Financial Planning Tips During a Recession
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Goldman Sachs Research estimates the risk of recession in the next year at 30% in the U.S. As an independent worker, our entire livelihood depends on getting clients and getting paid for our services. The word "recession" could induce fear as we may see budgets being cut and clients spending less.
While we enjoy the freedom to live life on our own accord as independent workers, we now have to prepare for the potential impact of an economic downturn.
Fortunately for you, we have tips on navigating a recession and not only surviving but making your business flourish during unstable times
First, let’s cover the impact of a recession on your business. In short, each economic turbulence will affect freelance industries differently. Some companies may cut their contractor budget while others may not only keep it, but increase it and let go of full-time employees instead. Make sure you get a sense of your industries tendencies if you work with corporate partners. If you sell to individual consumers, you may see a downturn in referrals or inbound leads. This means you must not only increase customer acquisition but also look into current client strengthening techniques.
Tips to Recession-Proof Your Solo Business:
- Sign Clients on Retainer or Recurring Payment: One of the scarier components of a recession is not feeling confident about when the next check will come. One way to combat that is to obtain scheduled income by signing retainers or long-term project with new or existing clients. Package your services to include work that gets paid in scheduled long term increments. For example, if you are a freelance consultant, you can project the timeline of work needed completion and offer different increments of payments for 3 months of 6 months.
- Limit Expenses if They Do Not Yield ROI: Let’s face it - for the most part, anything we need to do as independent workers can be done with a free or near-free tech stack. In good times, we add paid services to meet demand and scale. Similarly, in uncertain times, it will save money to cut business bills or subscriptions to save cash. A good example of that might be networking conferences or downgrading to a free CRM.
- Extend your Skill Sets or Offer Various Services: Evolution as an entrepreneur is probably the most underrated skill. Adding new skills or services to offer to your clients will only make the relationship stickier. Being able to offer needed services is mission-critical for obtaining new clients during a recession.
The road ahead may be uncertain but there are ways to navigate the uncertainty with confidence. Sticking with these tips and tapping into your freelancer network for encouragement will be essential over the next 6 months. Use the information at your fingertips to come out on the other side better than ever before.