(Note: This article was originally published to JamieMcSloy.co.uk on April 12th, 2019. I’m going through an old backup of the site, which has hundreds of posts that aren’t currently uploaded. As I’m working hard on updating the site – and releasing The Vault, letting these old posts be the daily posts for a while.)
Freelancing Through A Recession
A lot of the business talk in various online circles is completely different from when it was when I started, in what seems like many moons ago.
I started freelancing having graduated from University into a depressed market place at the tail end of the last recession. The business advice then was based on how to survive in a recession. This is completely different from the advice given now, when we’ve been in a relative growth period for a handful of years.
These things come and go, and there are rumblings economically speaking that we’re moving towards a correction.
I’m writing this article because there are people giving advice about recessions and it’s clear they’ve never been in business in a recession, because they say dumb things like:
- “If you provide a high quality service, then there’ll always be business”
- “People will always spend money, recession or not!”
- “You just have to find a product that people always want!”
These sorts of sentiments are clear indicators that a person, no matter how well-meaning they might be, doesn’t have a clue what they’re talking about.
We’ll address this in more detail through the article.
This list of tips and tricks isn’t in any particular order.
Forget Quitting Your Job If You Have One Until You’ve Hit Some Real Momentum
Your ultimate allegiance is to your financial future and the financial future of your family, kin, pet dog and whoever else you care about.
Your business dreams and your beach martinis can wait.
The truth of a recession is that unless you have some super powerful business idea that’ll change the world, there simply isn’t any business growth to be had. Hence “recession.”
What does this mean for you?
It mostly means that when there’s a recession going on, you probably shouldn’t quit for the bird in the bush (a potential business,) when you already have one in the hand (your job.)
If you’re going to start a business (and absolutely do – in fact do it now while the sun is shining,) then keep your job until you absolutely can’t do both.
I started out as a freelancer because I had no job to quit. Starting with no income, and having little working capital for a long time, it added years to building my business. If I’d had an average wage, that money could have gone into testing and scaling and knocked years off.
Multiple Streams Of Income
During a recession, stuff chaotically goes under. It doesn’t matter if it’s the old boy who has run the corner shop your whole life, the chemist who you’d think would be immune to recessions or the massive corporation that sits in the middle of your city centre; recessions mean chaos and unpredictable markets weed out the businesses without any cushion quite quickly.
In England in 2019, there are still multiple city centres with units that have been empty for most of the time since the 2008 recession.
What this means for you is that putting all your eggs in one basket is stupid in a recession. If it’s your job, then you need to sell stuff on ebay on the side. Or something. Going from $5k a month to $1k a month if your boss decides to shut up shop or downsize the team is better than going from $5k a month to $0.
If you’re a freelancer, you need multiple products, multiple services and importantly, multiple different customers.
The more you rely on one income source, the deeper you’ll feel the effects when stuff goes wrong.
Identify Typical Recession Issues
Every recession is different, but there are universals in all of them.
You can study the Great Depression and see that people turned to DIY, stopped trusting banks, and people behaved differently, economically and otherwise.
Those same traits occurred in different ways in the 2008 recession.
In terms of business you can concentrate on things like:
Customer Service
Customer service falls off a cliff during a recession because it’s something that an accountant will look at a spreadsheet and see as “not contributing to the bottom line.”
In 2008 onwards, whole call centres were getting wiped out and customer service teams went from a dozen team members to some Indian bloke and an automated help desk.
This occurred all over the world.
Customer service is something accountants view less favourably than say, a sales team.
This is important not because you want to get good at selling things, (although you do,) but because customer service is a selling point for customers who are sick of automated emails.
Retention Pricing
In a boom period, every new customer gets the shiny discount deal, and existing customers get the thick end of the wedge.
This changes once people start closing their wallets and moving elsewhere for cheaper deals – or just quitting.
During recessions, you’ll see companies start to offer deals like, “Well, before you go… maybe you want the half-price special?”
High Overheads For Competitors
Your one major advantage in a recession is targeting companies who are downsizing their departments with whatever skills you’re offering.
Often, these companies have a need for say, web design, but they can’t afford a web design team.
As a freelancer, they can probably pay you because you’re handling your own pension and healthcare and whatever else that they’re charged taxes for for employees.
This is an advantage, but it comes with a downside…
Differentiate From The Hordes Of Unemployed People
One of the things that people who’ve never built a business in a recession will forget to mention when they give their recession advice is this:
There will be hordes of new “consultants,” “freelancers” and “self-employed” whatever-your-business is appearing overnight.
A lot of these will be non-competitive people who are trying their hand at self-employment having been laid off.
A lot of them though, will be hungry people. Some of them will be people who have more experience than you, better contacts than you and will ultimately be positioned better than you are.
You need to differentiate because the market will be filled with more workers and there’ll be less business to go around.
Guys who say “abundance mentality” simply don’t account well for this fact.
Work Hard At Guaranteeing Immediate Returns
One thing that came of the last recession was, ironically, the rise of internet marketing.
The thing with internet marketing is that it returned the business world to a direct response marketing model; Google Adwords quickly demonstrated an ROI. Sometimes it was good, sometimes it wasn’t.
But companies were used to television ads and creative marketing campaigns that were dubious in their ROI after months.
This is not something companies can afford in a recession.
Most companies; and consumers, are tightening their purse strings. If you’re promising them something, be it a hotter girlfriend or a better bottom line, you’re going to have to work hard to convince them to spend money.
You do this by demonstrating return on investment in all the usual ways.
USP Becomes Incredibly Important
The two things above; differentiation and proving the success rate of your offers, combine to create something that gets lost in a growth period: USP.
The sad truth for internet entrepreneurial sphere is that a lot of the businesses have very flimsy USPs.
Your dropshipping store can barely compete with the thousand others that are AliExpress+FB ads in a growth period. When people aren’t willing to pay $50 for a $5 watch, this competition gets fiercer, the competitors get hungrier and your business is the same as all the others.
Same is true on the service side: If you’re offering “FB ads” or “Content Marketing” in a recession, you need to have something that sets you apart from the million other new freelancers who will be doing exactly the same thing as you are.
Your USP can be simple or it can be totally intangible. It must exist though.
Save Your God-Damned Money
In a recession, your income will become less reliable and it’s best to save up your money.
It’s best to save your money almost all of the time; but it might be that you have five clients one month and then one client the next. Your income won’t necessarily be consistent and as such, you need to keep an ever-growing piggy bank ready for when you’ll need to dip in to cover lost income.
This is true for your personal expenses and for your working capital for the business.
Ignore The Dopes Who Say “What Recession?” When Times Are Good For Them
Hands down the single most annoying thing during a recession are the dopes that say, “we’re in a so-called recession!” or say, “Well, I just got a pay raise. Where’s this recession?”
This might seem like a grumpy old man griping, but it’s legitimately something that, when you’re reeling from bad economic times, will possibly land you with a battery charge.
There will be plenty of people, from your neighbours to the political pundits on the TV, who will say, “The sky isn’t falling!” and yet you might have lost 50% of your retirement fund because some imbecile in a skyscraper somewhere put it all on black.
You need two things:
- Thick skin
- The knowledge that many people don’t recognise trouble until it’s knocking specifically at their door
Obviously, you don’t want to be one of these people. In fact, you want to be the opposite.
Goodwill Pays The Bills
One of the biggest lessons from the Great Depression is that if you want to survive as an individual, business or community, at some point you are likely to have to make some sacrifices and put those who are suffering first.
I’m not suggesting here that you start a commune or anything.
That said, people might be late with their bills one month. Or they might need to downsize the level of service you’re providing them.
You might want to consider doing that in order to build goodwill.
Obviously get paid for what you’re worth and do the job required of you, but goodwill is something incredibly important.
It’s also immensely beneficial if you end up being the guy or girl that keeps a fellow businessman (or your community) afloat.
You Are Selling The Stuff They Say Not To Sell; Lower Price, Quick And Easy, Fundamentals
In most business advice; including a lot of my archives, you’ll be told, “Don’t compete on price.”
In general, that’s a fantastic idea and something you’ll want to live by.
However, when economic times get tough, you should understand that pricing changes and the benefits you’ll be promoting as a business will also change.
In a recession, a lot of people look to tighten their purse strings. This then can become a core benefit of your offer.
Again, you must get paid what you’re worth, but if putting your prices down 10% doubles your client list, it is likely worth it.
Tech Will Not Replace Hard Work
A lot of guys dropship and do online business stuff. At the moment, there’s an add-on for everything and everyone is happy to pay.
- Scarcity app at $10 a month!
- Email optin widget at $7.99 a month!
- Upsell app at $27 a month!
And most of those things are completely irrational purchases to me.
It’s better to spend a day working on figuring out a solution that’s free or cheap than it is to spend $500 a year plus on apps.
That’s because during the last recession, bootstrapping was the way to go because the last thing you’d do when starting out was spend $100 a month on stuff you could conjure up on your own.
When your income drops because people are spending less, you’ll spend more time figuring out stuff to save money. I suggest you do that now and get ahead of the curve, but I’m not your CEO.
Final Thoughts
These are just some random tips. Most of them apply equally well when you’re not in a recession, but a lot require harder work and are likely less economically efficient.
As always, use your own discretion and prepare for tougher times and better times in equal measure.
Regular blog readers; sorry for the complete drop off in posting over the past couple of weeks. I’m waiting on some blood test results as I think I have a virus of some kind. Dizziness and vertigo constantly even when sat still. Tunnel vision when spending more than five minutes looking at a screen.
Regular service will resume once issues are addressed.
I feel this is one of the most important articles I read on the blog. Applies very well to the current times.