One of the many advantages of getting older is that I’ve survived several U.S. recessions (1973-75, 1980-1982, 1990-1991, 2001-2003, 2007–2011). I even launched my business during a recession after experiencing two layoffs in the first seven months of 1990. I am so used to seeing recessions as part of the national economic scene that I never really recognized that my low-revenue years might actually qualify as my own personal recessions. My most recent one started innocently, as a slight slowdown in December 2012. I welcomed a break from the frenetic pace of a busy and lucrative year and the opportunity to prepare for the holidays without the usual stress and exhaustion. Then I cleaned the office, prepared for tax season, and waited for the turnaround. By mid-February, I had burned through my cushion of cash and had to face reality. I refined my marketing plan and implemented more marketing; I accepted a few short-term gigs that I normally wouldn’t take on; and I borrowed from my Home Equity Line of Credit (HELOC) to reduce my level of stress. I am telling you about my recession not because I enjoy embarrassing myself or seek pity but because I hope it might help new and experienced freelancers to recognize an uncomfortable truth: Every freelancer, no matter how long in business, may experience temporary national and personal recessions that will challenge us financially and emotionally. Life happens! Clients disappear through no fault of our own or we may choose to part ways with them because the relationship is just not working for us anymore. Clients’ priorities may change and projects may go on hold temporarily or even permanently. The general economy may be booming, but our specific industries might not be experiencing the same flush of success. What led to my most recent recession had been the loss of a steady and high-paying client because they outsourced their accounts payable to a firm that demanded that all freelancers become employees. In one brief phone conversation, I had to part with an $18,000 annual contract with few immediate prospects to replace it. If occasional recessions are as inevitable for small businesses as they are for countries, smart freelancers will develop a survival strategy before the next one hits. As with most other challenges in life, it’s a good idea not to panic as soon as you realize you are in a recession—instead, step back from the situation and talk through your fears with a trusted colleague. If possible, determine not to take the situation personally—avoid wasting precious energy trying to figure out if you were to blame for your personal recession. Instead, look ahead to solutions to your problems:
- Trim expenses. For example, I had planned to purchase a new laptop in April, but instead I extended my warranty for one year so that my three-year-old laptop would be still covered. However, don’t be tempted to delete the line item of marketing in your budget. Instead, increase your budget for marketing to bring in a flood of new business.
- Brainstorm all potential resources, even perhaps accepting short part-time or full-time W-2 assignments. Rather than liquidate assets to keep yourself and the business afloat, consider borrowing against those assets; financial planners suggest that we are more likely to pay back a loan than to replace money withdrawn from our accounts (“Never invade capital” is their mantra).
- Develop a budget based on your current revenue plus the financial resources that you’ve identified, then consult with your accountant to see if you could recalculate your quarterly tax payments based only on your actual revenue. When I did this, I found out that I could legally skip my second quarter tax payment.
- Contact all your existing and past clients and ask if they have any projects that you might help with. Spend a few days data-mining to find companies similar to your best clients so that you can market yourself to them. Network obsessively, but rather than ask people for help, offer to guide them to your contacts to help them find work—it’s good karma and brings you amazing positive results.
- Stretch yourself to learn new software and new skills; if possible, earn a credential (view possibilities at the STC site).