As a freelancer, how to overcome the uncertainty of variable income and dealing with clients from various geo and overcome the fear of being self-employed.
Uncertainty is a part and parcel of human life. No one knows what it is for him or her in the very next moment. You can plan out things but seldom things work as planned. Uncertainty is overly exaggerated as a freelancer but there are ways to handle it rather well.
So let me share how one can handle the various uncertainty that comes along when working as a freelancer.
How to Handle Uncertainty of Income?
When you are living from paycheck to paycheck, you have one source of income and it means you are at a single point of failure or SPOF. SPOFs are never desirable at any point of time in life, leave alone the businesses and freelancing.
Build more than one source of income
As a freelancer, one should always focus on more than one source of income. If you are serving clients, considering building a product to help your clients. If you are selling a product, offer a diversified set of products in more than one marketplace. If you are a freelancer, opt for additional services to boost your overall income.
The idea is to have more than one source of income which eliminates the risks and uncertainty of income.
Build passive source of income
Having more than one source of income is always recommended but building on a passive source of income is even more important.
What happens to your income level if you aren’t able to work for next month or next quarter? Source of income which doesn’t need your active involvement and is more passive in nature can always help. Blogging is one such example of building online passive income and rent from property or dividend from equity investments are traditional passive income.
Build an emergency corpus
Emergency funds are a must for any working professional but it is the most neglected aspect of finance planning. If you want to avoid the uncertainty of incomes and cover the risks, have 10-12 months of basic living costs kept aside an emergency fund.
Work towards building a financial system that eliminates every possible risk.
How to Handle Uncertainty of Clients?
Your technical skills are important but your marketing skills are more important in getting clients for the skillset you offer.
Build more than one source of clients
If you have only one source for getting new clients it is yet another case of single point of failure (SPOF). Indian freelancers often have freelancing sites as the only source of clients. It is good to start with those sites but if it is the only source of clients, you are at a higher risk of something going wrong with the site and your freelancing income takes a nose dive.
I have seen many Indian freelancer had issues making a move from Elance to Upwork.
Build more long-term / retainer clients
Have more long-term clients than dealing with clients that needs one off short-term work.
As a rough example, client requiring web design work is more short-term in nature compared to web development. Can you make a move to from being a web designer to web developer? If you can’t offer clients a retainer services.
Value-based price structure instead of time based
When you start as a freelancer, you should be fine working on an hourly basis. As you grow your expertise, look for clients where you can add more value doing a task than to trading time for money.
If you can get the job done in minutes building expertise over the years shouldn’t mean you should be paid less because it needs less time for you to get it done. The speed to get things done should help increase your overall income.
If you trade time for money, soon you will burn out.
Make the right choice of clients
Every freelancer has to take some bold and tough decisions and can’t rely on others to take the decision for him or her.
It can be a decision for the choice of technology (PHP, Java) or the decision to work from home instead of renting an office or the decision to say no to client.
If you find it really hard to say the hard no, there is a polite way of doing it and one of them is not to say YES right away. Take some time to think about it and it can be a polite way to say a NO.
You have to make sure your choice of client is good and helps you grow as a freelancer.
Finally Admit your fears
No freelancer is fearless. Being a freelancer for almost a decade I have my own set of weaknesses and fears. It is important to know your expertise but it is equally important to realize your weaknesses and have an action plan to conquer your fears.
Prepare for the worst case scenario and the action plan for it.
Freelancers prefer to be doing everything but working the outsourcing model and building relationships with other fellow freelancers –
is the right way to freelance.
One cannot do it all alone but more importantly, even if you can do it, you don’t need to be doing it all alone.
Over to you
It seems a job has less uncertainty and a stable source of income but in reality, it is an ideal case of single point of failure (SPOF). Freelancing, on the other hand, seems more uncertain but it provides a lot more career stability over time.
If you think you will make a mark working within your comfort zone, you are better off working for others.
Further Reading …