How Freelancers Can Future-Proof Their Income
Lost your income because of coronavirus or the recession? Here’s how to minimize these hits for the future.
Coronavirus and the recession have been a wake-up call for a lot of freelancers.
Some freelancers have completely lost all of their contract work and others have had to file for unemployment.
If you’re in this camp, you may be reflecting on how you could have done things differently to change your current situation, or what you can change for the future so that it doesn’t happen again.
Here’s what won’t help you: figuring out ways to take on more clients so that you can make more money and squirrel it away so you’re better equipped for a financial hit in the future.
There are two flaws to this logic:
- You only have a certain number of hours in a day, so trying to add on more clients to your roster has an ultimate cap.
- If you take on more clients and create a fund to protect yourself during economic downturns, you’ll eventually run out of that money if the downturn lasts past a couple of months (like it is now). This solution is a bandaid.
What instead will help you is completely changing the structure of your business so that you’re thinking less like a freelancer and more like an entrepreneur.
Here’s the difference between thinking like a freelancer vs. thinking like an entrepreneur:
- Monetization is a direct input to output equation. You must create or do something in order to make money.
- Custom, project-based work is the only way to bring in revenue.
- Everything is dependent on you.
- Monetization includes diverse revenue streams that include passive income, custom work, and recurring revenue channels.
- Custom, project-based work is not prioritized to bring in revenue.
- Workload is distributed so that running the company and bringing in revenue is not dependent on one person.
Even if you don’t have any aspirations to build a huge empire or hire additional team members, you can utilize entrepreneurial thinking to still build a business that revolves around you but is more protected against economic and external volatility.
Below are some major pros of adopting an entrepreneurial mindset for your freelance business.
An entrepreneur leverages the power of revenue diversification to protect themselves from income instability. For example, during a recession, higher-priced products or services may not do well, but a lower-priced item may skyrocket because of affordability.
By diversifying your revenue channels, you have the ability to be financially agile and truly roll with the punches when consumer preferences sway. Businesses like these see a financial hit during economic downturns, but they don’t completely shut down.
This model is much stronger than a freelancing business where your custom work may not have the flexibility to lower its prices and you can only rely on this one source of income.
Compound Brand Interest
When you’re a freelancer, your customers’ purchases with you are strongly transactional. They interview you to make sure that you can complete the job and hire you if you check off all the boxes.
When a customer buys from a brand, there’s more buy-in because in addition to checking off all the boxes on their list, they also buy into your image and personality.
There’s a different emotional investment involved when you’re buying an Apple iWatch vs. a random step tracker on Amazon.
People buy the social capital of what your brand conveys to the outside world. When you’re a freelancer, you don’t have that clout or sway, which means that you’re easily replaceable.
The benefit of this during an economic downturn is that a customer will buy from a brand even when funds are a little tight. When a customer loves you, it’s hard to convince them anything different. They set money aside for your purchase, and they hold out until they can buy what you’re selling.
A customer who loves your brand will always choose you because they’ve convinced themselves that your brand is worth the investment.
Here’s How To Become A Freelancer Who Acts Like An Entrepreneur
To apply an entrepreneurial mindset to your freelancing business, here’s what you should do:
- Act like a brand. Host a weekly email that you send out to your audience and leads with valuable, free knowledge that your audience wants to see. Create an engaging Instagram page where your audience can follow, learn, and engage with you. Whatever these channels are, find the channels to build a relationship with your audience and make it fun to hear from you.
- Diversify your revenue channels. Streamline your best offerings into a product or an offering that doesn’t require your custom touch. Experiment with this and scale it into a robust revenue stream for your business.
- Offload your work. Once you’ve diversified your revenue channels, you’ll naturally see some work offloaded from you. This may naturally occur as a result of creating a passive income product or if you take the initiative to identify where and how your business can become less dependent on you to bring in income.