Wednesday, February 4, 2009

What's Your Contingency Plan?

Yesterday I was reading an article in the New York Times about the economy. The article wasn't primarily about freelance writers, but the person who wrote the article (Ben Stein, randomly enough, although I didn't realize it til the end) had this to say about the freelance writing life:

"This is the most insecure existence imaginable. It mandates saving, ingenuity and nonstop work and creativity. Freelancers never have a day off. Never. They know that they can go months without a check. They absolutely have to save. They have to have five different levels of fall-back plans and financial escape hatches."

He was writing about being a freelance scriptwriter in Hollywood. But there are definitely parallels between this and the freelance copywriting life. As a contract worker, I don't worry incessantly about money (I used to, but into my third year as a full-time freelancer, I've finally allowed myself to have faith in the fact that my business is pretty stable).

But that doesn't mean I'm not obsessive about saving. I am. If I don't put money into my savings account every month, I feel like the whole thing could unravel at any minute. And it takes a serious crisis to make me take money out of that account. I also have a separate account for tax savings...I have to put a high percentage of every check I get into that account and never look at it again, or tax season will be a nightmare.

But my contingency plan goes beyond savings. If I start to run out, there's always a freelance writing staffing firm I've been eyeing for a while...they hire mainly writers for on-site projects, so I haven't actively pursued it, but it's there if I feel like I need it. There's an all-out campaign for a full time staff copywriting job at an ad agency--I could do that, if i really needed the stability. I have options.

In this economy, even full-time employees need contingency plans. Full-timers are often completely destroyed by a firing because a). all their eggs are in one basket and b). they haven't thought ahead to when the basket tips over. Stability encourages complacency. As freelancers, we know that relying on one or two clients is an unstable situation and diversifying our client base actually leads to a more stable situation; and you have to have plans on top of plans for when you lose regular clients, because you will.

So what's your contingency plan?


Unknown said...

Excellent post, excellent questions. It's very true that we freelancers are never able to exhale. But the inconsistency, in my opinion, is a benefit. We get used to thinking on our feet. We're always drumming up new ways to stave off slow periods. We learn how to market and how to plan for the bottom dropping out so that when it comes, we have a plan of some sort.

My contingency plan has been and will continue to be to keep a specific minimum in my checking/savings accounts. I've also already worked with one temp agency and have built a good reputation with them.

And like all freelancers, I'm constantly thinking of ways to improve the pool of projects/clients, and to bring in more cash in creative ways.

You're SO right about full-timers! When I was one, I remember thinking I'd never get to a point where I'd ever be able to freelance! When I lost the job, I was shocked at how quickly - and relatively easily - that freelancing career was born.

Dawn said...

My contingency plan was that I got a job! I've only been full-time freelance for 18 months but mine was the sole income (my husband was laid off so he was with the kids) and it was just too scary. We ran through our savings while I built the business off and without that safety net, we were scrambling when clients paid late. So he got a job (at a pay cut, natch, such is the economy) and I got a job that allows me to telecommute 3 days a week. But I still love your blog!!

Anonymous said...

Contingency plan? Depends on what circumstances you are talking about. In an economic downturn, I think my skills and experience with computers and software put me at a distinct advantage. Someone has to service and maintain all the systems in place these days.
I think I can earn a decent living, either as an employee or a contractor/freelancer. Right now, we own our house outright, and our expenses are minimal. Stashing away money in significant amounts helps us sleep at night.

In the event of a catastrophe, my wife and I have the gear and supplies to live off the land pretty well, as well as hunting and growing our own food.

Deadhedge said...

My contingency plan is to always have a side job. I started as a $9/hr employee at a knitting store on the weekends and also taught knitting. Then I moved on to a medical interpreter in Spanish. Finally, I became an MBA admission consultant which is fun and has the best bang for the buck. I learned never to have just one job. Key to a side job is that it has to be kind of fun otherwise, I would go nuts working all the time. I also think that I might be able to combine my side jobs into one and in the future become a Spanish speaking knitting instructor for MBA applicants.

Kimberly Ben said...

Another great post, Jennifer, that forces us to pause and think. I'm in agreement with Lori's statement that I see the inconsitency as a beneit. I hustle hard. It pays off.

Right now my contingency lan ids to diversify by adding a couple more consistent clients, and boosting other more passive revenue streams (I'm working on a niche blog and some other things). I keep tweeking my business plan and review my goals periodically to make sure I'm on track.

In the meantime I am focusing on simplifying my life and minimizing my expenses as much as possible.

Jennifer Williamson said...

@Lori: I agree the inconsistency is a benefit--it keeps us on our toes. As freelancers, we get "laid off" every time a job ends--and we always have to be looking for the next one. Full-time workers often believe ours is a pretty unstable life, but to be honest theirs looks the same way to me now that I've done both.

@Dawn: There's no shame in taking an on-site job--you can still freelance and build your business, especially since your on-site is part time. I took an onsite gig earlier this year for a few months, and while it did take away from time I could've spent on my business, it made me think of freelancing a little differently. In this career, there's a lot of flexibility to go in and out of full time work and still work on what you love.

@Anon: You sound more resourceful than I off the land is pretty brave. I have a tent and know how to fish, so I might be ok...but no Internet, no money. At least, that's how it is right now :-)

@Kimberly: Diversification in my opinion is the best contingency plan for people like us. I've been looking into passive income streams as well. Keep at it!

Anonymous said...

Jennifer, got here through Lori's post... my contingency is savings plus residual income. Both keep growing and I actually probably will end up with a retirement plan after all.

I also have seeds and am getting more, plus some containers... an amazing amount of food can be grown in a couple or three containers... water is the real problem here. Not quite off the land or the grid, but better than nothing.