IT end of things as I have never worked with an IT section in the Web Industry. It has always been with Marketing.

    Er… What freelance magazines? There are freelance magazines? Please enlighten me.

  4. Gary, that post was great advice for freelancers at any stage of an economic cycle, not just an impending recession.

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