Economic Chaos & FREELANCE
The news reports about our robust economy last year baffled me, and I freely admit my life as an artist has dragged me through the school of hard knocks and taught me how to live well without having a lot of money. In December, our economy grew a miserly 0.6 per cent and they were still calling it robust. The first quarter of 2008 reported the same statistics (that's six tenths of one point of 100 points, kids) of 0.6 per cent growth: NOW we're in a recession according to analysts. The cost of fuel has quadrupled, and since every money making venture depends on oil at one level or another, it makes good sense that rising prices would soon follow as I wrote back in 2005 on a topic I know practically nothing about—economics. Why are we talking about this on a design blog? Because many have new businesses but few have business education, so here's few things about how to stay in the black while your competitors are just black and blue.
Companies in almost every industry started twisting and turning within the confines of the law to cover losses due to the growing cost of doing business; that's true for freelancing as well. Every business is affected by the rising cost of fuel, and I'm sure you will join me in weeping for the people at Exxon who were saddened by their measly $10.89 Billion in profits this quarter—they didn't even meet Wall Street's expectations, oh boo-hoo. From shipments of raw materials to delivery of the finished product, the cost of doing business in an oil driven economy is pushing the creative limits of operations managers worldwide. And what about public companies that answer to their new task masters—no, not the shareholders. The financial analysts on Wall Street are the powermongers who drive the price of commodities and goods beyond the reach of the average guy. Operations managers must find ways to meet Wall Street analysts' predictions or lose that precious BUY recommendation. Companies have changed their first priority from making customers happy to satisfying Wall Street. If we did that in design, the industry would collapse. And when a publicly traded company cannot squeeze profits from narrowing margins, what then? Then they reduce the quality of the product which would be career suicide in design. Maybe they quietly make that roll of toilet paper with fewer sheets or remove five tenths of a mil from the thickness of your plastic garbage bag; but the price remains the same. Companies do this to stay within the analysts predictions for the next quarter; when there's nothing left to cut, cut quality and maintain price. When there's no where else to squeeze, investment bankers make the ever so gentle suggestion that operating costs need to be reduced. Lay off those workers, shift operating expenses whenever possible to another department, company or cause. Shift the cost of doing business to the customer; like the power company adds fuel costs to your bill each month. Hey, let's cut back on customer service. Lose customer service in a freelance situation and you might as well kiss the customer goodbye.
Business may be rolling along briskly and one day, a regular client starts slow paying, or word gets out another client laid off a few employees. They still present a smiling face because of pride or optimism. But eventually, no matter how solid your business relationships are, the slowdown will reach your bank account. What should you do?
Reduce your overhead, just like the big boys in the corporate world.
1. Cancel cable or satellite TV; you watch too much TV as it is. Listen to the radio instead.
2. Stop buying newspapers and magazines; you can read most online for free. The library has Communication Arts Magazine, for heaven's sake. Oh, you like to collect them? You're going to die naked, so give it up.
3. Turn lights off when you leave the room. Turn the computer off when you stop work.
4. Stop eating out; and forget that $4 cup of coffee. Remember grocery stores are designed to make you spend more than you want to. Shop the outside perimeter only (produce, meats, dairy and bread) dipping into the aisles for one or two items. Shop with a list that you stick to and, lose that pride, use coupons. Heart disease and weight gain became more prevalent as we became richer; use rice and/or beans to make meat and poultry last longer like our grandparents did. You'll be healthier and your food bill will be lower.
5. Delay buying the new car, especially if the one you have is paid off. Buy a bicycle instead.
6. Make those $300 shoes last another season; and don't spend so much next time. Try switching your need for status from buying great stuff to creating great stuff. Make your status depend on your own great works instead of someone else's.
7. Get rid of your land line if you have a mobile phone.
8. Combine car trips so when you leave the house, you make all the stops you need for a while; whenever it's more efficient, use a messenger or priority mail. The postal service not only provides all the packaging, but in major cities, they offer free pickup. AND they have a flat rate envelope, plus 2 flat rate boxes. If online merchants took advantage of that service, we would all be paying less for shipping.
9. Reduce your thermostat in winter and raise it in summer. Put on or take off some clothes. Save energy; cuddle.
10. Resist buying the latest thing; you don't need it and spending money now on anything less than a necessity is folly when you don't know what the economic future holds.
11. Cold call like your life depends on it; a month down the road, it just might.
12. If you're not hurting for business and you think this list is nonsense, take all the money you might save on this little list of sacrifices and give it to the poor. Learn to live on less and put your disposable income to good works.
If you fall behind on paying supplier bills, don't hermit out and stop talking. Call them up and explain the situation. If you are a long time customer, chances are they will value your good working relationship more than they want to destroy it over money owed. If they don't care and say they will be knocking on your door at midnight to collect, then learn something about who you want to work with in the future. For those who turn hostile, make regular monthly payments. They can sue you, but the judge will almost always throw it out if you are making an effort. I hope none of you ever reach that point, but be prepared if you do. There are 2 or 3 chapters in my book outlining a detailed plan of action to help you survive economic chaos and you can buy a used copy at Amazon. Great if you never need it; but then you probably aren't taking any risks. Risk is where it's at, especially on Wall Street.
After a slowdown; the most important thing you can do is persist in calling on new customers. It isn't how hard you fall that's important in the long run. It's how fast you get back up and start dancing again.
Got questions about freelancing? Tired of working for someone else and doing the boss' castoffs? Better get some good advice on how to protect yourself from those who would pillage and plunder your creative talents. I wrote the book I needed when I first started out in advertising design to keep you from making some of the same mistakes. Start and Run a Creative Services Business. It's filled with a full spectrum of my experiences over 25 years. Not an artist? You'll be in stitches as you follow the pitfalls and adventures of self-employment. And if you've been freelancing for a while, you'll find new information and a trustworthy mentor to stand by your side through thick and thin in Start and Run a Creative Services Business. Excerpts are available online at my website.