Can I ride this thing out?
November 19, 2008 7:37 AM   Subscribe

Anybody have evidence -- empirical or anecdotal -- about what recessions do to the self-employed? I'm a freelance writer, and am wondering whether my clients are more likely to farm stuff out to me because I'm cheaper than hiring in-house staff or cut their freelance budgets and dump more work on the people they're already paying. Thanks!
posted by shallowcenter to Work & Money (11 answers total) 12 users marked this as a favorite
This may not be exactly what you're looking for, but there was a short piece on Marketplace about what the economy is doing to entrepreneurs.
posted by JoanArkham at 8:38 AM on November 19, 2008

I'm not sure if this applies to freelance writing, but I would expect many companies (especially tech companies) to cut their writing and documentation budgets during hard times, first cutting outside work, if they have the staff to do the writing, and following that, cutting staff and farming out the jobs they have to contractors.
posted by zippy at 8:50 AM on November 19, 2008

Anectdotal: Our magazine's ad sales still grew this year, unbelievably, but we're preemptively slashing budgets all around for 2009. My author budget is down, and I'm going to be drawing on in-house staff to do a lot more writing.
posted by peachfuzz at 8:54 AM on November 19, 2008

we're contractors in the publishing industry and early in the year (this summer) we got a bunch of work because some of our clients had laid people off, but the work still needed to get done. so, it worked out well for us.

if the recession will continue to be good for us is anyone's guess, as our parent company has also started laying people off, so we might get even more work shoved on us (with no extra pay).

so, it was good for us for a while, but may turn out to be less good later. but, i would rather be overworked right now than have no work at all and get laid off.
posted by misanthropicsarah at 9:00 AM on November 19, 2008

Anectdotal: I work for a small stock market publisher. We've cut our free-lance authors from about 10 down to 1. We've also laid-off in-house writers, but the freelancers we're the first to go.
posted by and hosted from Uranus at 9:23 AM on November 19, 2008

Depends on the company. Some mags and rags are probably cutting budgets to the point where they're slashing full-time, with-benefits staff members—in which case they may well be looking to cheaper freelancers to pick up the slack. Others, like mine, are cutting freelance budgets to keep on full-time staffers.
posted by limeonaire at 9:24 AM on November 19, 2008

Response by poster: Thanks for the thoughts, folks. Joan, here's what stood out from that Marketplace piece:

"Not only will potential employees and consultants return phone calls these days, they'll work for equity in addition to cash. And there are other advantages to starting up in recession. Rent is cheap. And people like web designers and graphic artists may offer their services at a discount. After all, they're hurting for business too."

I'm not hurting for business now, but am wary about what the next several months may bring. Anybody else with insights to share?
posted by shallowcenter at 9:26 AM on November 19, 2008

Anectodal: I'm a freelancer, and a couple of the agencies I've worked for have put a moratorium on freelancers (unless I'm absolutely necessary). It's been a negative thing for me. (But I'm riding it out anyway ... just looking into more and more agencies.)

I also work with other agencies that are basically comprised of freelancers, and they've been my best source of income.
posted by iguanapolitico at 10:23 AM on November 19, 2008

Still more anecdotal: I've seen no change in the amount of freelance work available to me (programmer and web designer) and have no plans to lower my rates.

The industry I focus on is pretty heavily dependent on freelancers; they traditionally haven't been able to offer competitive salaries so have a lack of in-house talent. For that to change, the going rate for developers would have to drop substantially and these companies would have to start hiring more full-timers to take on the work -- while the first might happen, the second seems unlikely.
posted by ook at 11:42 AM on November 19, 2008

It's my opinion that you are probably safer having your employment spread over several businesses than being employed by one. As a marketing communications person, I've been laid off three time, always in bad economies or weak cycles in my industry. Last time I decided it would be my last freaking time going through that routine and I have been freelancing since.

Different companies will do different things so it is hard to make generalizations. But my experience is that after the staff get laid off, there is more work and more need - and therefore more opportunities. Even when budgets are slashed and "no outside contractors" rules are in effect, articles and ads need to be written web pages need to be updated, speeches need to be written, brochures run out and trade shows go on.

You didn't ask for advice, but I would say to tighten your belt and live with tight financial discipline. Ensure that your client mix is diversified so you are not exposed to just one business class. Try not to have one client represent more than 25-30% of your work. If you can dig it up, try to do a few extra jobs now and stash the pay aside. Put extra efforts into your networking and reminding current and past clients that you are there and ready to help. Keep your eye on local companies that have layoffs, let the dust settle for about a month, then try to make some entry to make your services known - perhaps through a VP of sales, because sales may get gutted, but someone always remains and they still need marketing.

There's no certainty for anyone. I feel much safer being a freelancer in this economic uncertainty than I ever did being employed during rough spells.
posted by madamjujujive at 8:24 PM on November 19, 2008

I've been an entrepreneur for 15+ years and have lived through some tough times, including the Asian Financial Crisis and SARS.

You'll probably see new competition from people who are becoming freelancers because they've just been laid-off. As an experienced freelancer, you have a distinct advantage over the newcomers who are trying to start a business and develop new clients in a down market, though they may depress rates in your area.

Many of my clients have not been able to add headcount, but have been able to spend the same amount of money (sometimes more) on outside consultants. And it's amazing how money can appear out of nowhere when a senior person in an organization wants to move ahead with a pet project.

I've also been successful suggesting new products and helping clients solve problems they didn't know they had. Being in the right place at the right time, having a genuine interest in your clients' success and a healthy dollop of good luck all help.
posted by quidividi at 4:32 AM on November 20, 2008

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