The market can be unpredictable at times. But what happens when the entire economy takes a nosedive? That’s where recession comes in. Recession, it’s a word that can strike fear into the hearts of business owners and freelancers alike.
However, what is a recession, exactly?
Simply stated, it is a period of economic decline, typically marketed by:
Decrease consumer spending
Businesses experience a slowdown in sales and profitability.
It can have a significant impact on the job market, with companies cutting back on hiring and even laying off workers.
You must be thinking why do I care? You should.
Because sadly, no one is immune to the effects of a recession.
Clients may be less likely to hire in new employees or freelancers during tough economic times.
Even if they do, they may offer lower rates.
Fewer full-time job opportunities.
The bright side? Freelancers can recession proof themselves.
How? You just need to be prepared and have a plan in place to weather the storm. In this blog post, we’ll discuss how you can recession proof your freelance career and some practical steps you can take to use combat recession.
So, buckle up and let’s dive in!
Global recession 2023!
Have you heard about the “Global recession 2023” predictions? The reason - “New borrowing costs put in place to fight inflation cause several economies to shrink.”
According to Bloomberg and CEBR:
More than a third of the world's economies will fail, with a 25% likelihood of a global recession in 2023 if global GDP growth falls below 2%.
By 2037, developing economies will have caught up to wealthier ones, doubling global GDP. As power dynamics shift, East Asia and the Pacific will account for more than a third of global output by 2037, while Europe will account for less than a fifth.
Impact on India?
The research estimates India's economy would reach $10 trillion by 2035 and rank third globally by 2032.
A slight or severe recession in the US, a superpower, will affect the world.
The crisis escalated into a global economic shock, resulting in European bank failures, stock market declines, and major Indian market losses.
Indian companies had many outsourcing contracts with US clients, thus a US economic slowdown proved bad news.
You must’ve witnessed what fear of an imminent global recession made the IT industry do, “The massive IT layoff, 2022.”
Several tech giants (from Amazon to Disney) announced mass layoffs as a part of their restructuring plans.
Elon Musk, Mark Zuckerberg, and Jeff Bezos have laid off thousands of employees to slash costs.
1,20,000 jobs were lost worldwide last year.
Well, the layoff didn’t end. Continuing to 2023: 500 tech firms fired 150,000 more employees.
Freelancing during recession can be tricky and intimidating but don't panic, because you have the control to prepare for and adapt to changing markets (perhaps by rebranding such as adjusting your rates, services or finding new areas of work).
So, whether you’re a gig worker, employee or a freelancer starting out as a small business owner, it’s a good time to start thinking about your plans for the future and taking steps to protect your financial stability.
“Prevention is better then cure!”
Impact of the recesesion on Freelancers?
Can freelancers thrive during recession? Yes. Is it a blessing in disguise for freelancers? It might be. The recession can have both positive and negative impacts on freelancers.
Companies may reduce their budgets and cut back on hiring more workers.
In contrast, some companies may opt to hire more freelancers as a cost-saving measure instead of hiring full-time employees.
Industries that suffered and few that survived during recession!
During a recession, industries that are most affected are often those that rely heavily on consumer spending, such as:
Other industries, like healthcare and education, are typically less affected. However, it’s important to note that the impact of recession can vary depending on the severity and duration of the economic downturn.
While these industries struggled during a recession, some industries and companies survived and made their actual comeback. For example, businesses that offer cost-saving solutions or products that can help consumers.
We will call these industries recession proof (i.e. Economic downturns affect them less but still fluctuate). They were:
“The fact is there are fortune 500 companies that have been founded during recessions.”
- Marianne Williamson
Does recession reshape the freelance market?
Recessions can certainly impact the freelance market, as they tend to affect the overall economy and job market.
A report also suggests that in a recession, more workers quit or get fired, resulting in a spike in freelancers number, whereas, businesses cut back expenses, leading to a potential increase in demand for freelance services.
It is known as the rise of the “gig economy” where more people turn to freelance work as a way to supplement their income or find new source of employment. This can lead to increased competition for freelance work, as more people are vying for the same jobs.
Does that mean👇
Should you give up on freelancing in recession?
We’d say a big NO. Why? read below.
Well, you might face self-doubt but don’t doubt the market, because “businesses benefit from freelance services.” It’s a fact that businesses during recession want to find a more sustainable way to run their business, by cutting overhead costs and any other expenses they can avoid.
This means, if a company wants to survive and combat recession they’re more likely to opt for cost-effective ways and one of them is hiring freelancers. That freelancer can be YOU, but, only if your service benefits the company while staying cost-effective (That’s why you need to re-evaluate the market and diversify as needed).
Simply put, do businesses hire freelancers in recession time? YES, but as stated earlier, it depends on the service, skill set and need.
Meanwhile, before you delve into the thoughts of giving up freelancing, there’s a host of benefits of freelancing during a recession you should consider.
You’ve a skill? That means there’s a gig out there for you, doesn’t matter whether it’s recession or not.
More gig opportunities: During a recession, companies may not have the budget to hire full-time employees. Therefore, they may turn to freelancers to complete projects on a temporary basis, providing more opportunities for freelancers to secure work. (As stated earlier)
Increased earning potential by diversifying client base: Freelancer can set their own rate, which can potentially result in higher earnings compared to a traditional job.
Remote work that brings work life balance: Remote work can help to reduce commuting costs, save time, and increase productivity. Also, control over their schedule, which can help to achieve a better work life-balance during a recession when stress and anxiety levels may be higher due to financial uncertainty.
Entrepreneurial experience: Freelancing requires a level of self-motivation and entrepreneurial spirit, which can help to develop important skills that can be valuable in any career path.
Other benefits include enhanced autonomy, portfolio development, network development, niche expertise, improved skill set, flexibility, and diversification, among others, that might help an independent worker in the long run.
“ You may lose it all and fall, but in the midst of your recession never lose your passion.”
- Goitsemang Mvula
Get recession ready-freelancers. Tips and strategies.
Do you want to survive and thrive during tough times? Prepare for a recession to ensure the sustainability of your business. With economic uncertainty looming, it is important to prepare for the worst.
“Recession is opportunity in wolf’s clothing.”
~ Robin Sharma.
Here are some tips and strategies to stay recession-proof and continue freelancing without any fear.
#1 Focus on recession proof industries
So, what are these industries? While no industry is completely immune to economic downturns, there are some that trend to fare better than others during tough times. At the beginning of the blog post we mentioned a few industries.
Of course, these are just a few examples of recession-proof industries. The key is to focus on industries that are essential to daily life and are less likely to be heavily impacted by economic downturns.
#2 Upskill and re-skill: Build recession proof skills
Continuously upskill and re-skill require dedication and effort, but the payoff can be significant. It means acquiring skills that are in demand and have long-term potential.
Note* When choosing recession proof skills, it’s important to consider both current demand and long-term potential. Also, keep your resume or pitch deck updated. Finally, Don’t hesitate to invest in yourself and your future.
#3 Never Plan Beyond Six Months.
Why should freelancers avoid planning beyond 6 months? Because the market can be unpredictable and subject to sudden changes. Moreover, freelancers must understand that the economy is cyclical, and a recession can hit at any time.
By planning for the short term, they can quickly pivot their services to meet changing market demands and ensure they remain competitive.
So, avoid making long-term commitments that may not be feasible in the short term. This flexibility allows them to adapt to market conditions and take advantage of new opportunities.
Focus on shorter projects
Conditions such as:
The COVID-19 epidemic shook the global economy, causing job losses and lower income for many people. In India around 12.2 crore people loss job due to pandemic.
In contrast, remote work increased recruiting in some businesses during the pandemic, which resulted in mass layoffs due to the threat of a recession in 2022, continuing to 2023.
You might be thinking, “no long-term planning” implies no direction or goal, right? Yes, but here’s the deal: many freelancers set short-term goals that align with their “long-term aspirations,” allowing them to build momentum and achieve their desired outcomes.
“Freelancers tendency to avoid planning beyond six months is a practical approach that enables them to remain agile and responsive to market changes. With the current economic climate being so uncertain, having a short-term mindset can be a key factor in ensuring business success.”
The benefits of short terms goals?
Clarity of goals
Building momentum and confidence
“ As sure as the spring will follow the winter, prosperity and economic growth will follow recession.”
- Bo Benett.
#4 Diversify Your Income Streams
What is the most significant challenge a freelancer can face? Generating a steady income, right? While you may have a reliable client or two, relying on a single income stream can be risky. That’s where diversifying your income streams comes to play.
Diversifying as a freelancer means exploring different avenues to generate income, whether it be through new markets, services or clients.
Here are a few ways you can diversify your income streams:
Explore new markets and offer new services
Venture out of your comfort zone and find clients in different industries. For instance, if you’re a graphic designer, you could expand your services to include website design, social media marketing or even video editing.
While businesses are looking for cost-effective alternative, the more diverse your skill set, the more opportunities you’ll have to attract these clients and generate additional income.
Expand your network and diversify your client base.
Have you ever imagined, or faced, the following situation: "That one disappears, so does your income " What impact does it have on you? The impact magnifies if that client is your sole client.
Relying on one client or type of work can be risky, by networking and seeking out multiple clients, you can spread out the risk and create a more stable income flow.
“History has shown that even in a recession, consumers go to shows.”
- Michael Rapino.
Examples of different income streams for freelancers to explore:
Below are some examples out of the many different ways you can make money.
Start selling digital products (e books, courses, or templates)
Sell physical products (prints, merchandise)
Offer coaching or consulting services in your area of expertise
When the economy takes a downturn, clients may have less money to spend, making it more difficult to maintain a steady income. By having multiple income streams you can reduce your reliance on any one source of income and increase your overall stability.
So, take the time to asses your skills and explore new opportunities - your wallet will thank you for it!
#5 Reduce expenses, invest more and build an emergency fund !
Savvy readers you must know how managing our finances has become increasingly important, especially when we are faced with the uncertainty of a recession.
It’s crucial to take proactive steps to prepare ourselves financially to weather the storm, such as reducing unnecessary expenses, investing wisely, and building an emergency fund.
“ Successful people save in prosperous times, so they have a financial cushion in times of recession.”
- Brian Tracy
First, eliminating redundant costs might free up money for other crucial financial areas. Such as, rent or mortgage, utilities, groceries, and insurance. By cutting non-essential spending like entertainment and extravagant items, we can save a lot of money for emergency funds or wiser investments.
Second, investment is essential to financial security, especially during a recession. Investing in low-risk, diversified portfolios during a recession can help us reduce losses and profit when the market recovers. Even in a recession, investing in gold, real estate, or bonds can give a steady income.
“If there’s a recession. I’d buy stocks. That’s when you make money: when markets are spooked.”
- Ben Stein.
Ways freelancers can reduce or eliminate expenses:
Freelancers can take specific steps to reduce expenses during a recession and mitigate the impact of a recession.
Strategies for negotiating with suppliers and clients:
Negotiation is a critical skill for freelancers to master. Effective negotiation can help you secure better deals, build stronger relationship, and achieve your personal and business goals.
#6 Focus on High-Value work
In a world where there is cut-throat competition, it is important to focus on high-value work to achieve success. This approach not only provides financial rewards but also contributes to personal and professional growth.
To provide high-value work, you need to identify and specialize in high-demand areas. This can be especially important during a recession when consumers are more discerning about how they spend their money.
The benefits of providing high-value work during a recession:
During a recession, many businesses struggle to stay afloat. Consumers spend less and competition for their attention and money increases.
However, high-value work during a recession has various advantages:
Benefits of providing high-value work during a recession
Increased customer loyalty
Differentiation from competitors
Future-proofing your business
Tips for developing skills:
Keep a close eye on emerging trends and technologies
Continually develop skills (take courses, attend conferences)
Be open-minded and willing to learn
Network and learn from industry experts
#7 Stay positive, motivated and be adaptable
While it may seem like the world is falling apart, it’s important to remember that a recession is a temporary phase, and things will eventually turnaround.
Be open to new opportunities
Seek out ways to pivot your freelance business
Maintain a positive attitude during a recession.
“Positive attitude attracts positive outcomes and opportunities.
So, focus on the positives, celebrate small victories, and stay optimistic about the future”
A recession can be a challenging time for freelancers and professionals alike, whereas, freelancing is a dynamic and ever-changing field, it’s important to stay positive, proactive, and keep hustling.
We hope you found this blog post helpful and informative, and wish you all the best in your freelancing journey.
In this time of recession, it is the time for invention.
Did you know both the telephone and the actionable were invented during the recession.”
- Eugene Mirman
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