Episode 38: How Freelancing Can Protect You From a Coming Recession
How can freelancing help you not only survive but thrive during a recession? This topic is as relevant as ever in today’s economy. We are not officially in a recession, but it’s been bubbling for a while now and it’s only a matter of time before the bubble pops.
Inflation is out of control and will only get worse thanks to bad government policy. I already wrote another blog about how freelancing can help you beat inflation so check that out.
To summarize, as everything rises in price, freelancing allows you to grow your income far beyond the price increases but as an employee, your raise will often be less than the rate of inflation.
But what about a recession where record numbers of people are losing jobs? And an economy where fewer people are buying things and businesses are losing money? There was a “mini recession” at the beginning of 2020 because of the pandemic, but it rebounded quickly and businesses adapted to their employees working at home and started hiring again.
Since then we’ve seen an increasing number of people quitting jobs. And likely sooner than later, a recession will happen again, and unemployment will surge. So why does freelancing matter in this kind of economic situation?
The biggest way that being a freelancer helps you survive a recession is because you don’t get laid off. You work for yourself.
You might lose some clients but you’ll likely gain more than you’ll lose pretty quickly.
However, when businesses try to navigate surviving a recession they have to cut costs, and employees are the single most expensive cost for a business. So they lay people off. But they still need certain tasks to be done to keep the business running. This is where hiring freelancers becomes really attractive to them.
Employees on average cost 2-3x their actual salary.
Freelancers cost much less than the employee’s salary alone because they are only paid on demand for work that needs to be done.
So during recessions businesses will hire out work to freelancers more than ever because they need the ability to expand, shrink, and pause work with ease based on the fluctuations they will experience in their business during a recession. This makes you very valuable as a freelancer.
So why wait for a recession before starting your freelance business? If you can get things going now, before all the fired employees flock to freelancing, you’ll have an edge, and you’ll be able to win more clients.
So even though you may experience a temporary hiccup in clients when a recession begins, because of the shock businesses go through, you’ll soon recover because most businesses will want to hire you instead of an employee.
On average, my highest paying clients are still only paying me $3,000/month to handle all their video marketing needs. They could hire an employee to do all of that but in my case, they would have to hire 3 different employees because I operate as an agency with a small team. I’m a video strategist, and I have a video editor and a writer all working on getting each video published.
So even if they hired part-time employees for each of those roles, they could be spending $6k-$8k per month on 3 employees each getting $25/hour, on top of all the benefits and other expenses associated with employees.
They’ll also get lower quality work because the skilled editors and strategists are usually freelancing, they’re not looking for an employee job because they know they won’t get paid nearly as much. Experts and specialists freelance.
As freelancers, we often do things faster without all the fluff. On average I’m putting 2-3 hours per week per client but I get a lot done. You can’t hire an employee for 3 hours of work per week. So instead, employers fill jobs with a lot of fluff and other tasks that aren’t their employee’s specialty.
Another reason why being a freelancer will help you survive a recession is because you’re able to adapt how you earn money much easier.
You can alter your services to be more relevant to businesses’ needs during a recession. You can’t just whitewash your resume and find a regular job in a totally different area.
But as a freelancer, you can more easily frame your experience to be relevant to whatever direction you want to go in. And you can pay attention to what businesses are paying for during recessions, and focus on providing those services.
The last reason freelancing is the way to go during a recession is that you can earn a much higher income.
That gives you an advantage during a recession because while everyone else is saving their money and not buying anything, you can buy things at a much cheaper price. Even houses can often be bought cheaper, which allows you to invest your money while the prices are low and see big gains later.
The key is to get into the mind of a business owner. What is their number one priority during any economic situation? To make sales. Because if they don’t, then they’re not in business anymore.
If you can connect the dots for your potential clients on how your freelancing services can bring them more sales then it’ll be easier to find clients during any market.
If you show up as a freelancer that tells the client, “just tell me what you need done and I’ll do it” you’ll struggle more to win them over. On the other hand, if you show up to them saying, “I’m a video editor and I can edit videos that will attract more leads and increase sales” then they will listen.
I sell video strategy and video editing services in my freelance business and much of what we do doesn’t bring immediate sales, because it is content marketing, not direct advertising. So it’s easy to see my work as a low priority during a recession but I’m prepared in how I’ll respond during times like that.
Let’s imagine I’m talking with a potential client and here’s the conversation:
“Chad I see where your services can benefit us in the long-run but creating videos for 6-12 months so we can maybe see sales in year 2 is not going to help us right now. We need to keep the business afloat.”
I’ll say,
“I totally understand where you’re coming from and many business owners are thinking the same thing which is why right now is the perfect opportunity to create content in a much lower competition space. Then when the recession is over, you’ll be on top. Content marketing is one of the cheapest forms of marketing and there are ways that we can keep costs minimal while producing video content that will build an audience. Are you interested in learning more about what some of those ways could be?”
So hopefully that helps you get prepared for the next recession. If you’re currently an employee, start now in preparing to freelance. If you’re already a freelancer then great, it’s time to build your business and create a strong client-base so you’re ready.
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