The pros and cons of freelancing
What are the pros and cons of freelancing?
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:
- 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.
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.
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:
- 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.
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.
Probably the most difficult challenge for a freelancer is that 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 cashflow so you’re able to pay your bills throughout the dry spells as well as floods is arguably the most important aspect of freelancing.
When business is going really well and you’re making a heap of money, don’t forget running a business means having a long term view and planning for not only this six months, but the next. Remember your high earnings at the moment is not the new ‘normal’ but a ‘peak’ in earnings that’s probably temporary. Remember to plan ahead for the ‘troughs’ that are likely to happen. Apart from putting aside enough money to pay your tax bills, you need to put aside any excess funds into a kind of ‘slush-fund’ account intended for you to use when your earnings slow down, or for unforeseen business expenses. Then, if business doesn’t end up slowing down at all, that slush-fund then becomes profit that you can spend how you wish.
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.
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