Many people are reluctant to become freelancers or consultants because the risk seems too high. You have flexibility to set your work schedule and take the kinds of projects you want, but you trade that for the security of a full-time job.
I’m not convinced that working independently is necessarily much riskier than a full-time job though. In fact, sometimes it can be safer. Plus, you can also take steps to improve your security as a freelancer.
The risks of full-time employment
Having multiple clients and income streams can actually be more secure than having a single full-time income.
Think of it this way: you would never invest everything in your 401(k), IRA, or other retirement funds in the stocks of a single company. That would be ridiculously risky to trust your entire future retirement income to the success of a single enterprise.
But full time employees trust their entire present income to a single company. If they lose their job, they lose 100% of their income. They usually have to ramp up from nothing to find a new one.
How to reduce risk and increase security
Having multiple clients reduces risk
I usually have at least two active clients at all times, plus often smaller side projects and more in my pipeline. If one of my two current big clients suddenly cancels their project, it will hurt my income–but not nearly as much as losing a full-time job hurts. I’ll still have income coming in from my other active client and whatever smaller projects are happening.
Nurturing leads and your network increases security
I also have the security of having additional leads so I can ramp up quickly on other work. I have a network of colleagues on LinkedIn and through the Online Network of Independent Learning Professionals (ONILP). When I’m busy, I refer work to others. They also return the favor. I know I can reach out to my network if I need more work.
So much of the freelance work in this industry comes from referrals! At my current stage in consulting, most of my work comes from repeat business rather than referrals, but that wasn’t true when I started. Referrals from other IDs, freelancers, and other clients have always been a significant source of leads.
Being able to find the next project
Yes, my income is variable, and I have had both good and bad years overall. However, I don’t see freelancing as being as being that much less secure overall than having a full-time job. The security comes from being able to find the next project, not from having a guarantee that the current project is a sure thing.
After all, if you have a full-time job and it ends suddenly, your security is really a measure of how fast you can find a new job. Freelancers and consultants are generally better prepared for finding that next thing. Full-time work can make people complacent, so they can be completely unprepared to look for work if they lose their job.
Selling courses and other income streams
It’s not as common for those getting started in freelancing, but you also have the option of creating course products or having other income streams. My branching scenario course and the eLearning Freelancer Bootcamp don’t make anywhere near enough money to be my full-time income, but they do give me a separate income stream that doesn’t rely on my big clients. I don’t do a ton of 1:1 coaching, but that’s another source of income too.
Other freelancers teach workshops, produce virtual events, manage online communities, or have other income streams. Having diversity in your income is a strength.
How much security do you have?
I think many of us consultants and freelancers probably have more security than we realize, and many people in full-time jobs don’t realize how little security they truly have.
Originally published 10/2/2018. Revised 7/7/2022.