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Are you thinking about a move from full-time employment to a career as a freelancer? The job is OK but boring and you are attracted to the flexibility, the interesting work, and the pay. But, timing is everything. You’re worried about whether this is a good time to leave that secure job.
This is a nervous time, and for good reason: there’s been a precipitous drop in stock markets, and the drum beat of recession is louder and louder. Even if you believe a recession isn’t warranted on the economic fundamentals, perhaps talk radio and the pundits on cable TV and the internet are unintentionally encouraging a recession, leading tough economic times into a self-fulfilling prophecy.
But, is that full-time job as secure as you hope it is? Possibly not. After all, company executives are beginning to consider pre-emptive workforce reductions to preserve profits through a coming recession. General Motors announced 14,000 strategic layoffs in November and Verizon will let go of 10,400 employees, the company announced. These won’t be the last. As a publication of the Wharton School, U Penn wrote, “Time was, layoffs were seen as an emergency strategy, the last resort in a downturn or crisis. Today, however, layoffs are a standard tool for doing business. As the economy continues to heal and job indicators improve, a number of firms have announced a fresh wave of layoffs citing the need to improve profitability.”
And, there’s something else; recessions often expand the opportunities for freelancers; in most cases, the work isn’t gone, just the people that were doing it. Nor does competition take a break during a recession, leading companies to seek the help of freelancers in responding to competitive threats and developing new innovations to augment profits.
In my own case, I had some of my best years during the Great Recession. Clients wanted to increase productivity, drive change, and improve the skills of their workforce, and needed the help of external experts like myself. And, it’s not just me. According to statistica, business consulting revenue increased during the recession. So did IT consulting.
So, are you putting yourself at risk by considering freelancing? Or could this be the launch of an exciting and satisfying new chapter of your career?
Here are the three steps to making a thoughtful decision about your next move:
Here’s step one: Are you emotionally ready? if you have done your homework, do you trust yourself to succeed? Consider the message behind Victor Lipman’s recent piece in Forbes.com, “Ever feel like odds are stacked against you” and take a look at this summary of Tom Brady’s pre-draft scouting report. Keep in mind that Brady this season set new records for touchdown passes and total yards:
“Negatives: Poor build. Very skinny and narrow. Ended the ’99 season weighing 195 pounds and still looks like a rail at 211. Looks a little frail and lacks great physical stature and strength. Can get pushed down more easily than you’d like. Lacks mobility and ability to avoid the rush. Lacks a really strong arm. Can’t drive the ball down the field and does not throw a really tight spiral. System-type player who can get exposed if he must ad-lib and do things on his own.
As humans, we are primed to emphasize the negative in decision making. Behavioral economists call this the negativity bias: the tendency for humans to pay more attention, or give more weight to negative experiences over neutral or positive experiences, or to focus on the negative in assessing alternative actions or choices. Its meant to be protective but sometimes it leads you to the wrong conclusion. So, talk with the successful freelancers you know and make an informed judgement of your general emotional readiness.
Step two: Are you professionally and personally ready? Be clear eyed about your credentials, skills, and readiness for a change, and ensure you have de-risked your personal situation to the extent possible. For example:
- If freelancing doesn’t work for you would your employer welcome your return, or do you have other contingencies “just in case”?
- Have you determined whether your skills are what the freelance market is looking for? Its important to have a realistic understanding of the skill-market match, your likely rate as a freelancer, and the longevity of that rate over 3-5 years?
- If you need to build expertise in new areas, this is your time to determine what, how and by when
- Are you comfortable with the reality of a freelancers’ life; for example, working in an office with known colleagues is far more social than working at home or in a co-work space.? Will that be difficult for you? For others in your life?
- Can you handle a moderate degree of income uncertainty, or will that be problematic?
- Are the people in your life whom you depend on, and who depend on you, ready for the change? Make sure you all understand the impact of the change
Step three: Are you commercially ready? Once you’ve worked through the readiness to make a change, and your understanding of the freelance life, use the analysis below to test whether you are commercially ready:
- First, Make a list of all of the costs you will bear in starting up your freelance business: equipment, assistance, etc. Make sure you’ve identified all of these costs and don’t guess: seek the guidance of freelancing colleagues. Then, add 25% to be sure
- Second, identify your assured clients and other sources of income. Now, make a list of all the clients you can count on, the contracts you feel very confident you can count on, and the total income you are confident that you can earn in the first year
- Third, take the client list and whittle it down to those on whom you can truly depend. This is a challenging but absolutely crucial step. As a General once said, “hope is not a plan.” Only count those clients and those revenues that you feel certain will be realized
- Fourth, divide the resulting “count on” income in half. This next step is crucial; it ensures a conservative bias in estimating whether you will be financially OK. You may have to depend on savings at first, but it is very important when you are making a big career step to know you have an acceptable cushion. Most businesses fail first because they are underfunded.
- Fifth, trust but verify. As challenging as it may be to you, the last step is actually going to your short list of “count on” clients and testing whether you can fully expect the work and income
Is the resulting clientship and income sufficient to pay your bills and start up your entrepreneurial venture: you? If so, you are ready to move on to planning the details of your new business.
If not, and you believe that freelancing is in your longer term future, use the time to get ready. For example, can you shift from full-time to half-time with your employer and use the remaining time to build your practice? Or, does it make sense to grow your network as a source of colleagueship and shared opportunity? Perhaps you need to build your brand and create more awareness of your skills? Whatever it is, get started.
2019 may be your best year ever!
December 22, 2018 at 02:19PM
Forbes – Entrepreneurs