Building a sustainable self-employed career takes a certain amount of belief and dedication at the best of times. And it can be much harder to keep going when the national, or global, economy is contributing to the challenges. Having launched my own business during the Great Recession of the late 2000s, I know how useful it can be to find good advice on freelancing during a cost-of-living crisis.
Both the latest IPSE Freelancer Confidence Index and a cost-of-living survey show how many freelancers are worried at the moment. Nine in 10 (90%) surveyed were concerned about rising inflation, and 25% were considering leaving self-employment in the next 12 months due to the financial pressures. Following the challenges of the Covid-19 pandemic, 64% of freelancers were less confident about the UK economy over the next 12 months, expecting a 12% drop in their day rates, and an increase in costs.
Everyone responds differently to pressure, but what advice am I finding useful during the latest financial crisis?
Staying calm and productive
It’s easy to feel overwhelmed and helpless when you’re facing issues on a national or global level, causing stress, procrastination, and burnout. If you struggle with imposter syndrome or self-confidence, those feelings can be magnified when clients make cut backs during a financial crisis, or you’re facing higher costs and household bills.
But to adapt the Serenity Prayer, staying successful as a freelancer means knowing the things you can change and impact, and accepting the things you can’t solve for yourself. And continuing to work on the areas you can improve, delivering projects, and moving forwards as best you can.
Your targets, business plan and budgets might need to adapt to the current situation. Success may look more like survival than expanding your company. But when times are financially tough for everyone, that’s an achievement in itself.
Make use of all the help and support available
You’re not the only person facing difficulties. And while it may seem heroic to try and solve everything on your own, especially if you’re providing the sole income in your household, it can lead to unnecessary isolation and pressure.
Help and support can come from a lot of different sources. Past clients and other freelancers can provide new work opportunities, organisations such as IPSE provide a range of advice and support for the self-employed, and charities including Stepchange can provide free debt advice and manageable solutions.
It’s also important to maintain your mental wellbeing as much as possible during difficult times, whether that’s through opening up to friends and family, support from reputable organisations such as CALM, Mind and the Mental Health Foundation, or via the NHS. With around one in four people in England experiencing a challenge to their mental health every year, there’s no reason to struggle alone.
Cut costs where you can
Lowering your costs and bills as a freelancer doesn’t necessarily mean your work or lifestyle needs to suffer. If you haven’t audited your outgoings for a while, then you may find you’re still paying for products and services that aren’t required any more. Spending a few hours going through your business and personal accounts could save you hundreds of pounds each month if you’ve been using expensive software or hosting in the past.
Other options can include switching to a cheaper plan, or pausing your account for a while.
The same applies to personal expenses, including entertainment subscriptions, gym and fitness memberships, or your weekly shop. It doesn’t mean automatically cancelling anything you enjoy or that benefits your mental or physical health. But prioritising what you find most valuable and beneficial could identify some products and services you could happily live without. It’s about making sensible swaps rather than just cancelling everything.
Switching services can also save you money. Some business bank accounts include access to free accounting and invoicing software, saving you the cost of a separate system. Or you may be able to switch to a cheaper phone contract, car lease or mortgage provider. It can take a little time to move your accounts, but the savings can make a huge difference.
Increasing your income
It’s easy to lose track of invoicing and payments when you’re stressed and overwhelmed. Make sure you’re chasing late or unpaid amounts on a regular basis, and staying on top of client billing.
If client hours have been reduced, then use that time productively to either work on your business, or consider taking on a side hustle to boost your income. The gig economy can provide lots of temporary or flexible opportunities.
Refresh your approach to finding new clients, and don’t dismiss online job boards for freelancers as a source of opportunities if you’re struggling to find projects at the moment. If your need for more income isn’t urgent due to savings and current contracts, then invest any spare time by building resiliency into your business by updating your portfolio, expanding your network, and exploring relevant communities.
Most freelancers don’t think their current day rates are able to keep up with the current rises in inflation, but more than 80% are still charging the same amount. While it may seem counterintuitive to increase your prices during a cost-of-living crisis, it’s certainly possible. Especially if you’re close to fully-booked and working with larger clients, when a small increase is likely to make little difference to their budgets, but could make a big impact on your income.
Even after increasing your rates, it’s likely you’ll still be a more affordable option for businesses than permanent full-time staff.
Keep promoting your business
Studies always focus on how big brands are able to increase their market share during a recession or financial crisis by continuing to promote themselves rather than cutting budgets and going quiet.
And the same is likely to be true for small businesses and individual freelancers. You don’t need a huge advertising budget to attend local networking events, answer questions on social media, or create content for your website.
It can be a good prompt to look at what efforts have previously brought in clients, or to experiment with creative new ways to reach potential customers. If you do have some money available, advertising is likely to be cheaper at the moment. But it’s also a chance to enter free business competitions, apply for grants or funding for new projects, try out creating videos or live streaming your work, or trial a new product or service.
Don’t stop saving if possible
An emergency or ‘rainy day’ fund is an important safety net when you’re self-employed or freelancing. If you can build up three or six months of income in a savings account, it can provide a lot of security.
It’s tempting to stop saving or to dip into your funds when finances are tight. But it can take a long time to build up those amounts, and you’ll want to use them when absolutely necessary. There’s nothing wrong with lowering the monthly payments into your savings or pension when money is scarce, but try to avoid wiping them all out at the first sign of financial pressure.
And even a small emergency fund can be incredibly important when you’re faced with an unexpected bill. If you can continue putting £10 a week into your savings, that’s £520 each year, which could be a lifesaver if your car breaks down, or a client payment is late and your rent is due.
My most important lesson from freelancing during two financial crises
Even if you know exactly what you should be doing as a freelancer during any financial hardship, it can be hard to put everything into practice. It’s easier to recommend staying productive than to avoid procrastinating when you realise bills are due before the next round of invoices are due.
The most important thing I’ve learned from freelancing for more than a decade, and during two financial crises, is to practise a little forgiveness and understanding for myself. We’re all human and make mistakes, or have times when we struggle mentally or physically. Making small, incremental improvements over time is much more important than beating ourselves up for failing to save an emergency fund in the past, or realising that there’s a recurring subscription hidden in a business account that should have been cancelled years ago.
You’ll still have moments of stress and panic, even when you try to focus on achievable changes. But giving yourself a little understanding and forgiveness over a normal human response can help you move on more quickly.
