Let me open this article by making a few things clear: I’m not an economist. Nor am I a virologist. And I don’t have a crystal ball.
However, given what I’m hearing from people much smarter than me, along with the recent losses in the stock market and the impending job losses, we’re headed toward another recession.
I wanted to write this article because when I started freelancing, it was right before the last recession hit in 2008. And, if you’re at all like I was, you were really worried about your business and your ability to financially survive.
It’s not uncommon for freelancers to think that we’re always just a missed invoice or lead away from collapse. That your business is built on a house of cards. So, understandably, when corporate financials sliding and lay-offs are imminent, you probably start doubting your ability to stay afloat.
The truth about overhead
I was surprised, especially when I was really worried about the doom-and-gloom of the 2008 recession, by how seemingly better things got for my business when the downturn hit.
You see, when I started freelancing I was fairly new to the business world.
While my dad was a business owner, as a kid I was more exposed to the effects (him being at my mid-day baseball games while other dad’s were at work) than the causes. You could say that I liked what entrepreneurship yielded, but I was pretty clueless about what it actually took to pull off.
Well, in retrospect and with more than a decade of owning a business under my belt now, it makes sense now.
Companies are really expensive to run.
As freelancers, we have it pretty easy. Many of us work from home, and if we don’t we’re paying a few hundred a month at a co-working space. Our fixed overhead is made up of: 1) the money we need to pay our personal bills and 2) any subscriptions/fees for the software or services we need to stay in business, like invoicing software or our annual accounting bill.
During the last recession, business was so good I started to scale. I hired people. I leased and outfitted an office. And before I knew it, my ho-hum freelancing business was spending tens of thousands a dollars a month on overhead – and that’s before I take anything home (to pay my mortgage, etc.)
Most of the companies you have worked for, or will work for, have high overhead. If they’re smaller businesses, they likely actually have loans or lines of credit that they’re repaying.
And whenever these companies start to either doubt their viability or materially feel the effects of a recession, they start the cut expenses. And, more often than not, the #1 expense a business shoulders are it’s people.
If a business decides to let go of a full-time designer, often times the following plays out:
- That designer decides that this is their chance to start their own business. This correlates with my own internal data about how many of the readers of Double Your Freelancing started their businesses during the last recession.
- The business that let go of the designer still has design needs (albeit, potentially fewer), but isn’t willing to commit to the fixed expense of bringing on another, cheaper designer.
For many companies – and I hate, hate to say this – sometimes needing to downsize comes as a bit of a relief.
Here’s what I mean by that…
Businesses are complex machines with many moving parts. These machines were often architected on-the-fly: “demand was up, so we hired.”
Sometimes a business finds itself with a full-time web designer, but they actually don’t need that full-time person (or full-time department) to accomplish all the design needs they have.
So – and again, as ridiculous and possibly offensive as this is to write – I know that for many small businesses, forced downsizing gives them an out to live another day and try to rewire how things are done internally.
By incorporating a keen eye for business and your skillset/experience into how you position yourself in a market, you can establish yourself as the person to not only execute on what needs to still be done, but also do it in such a way that’s leaner than what they’re used to.
Rather than just filling in the gaps – “you now need a designer, I’m a designer” – consider how you can better incorporate a more holistic approach to business problem solving.
What other skills and experience can you combine with your core expertise to make yourself much more compelling to worried companies who are going through a bunch of internal turmoil?
Anchor yourself against cost overhead
People are expensive.
And, forgive me, but if I were to don my cut-throat capitalist hat, it becomes really easy to make the following decision. Do I:
- Fire the office manager, who really hasn’t been doing as much as we hoped, who costs us $4,000 a month. Or…
- Hire Basecamp @ $99 a month, which can do much of what the office manager was doing. We’ll find a way to fill in the other gaps.
People are like really expensive subscription products, and they’re a lot harder to cancel.
<takes off cut-throat capitalist hat>
While no one wants to actually acknowledge the above, it is something that people think about. I know I have and do.
If you can come in and prove to a potential client how you’re going to be somewhere in between $0 and what they used to pay a role like yours, then you’re signaling that you understand they’re going through a rough transitionary period and that you understand they’re trying to conserve resources.
That’s why I think it’s especially important for you to use this time to also expand your skillset and your business acumen, which I’ll talk about more in a second.
Keep tabs on what’s happening
Unlike most recessions, this almost inevitable recession is accompanied by a virus that’s causing networking events, like conferences and local gatherings, to be canceled.
Usually, I’d be encouraging you to get out there and do in-person networking. At the moment, with the Coronavirus spreading, that’s bad advice.
This is a great opportunity to capitalize on a few things.
First, remote work. In 2008, remote work was still very much unknown. Slack didn’t exist. Zoom wasn’t a thing.
I’ve been privileged to always consult remotely, but it hasn’t always been easy. Remote working has never been more accessible and desirable, and – if you can add a silver lining to this mess – Coronavirus has helped push things forward.
If a company let go of an in-house designer, they’re more likely than ever to be open to hiring a project-based remote designer–cum–email marketing expert.
Second, social media. Since more of us are staying indoors, there’s probably going to be more actual discussions happening on social media. What companies are struggling? Who needs your help? What’s the general tenor of the market you’re targeting?
Now’s a fantastic time to start writing or producing video/audio content that showcases your expertise. Involve yourself in as many online conversations as you can, and don’t be afraid to produce high-quality and in-depth material and link to it when and where it makes sense.
Use this “transition” time to get ahead
Like I’ve been hinting at throughout this article, I think once we’re able to get past this virus and the recession it’s triggering we’ll all be in a much better place. But I doubt it will be easy, and I doubt it will be quick.
Speaking personally, I’m hoping this will unite the United States in a way that we desperately need, and allow us to push forward – especially on the healthcare front.
But more broadly speaking, remote work should end up being more viable and more legitimate on the other side of Coronavirus. And, as weird as it might be to say, the financial tightening will hopefully usher in a new generation of independent, profitable, and multi-faceted consultants who are delivering great results to their clients.
I’d strongly encourage you to use this time to figure out how you can become more than just a designer, or a software developer, or a writer, or whatever it is you do.
How can you deliver holistic, end-to-end solutions to your clients?
What can you do to really dial in and focus on the business of you work you do, along with the technicals you already excel at?
Regardless of where this goes, and what long-term impact this has on our health and the world’s economy, I’m here and hope to play whatever role I can in helping you build a sustainable and successful independent business.
We’ve got this.