Riding the Income Rollercoaster

Do rollercoaster rides exhilarate you or leave your head spinning and stomach churning? Does that first dip of the ride make you ask, “What the hell was I thinking?” or “Let’s go again!”? Not everyone rides the peaks and valleys with the same zeal. And for many freelancers, the income volatility of the work can feel like a crazy rollercoaster ride. It can be the biggest deterrent to someone going solo and it is often the reason they quit. Transitioning to freelance is not merely a lifestyle shift, it’s a shift to running “Me Inc.”. And just like a corporation, you can’t wait for customers to pay up before you pay your bills – personal and business, so there needs to be money in the till before the bills come due. And you need a strategy to keep it full for next week and beyond – work or no work. 

We asked some of our freelancer friends for tips on how they stay the course and combined their strategies make for one awesome plan to ride it out. 

Build an income relief account 

Personal finance 101 urges everyone to build the cliched “rainy day fund. For freelancers, this cache needs to be a bit bigger to include both 3-6 months of living expenses but also a few months of expected business costs like software subscriptions, bookkeeping, membership dues, etc. If you didn’t address this before you started the journey, you might need a small but steady revenue stream, i.e., a part-time job. See below. 

One last round of regular employment?  

So how do stay off the roller coaster of income fluctuation in the early days? Maybe a transitional job with steady income even if it’s meager and dreaded? It’s just until the reserve fund grows, and the big stream of earnings starts to flow.  

All systems go! 

Build your administrative practices early so you don’t have to play catch up later. Once you get rolling, you can’t afford to divert time from project work to setting up CRMs, accounting practices, or other platforms to support your business. Take the time to create your foundation at the outset or during the rollercoaster dips if you have already started.  

Add an extra 30% to your hourly rate 

Any HR professional will tell you that benefits cost an employer at least 30% of an employee’s salary. That’s a lot of earnings that aren’t obvious. So, if you’re calculating your rate based on your recent salary, remember the value of the benefits you have sacrificed. Add at least 30% to your rate and consider the other administrative costs your employer covered for you: printer ink, IT support, company-issued laptop, access to software licenses, tools, etc. 

Cheaper by the dozen  

Many freelancers see the value of offering a reduced rate in return for a steady flow of work or income from a client which could be a retainer or guaranteed ongoing project work. 

One for you and one for me 

When you are starting as a freelancer, it’s easy to forget that not all earnings are yours. The government, your business insurance company, your accountant – they all want a slice. The elation of that first payment can be a little heady but resist the temptation to claim it all as yours.  

Use your dips wisely 

As unnerving as the dips can be, try to use them to your advantage. Many solo workers use the time to gain new or develop existing skills. Some focus on marketing efforts which might not be “gainful” in the sense of compensation, but can create exposure, such as building your content hub, growing your audience, generating leads, or attending networking functions. It’s important to stay in work mode, however, so your mindset doesn’t shift or waver. 

Congratulations, you are the CEO of “Me Inc.” 

Many freelancers go solo to do more of what they love. But freelancing means ownership of the entire business, each and every department: sales, marketing, IT, finance, and so on. Paying regular attention to all of these will free you up to focus on the work you love that pays the bills when you need to. The most pressing task though is sales. While a profanity to some, it’s critical to the survival of Me Inc.. If the world doesn’t know your talents are for sale, you can’t pursue those passions that brought you here. And who knows, you might grow to love chatting to people about that passion which can be infectious. A successful CEO shares the company vision and ensures the business can ride the peaks and valleys of business fluctuations. 

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