The pros and cons of freelancing
Sally-Anne Watson Kane
. Monday, November 21, 2016
What are the pros and cons of freelancing?
The pros and cons of being the sole decision-maker
It's great to be able to make all your own decisions but it can be lonely at the top. As decision-maker, the buck stops with you and making the wrong decision could send your business, and you, down the drain.
If you want to avoid disasters as the sole decision-maker:
Example: Sally is an editor with an online scribing and editing business. She has a team of contractors to whom she delegates editing work and audio transcription work. Over the years, she has learned to ask her team for suggestions about the services she offers and how to improve the way she does business. She also asks experienced colleagues for advice and guidance before making major business decisions.
- Make sure you have intelligent and practical colleagues and/or a team (e.g. contractors) to consult with about the issues that arise in regard to running your business and ask for their suggestions before making a decision.
- Never make hasty decisions. Once you think you know what to do, wait a couple of days, if you can, and listen to your intuition as well as the opinions of your team or colleagues before making your final decision.
- Write up a list of the pros and cons, or a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), of your decision before making it final.
- Situations and environments change and so must we. Once your decision has been made, be flexible enough to then change your decision if it makes sense to do so.
The pros and cons of working alone
The benefits of working alone are:
- You may like your own company and enjoy being alone.
- Your workspace is probably quiet, and you can suit yourself whether or not you play background music.
- Because there are no people around you there are fewer distractions and you may be more productive.
- You don't have to work with anyone who's difficult or annoying to work with, or explain yourself to anyone.
- You can be grouchy if you like; your mood isn't hurting anybody but yourself.
The drawbacks of working alone are:
Example: Helen runs an online audio transcription business in a home-based office. She enjoys working alone. But she has put some strategies in place to make sure she doesn't get socially rusty or lonely: 1) regular face-to-face catch-ups with her team, 2) face-to-face networking and training when the opportunity arises, and 3) speaking to clients and contractors via telephone when appropriate, instead of relying on emails.
- Being alone a lot may make you feel isolated and lonely.
- You may prefer a noisy workspace.
- You may work more productively in a social, people-busy workspace.
- Not having to deal with people much can make your social skills rusty.
- Because you don't have to be nice for anyone, you can become a real grouch.
The pros and cons of fluctuating earnings
Probably the most difficult challenge for a freelancer is the fact that earnings fluctuate and quite often, it never rains but pours. Some months you'll be working many hours or on high-paid jobs and making a lot of money; other months you'll be just making ends meet. Maintaining a healthy cashflow throughout the dry spells as well as the floods is arguably the most important aspect of freelancing because if you can't pay your bills, you won't survive.
The trick is, when business is going really well and you're making a heap of money, don't forget that this is not the new 'normal' but simply a 'peak' and that in future, there will be 'troughs' again. Apart from putting aside money for tax (that you'll end up paying to the tax office), every week review your earnings and put aside any excess funds into a separate 'slush-fund' account. You'll be able to use this fund for support when business slows down, or you have an unforeseen expense. On the other hand, if your business doesn't end up slowing down at all, your slush-fund then becomes 'savings' and you can do what you like with it.
Example: Pam works as an online secretary. She has had cashflow problems in the past but over the years has learned from her mistakes. Now she always puts aside a portion of her earnings to cover the tax she might have to pay at the end of the financial year. She maintains good cashflow by putting some money aside during the busier, higher-earning periods so that when business is slow, she can continue to pay the bills.
Weighing up the pros and cons
There are both benefits and challenges of working alone, making all your
own business decisions and relying on an income that is far from
dependable. The trick is to take advantage of the benefits and manage
the risks and challenges so you and your business thrive.
This article is based on my own experiences since 2002
when I started On Time
Typing as a sole trader business in Darwin which
has over the years evolved into an online transcription, scribing, writing, editing and
proofreading business with clients across Australia.
Stay posted for future articles about the challenges of working
from home, work-life balance and other aspects of freelancing and managing home-based businesses, especially online scribing, secretarial or editing businesses.
Copyright Sally-Anne Watson Kane, On Time Typing. Please seek my permission prior to reproducing this article in any way but feel free to link directly to this page if you wish to use this content - thanks!