Navigating a recession can be scary, particularly for freelancers who rely on the services of third parties. However, it isn’t impossible to stay on top of it in a time of economic uncertainty. In fact, over 59% of freelancers describe their economic situation as “very good” despite the uncertainties of being self-employed. They likely employ strategies to deal with freelancing in a recession and to keep their cash flowing, even in slower times.
Carefully planning out your survival strategy can help your freelancing gig not only survive a recession but thrive for years to come. This article will give you nine all-important survival tips to help you, as a freelancer, thrive during an impending recession.
- Possible impacts of a recession on freelancers
- How freelancers can prepare and thrive in a recession
- Benefits of freelancing during a recession
- Success stories
- Conclusion
Possible impacts of a recession on freelancers
Preparing for how a recession may impact you as a freelancer is the best way to refine and adapt your strategies for finding and keeping clients moving forward. Despite only 24% of freelancers fearing the loss of their livelihood, it’s still important to prepare for any eventuality caused by a recession.
Here are the factors you may need to overcome, from a lack of clients to payment delays.
1) Fewer job opportunities due to business cutbacks
You need to prepare for your business clients to scale back projects in response to a recession. If this happens, they may choose to let go of your services. Because fewer businesses are seeking contract work, you may find it increasingly hard to secure new opportunities during times of economic uncertainty.
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2) Heightened market competition for available projects
As we’ve already mentioned, during recessions, fewer businesses start new projects that need outside help. The ones that do will be flooded with hundreds (if not thousands) of applications from fellow freelancers looking to expand their client base. You must prepare for finding and securing clients to get more difficult.
3) Possible payment delays and contract restructuring
During recessions, cash flow can take a hit or even dry up. Your business clients may struggle to pay your invoices on time, which can directly impact the financial stability of your freelancing gig. Some businesses may try to negotiate your contract to secure better terms for them, including fewer hours or less pay.
4) Pricing instability due to market changes and downturns
Periods of economic instability can have a effect on how much you can charge for your freelancing services. If other freelancers choose to lower the cost of their services, it will affect how many clients you can secure during a recession.
How freelancers can prepare and thrive in a recession
Now that we’ve covered the worst-case scenarios of what you may face as a freelancer during a recession, here are our nine tips that will not only help you overcome said issues but also thrive in a volatile market. Here’s how you can protect yourself:
1) Create multiple income streams for a steady cash flow
As a freelancer, you’re probably aware of the need to have more than one income stream to ensure you always have money coming in.
In a recession, this is even more important. You should offer plenty of different services as a freelancer. You may even want to check out new markets and see how you could lend your skills to different client types.
2) Establish a financial safety net to cover living expenses
Source: Freelancer Study 2023 – freelancermap
Recessions are periods of uncertainty, and you never know what could happen. While you may think one of your clients will provide a steady income in the future, they could end your contract at any moment.
To stay prepared for any eventuality, you should start building a financial safety net. According to the Freelancer Study 2023, 71% of freelancers recommend having at least €10,000 in starting capital prior to becoming fully self-employed.
You should continue to build your savings so that, if you lose contracts despite building strong client relationships, you can always pay your bills and living expenses.
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3) Maintain a network for job prospects and collaborations
To be a successful freelancer, you need to build a strong network of other freelancers and professionals in your industry. You’ll probably get the bulk of your projects from your network, who will recommend you to their contacts.
To stay connected with your network during a recession, it’s important to know how to make a conference call and set up monthly meetings to stay well-informed about your industry.
4) Expand service offerings to build a broader client base
Depending on the industry you’re in, you may want to think about expanding your services to appeal to potential clients. If you’ve only honed one skill, it might be worth learning new ones to offer a more well-rounded service.
According to the Freelancer Study, freelancers take on an average of nine projects every year. In times of recession, it might be worth trying to increase this or take on multiple shorter-term projects.
Let’s take a look at some examples of freelancer careers and how you might expand your offering:
- A freelance writer may want to learn SEO skills so they can offer additional services like content strategies and planners.
- A graphic designer may want to expand into creating infographics and video production. They may even delve into animation.
- A freelance web developer could improve their offering by expanding into mobile app development and coding or website management as well as design.
- A freelance translator may want to think beyond translating documents and instead provide localization services for niche industries like legal or medical.
5) Negotiate for long-term contracts or retainers
While part of the appeal of freelancing is the ability to complete many short-term contracts at once, in a recession, it might be easier to look for longer-term contracts that offer more financial stability. You can look for longer-term jobs in your network and job listing websites. If your other short-term contracts end, you can always rely on stable income from your stable contract.
Freelancer life is busy. You’re probably used to juggling lots of projects at once. Long-term contracts help you balance your work life and personal life better, allowing you to take some much-needed time off when you need it. In a recession, you can use this time to seek out other contracts to better maintain your cash flow.
6) Align and update skills with industry trends
As a freelancer, your job relies on more than excellent work – you need to commit to continuously honing your skills and adapting to your industry. Spend some time in your week when you commit to your learning to help position yourself as a go-to freelancer in your industry.
To improve your services, you should keep up with advances in technology. Stay ahead of emerging tools available.
For instance, you may want to try an AI assistant tool to answer your client queries automatically or serverless computers if you’re a web developer. Keep on top of industry trends by reading relevant articles or keeping track of your network.
7) Set competitive yet reasonable service rates
If you charge too much during a recession, you may find it challenging to find new clients. But, if you set your rates too low, you may have an influx of work that you can’t manage properly. It’s important to charge rates that are competitive but still reflect the hard work that you put in.
To find out the typical rates for your line of work, do thorough research on your market. You could also talk to other freelancers in your industry to get a better understanding of what you should be charging.
Remember that the more experience you have, the more you can charge. If you’re a new freelancer, you may want to lower your rates to get more clients and boost your experience.
💡 Learn more tips on freelance rates and how to set them
8) Prioritize high-demand services for consistent work
During a recession, it is essential to find consistent work and a stable income so you can afford your living expenses. Find a service that is always in demand in your industry. You can do this by monitoring the market and looking at job listings to get a better understanding of what businesses need. Think about your skills and how you can use them to find multiple projects.
9) Leverage technology and process automation
Freelancers need to work on every aspect of their business, including admin tasks like invoicing and managing taxes. Rather than wasting hours every month on routine tasks, you can leverage technology that does it all for you. The time you save can be spent on keeping your current clients happy and finding new ones.
Benefits of freelancing during a recession
We’ve shown you some tips for handling economic uncertainty – now here are some extra benefits that freelancers experience during a recession.
You’re flexible
Freelancing gives you a flexible business model with multiple clients. You’re not reliant on a single source of income—if you lose a couple of projects to the recession, you still have others to work on. It’s not as catastrophic as losing an employed role.
And if you still struggle to make ends meet, you can always take on a part-time job. You don’t have to be fussy about the hours, as you’ll fit your freelancing around it. Employers appreciate that.
You’re in demand
Recessions tend to bring hiring freezes or layoffs at big companies, which can leave them without enough staff. Who do they call to fill the gaps? Freelancers! 78% of US business owners say they are more likely to engage with freelance talent during times of economic uncertainty. It means they don’t have to commit to a hired employee, or the associated benefits and taxes.
You’re prepped for the future
The plans you make now will stand you in good stead for the future. Freelancing has an inherent element of uncertainty, and you don’t get sick pay or paid vacation leave. So sound financial planning and developing a safety net are always a good idea.
A recession also shows you who your loyal clients are – those who stick with you and really value your services even when times are tight. You can return the favor when the economy picks up, by rewarding them with favorable prices and extras.
You can turn negatives into positives
If you have less work coming in, turn this to your advantage by learning or brushing up on relevant skills and technology. You can then add more strings to your bow with extra services, benefiting existing clients and attracting a wider client base in the future.
Freelancing also helps you save money on daycare if you have small kids. Unlike a 9-5 office job, freelancers can fit their work around family commitments – meaning only part-time daycare is required. In a recession, those extra savings are crucial.
Success stories
You want proof that freelancers can thrive in a recession? Here are three real-life success stories.
Carol Tice
Freelance writer Carol Tice not only made a living during the 2008-10 recession, but was able to build her business up until it hit six figures a year later. She’s even written a book, The Recession-Proof Freelancer, to prove it’s possible. Carol also founded the Make a Living Writing blog to help others do likewise.
She says that because the freelance-writing market is so large, there’s plenty of business to go around when the economy is struggling – especially if you target recession-proof industries like financial services, and those big enough to send you a steady stream of work.
Amy Suto
Amy Suto is another successful freelance writer, who has earned more than $300,000 on the platform Upwork (which only accounts for about 30% of her projects). Her book, Six-Figure Freelance Writer, offers tips for working through a recession – which include maintaining a strong personal brand.
She also recommends diversifying your client base, but doing this across industries rather than skills to avoid watering-down your offering. Another idea is to consider your clients’ needs and offer more value-added services that will truly address them.
Benek Lisefski
After 20 years of freelancing, Benek Lisefski has a thriving independent design business that has weathered more than one economic crisis. He credits this to having a strong network of contacts and satisfied clients, and working on mission-critical projects that clients can’t do without.
Benek advises making yourself indispensable to clients so that they see you as an expert partner, as well as ensuring you stand out from the crowd. If you can build your reputation, you’ll be chosen for critical projects that won’t get canceled in a recession.
Keep your freelancer career thriving – even in a recession
Freelancing during a recession can be difficult, but not impossible. To stay thriving, you need to adapt your strategies to stay ahead during economic downturns. You may lose some clients, and that’s okay – you’ll find more businesses ready to invest in your services.
Remember to focus on your learning and skill development to maintain your position as an expert in your craft. That way, if times get tough, you can expand your services to hit new markets and maintain multiple clients at once.
With our nine tips for staying ahead in your freelancing career, you’re ready to navigate the complexities of an impending recession. We wish you luck in your self-employment journey!
