Freelancing during an economic recession

Many financial experts are warning of an upcoming economic recession. In such times, freelancers are the first to be affected by company budget cuts. In this article I’ll attempt to give you a few tips on how to weather such an economic storm, and even profit from it.

 

Disclaimer 
This is not licensed financial advice. I’m simply sharing my personal opinions and conclusions. Take it with a grain of salt. Everyone’s situation is different. Use your best judgement.

When’s it coming?

Although nobody can say for sure, most forecasts place the recession anywhere between 3-18 months away. Will it only affect the US? Probably not. The EU isn’t in great shape either. Also, as it happened in 2008, a crash in the US market will ripple throughout the globe and affect everyone to some extent. Due to globalization, the world economy is highly inter-connected. I don’t think anyone will be completely insulated from such a shock.

 

But Calin, we just had a very strong jobs report recently. The economy is roaring. You’re talkin’ nonsense.

Well, dear alter-ego, here’s a very short list of facts that are pointing to my conclusion:

 

  • The US economy has gone through the longest period of economic expansion. The credit cycle takes between 5-10 years. The last downturn was in 2008, over 10 years ago. We’re overdue.
  • Housing prices in many cities around the world have reached the same levels as in 2008 – unsustainable without cheap credit.
  • Housing inventories in the US are building up while mortgage applications are dropping
  • The US has become the biggest debtor nation in human history, with close to $22 trillion as of today
  • A looming trade war with China, which in effect, is a tax on the consumers. This lowers purchasing power.
  • Populist movements throughout the Eurozone are threatening the integrity of the area. The Brexit debacle is currently the most evident symptom of that.
  • Higher employment rates are not necessarily a sign of a strong economy. In fact, it can indicate the exact opposite. People who previously didn’t need to work, now can’t afford not to – pensioners, housewifes, failed entrepreneurs, or people that collect unemployment or disability aids. They can no longer make ends meet. Keep in mind that, right before an economic downturn, things always look great.
  • The correction of 2008 didn’t go all the way through. The bubbles were re-inflated because people couldn’t take the pain. The same bubbles are now bigger than ever, but this time, re-re-inflating is not possible without destroying the value of the dollar and making things much much worse.

 

These are just a few things I could name off the top of my head. Do a bit of digging and you’ll find tons more. Draw your own conclusion.

Now, assuming you agree with me, here are some tips that would help your freelancing business get through the next recession.

Warm up and expand your network

You know the old saying – “It’s not what you know, it’s who you know”. If you haven’t been keeping in touch with your leads and past collaborators, start reaching out. Ask how they’re doing and offer to help out with a small favor. Maybe you can take a look at their new logo or website and share feedback on how to improve it. Or maybe you can do a small, 15-min piece of design work for them as a favor. Be helpful and kind and people will remember you.

If you’re not doing it already, start reaching out to people that could use your services. I recommend taking some time each week, on Friday afternoon, to find new leads and drop them a short message. That way, if you find someone interested, you can setup a call for early next week. After you’ve found the right company, you can use Linkedin to find the right person to contact. In my case it’s generally the CEO, CPO, or CMO.

Why do this? In an economic downturn, bad investments are corrected. Companies that shouldn’t have been funded go belly-up. Being well connected, and the top-of-mind choice for the type of services you provide, increases your chances of having continuous work.

Cut spending

This is a no-brainer but when things are going well, it’s easy to get carried away and start spending. If you go back and review all your expenses, you’ll probably find a lot of stuff you can go without. Are you paying memberships for software you’re not really using that much? Are you renting a fancy co-working space although you don’t really need it? What about your personal finances? Can you cut any unnecessary spending there?

 

Regarding software, here are a few free apps you might want to look at:

  • UI design – Figma, the free plan or Adobe XD
  • Vector design – Inkscape
  • Project management – Trello
  • Wiki, knowledge base, project management – Notion
  • Accounting – And.co
  • Design resources – freepik.com
  • Photography – unsplash.com, pexels.com or photos.icons8.com
  • Soundtracks – https://icons8.com/music

 

Last but not least, look at how you’re spending your time. It’s your most precious commodity and it’s often overlooked. If you have passion projects or side-hustles, review how much time you’re putting into them versus how profitable they are. It’s easy to get carried away when working on such endeavors. If you decide they’re worth it, block time in your schedule for them and stick to it.

Convert savings to precious metals

Fiat money is subject to inflation and counter-party risk. The bank note you have in your wallet now, will buy less in 2 years, even less in 10 years, and probably almost nothing in 50 years. Precious metals, on the other hand, have intrinsic value which lasts over centuries. If you dig up a gold bar from 3000 years ago, it has value today, whereas a bank note from 150 years has value only as a collectors item. Gold and precious metals are the real money endowed by nature, and will always have value. They’re one of the safest places to store your wealth.

Until recently, the problem with gold was that it was inconvenient to acquire, store and later liquidate. That is no longer the case. Goldmoney is a US company that let’s you easily buy precious metals, stores them for you at 12+ vaults around the world, and easily let’s you sell your gold at any time. It can even provide you with a prepaid card which you can top-up by selling your precious metals. It’s essentially like putting yourself on a gold standard. I highly recommend you check it out and sign up for a free account.

Educate yourself financially

The best way to successfully overcome a financial crisis is to anticipate it and get prepared. Get yourself acquainted with how the current economic system works. You can start with something simple like Ray Dalio’s video titled How the economic machine works. I also recommend following some great minds in this space like Jeff Gundlach, Peter Schiff, Roy Sebag,  Brent Johnson, Jim Rogers, Rick Rule, prof. Richard Werner, or Mike Maloney.

Comment

  • Jeremy Peel says:
    Feb 10 at 02:03

    Excellent, intelligent article Calin. Interesting, non mainstream perspective and very good tips! A good read!

    reply
    1. Calin Balea says:
      Feb 11 at 11:18

      Thanks Jeremy. Glad you enjoyed it. I’ll be blogging a lot more in the future, so stay tuned.

      reply
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