The key risks of being a freelancer – Both for the new freelancer willing to start freelancing as well as a seasoned freelancer
There are various risks as a freelancer. Let me share the common risks of being a freelancer at every freelancing stage – like for anyone who wants to start freelancing now to a seasoned freelancer who wants to establish freelancing as a career.
So without much ado, let’s begin with the risk of trying freelancing.
Risks When Starting as a Freelancer
Let me first share some of the key risks that a new freelancer will face, and when he wants to start freelancing.
One of the key risks when moving from being an employee to a freelancer is the risk of expertise. As an employee, you work as a team and have someone to go to when stuck. As a freelancer, you can go back to your friends or even to a past colleague, but you prefer doing things independently.
For example, when I started as a freelance web developer, I had the same expertise issue. Managing a server wasn’t my expertise. I am a programmer but not a system admin or network engineer.
So I am not capable enough to be able to configure a web server for a client.
I was working in PHP and vBulletin, but back then, vBulletin had Photopost as an album, which required a plugin inside Apache for watermarking (as far as I remember). I remember I had a callous time being able to make it happen for the client. Finally, I had to take help from the host support to get it done.
So the key and the most important aspect of developers willing to start freelancing is to define their expertise. However, as a new freelancer, you want to take anything and everything that is thrown at you. There is nothing wrong with it but make sure you only grab work that you can deliver. If you don’t, you will end up wasting a lot of time and energy trying to figure out how to get things done, and it can be a morale killer.
The next key risk in starting as a freelancer is to miss the client’s deadline.
When you are doing a job, you are always reminded of deadlines by colleagues. However, when you start working for clients, the deadline can be as early as the coming weekend, and you may not even realize it.
So it can so happen that you can miss the deadline very easily.
Furthermore, as a new freelancer, you may be on a spree to applying to projects on Upwork. Suddenly you have more work than you can handle.
It would then help if you chose to work on the one with a deadline much earlier. However, new freelancers can easily make a mistake to work on the one that will pay them the most.
Soon, it can so happen that you end up missing deadlines.
Lack of Long-term Commitment
When you want to start as a new freelancer, do you want to try freelancing, or are you in it wholeheartedly as a career choice?
The answer to the question is always “want to try freelancing” when you are starting.
However, you want to try freelancing, but the kind and type of projects that freelancers apply for are long-term because they want to see if they can get long-term clients for freelancing.
When you are not committed to long-term freelancing and still want the client to commit to you for the long-term is a disastrous approach to freelancing.
There is no harm in trying freelancing with short-term commitments, but you should also opt for short-term projects.
When I started freelancing, I had so much to work on my forums and build my blogs. So I always opted for projects under $500 because it means I complete the work and I am done with it. It is much later that I started to go to long-term clients.
Now when I am committed to freelancing for a decade, I opt to go with clients who want me to commit more time and effort than working for smaller clients once in a while.
Lack of Non-Financial Motivation
I always think that freelancing is more of a lifestyle. You need money to live a better life, and there is no doubt freelancing is one of the ways to make money online.
However, it would help if you weren’t a freelancer because it pays more than the job. At least, that is what I think.
You should consider freelancing because you love to be your own boss, want to live a free lifestyle, learn new things, want time freedom, want to spend more time at home or with family, etc.
The point is, if you want to freelance for more money, you will end up choosing a freelancing niche that you may not enjoy. Soon you will feel like you are working too much. I enjoy programming, and even if I am working for 16 hours a day after working for a decade as a programmer, I don’t feel like I am working.
The whole point is, you need motivation other than money. Try to freelance doing what you enjoy the most. Furthermore, one should keep learning and keep improving, and eventually, the money will flow in.
Not Being Paid
There will be a time when you did everything right, yet you aren’t paid for it.
Once, a client of mine had a major issue, and it happened almost a day or two after I asked for the payment a second time.
The client thought I did something nasty for making the payment, and I was never paid for it.
The point is, getting paid is often not under your control. You may not get paid even after doing everything that you need to do.
The risk to Freelancing Career Choice
Finally, once you understand the risk of being a new freelancer, now it is time to consider the risk of freelancing as a career choice.
Inconsistent and Unstable Pay
One of the key risks to freelancing as a career choice is dealing with inconsistent and unstable pay.
As an employee, you are paid on a certain date, and you can plan your monthly expenses based on your current cash levels and upcoming salary payment.
However, when it comes to freelancing, you can be paid weekly, but the amount can vary considerably depending on the workload you may have for the week. Furthermore, there will be days when one of the large clients is on leave, and you may end up not being paid for a few weeks.
Year-end is one such time when most of the clients from the US are on leave, and so it is often the case when November is a more busy month because clients want to launch something new in Christmas, and after the launch, there is a period when the workload is light.
As a freelancer, one has to deal with such inconsistency in pay.
Too much Ownership
As an employee, if you are a team member, you are responsible for your deliverable. As a team leader, you may be accountable for everything your team delivers. Similarly, the project manager is responsible for the teams working on the project. So on and so forth.
As a freelancer, you have the accountability of everything.
As a developer, I am responsible for the bugs. However, I am also responsible for making it live on the server and making it work on the server’s expected line.
I will share with you one example that happened to me recently. One of the codes was working perfectly fine, and suddenly the code started to give a unique error of 421 misdirected requests. The issue is the client is using the same SSL certificate for the main and a sub-domain. It was quite a unique issue, but I had to research and fix it.
Similarly, as a freelancer, you have accountability for marketing your services, grabbing clients, working for them, and finally deliver them.
At times it can be overwhelming with too much accountability.
Not being able to Find Work-life Balance.
As a freelancer, when you start working from home, the day starts as soon as you wake up and call it a day when you feel tired.
There is nothing wrong with it when you are in the starting phase and want to establish your freelancing career. However, soon you will need a balance between work and life.
More work can mean more money, but you also need life to spend the money.
As a freelancer, when you start making decent money, you start working to make investments and buy properties. So the key risk for a freelancer is not finding a work-life balance because he or she has taken up too much on himself.
I made the same mistake. When my loan for buying an office was not approved, I decided to pay for almost 16 hours a day for 2 years. I could have canceled the purchase and continue on rent. The sad part is, after 2 years, when I was an owner of the office, I left Kolkata and moved to Surat, and had to sell it off anyway.
Lack of Growth
In the initial days of being a freelancer, there is so much to learn and grow. However, the learning growth and financial growth tend to be exponential in nature in the early stage of a freelancing career but will temper off.
A developer starting to freelance at $5 or $10 per hour can easily move on to $50 to $60 per hour. However, one can’t move at the same pace from $50 to $500 or $50 to $100.
Moreover, when you are charging top dollars for your expertise, you need to deliver right at the beginning. It can mean there is minimal scope to learn, and one has to make extra efforts to brush up your skills.
Furthermore, you have to be ready to move on to the next technology before it becomes obsolete. In the process, you may see a decline in financial earning or at least stagnant earnings. For example, when I moved over from vBulletin to Xenforo, I learned the XenForo before I could work for clients.
As a freelancer working from home, there is very little human interaction that you may have.
When I have managed to crack a difficult problem, I can’t share it with anyone because they don’t understand programming.
As an employee, you can always share what you did, but when it comes to working as a developer from the comfort of your home does mean you have to keep all those minor achievements to yourself.
As an introvert, I was ok with it, but it is not all ok for a minorly extrovert person.
Lack of Technology Switch
If you want to switch technology, you have to do it all alone. There is no harm in doing it all alone, but judging the next technology that one should move to isn’t all that easy.
For example, now we know Android and iOS are major mobile OS, but Windows OS for mobile looked very promising back then. Those who made the switch from Desktop-based Windows to Windows mobile may have needed to re-think. Similarly, ASP or JSP as a choice of programming for the web may also have similar consequences.
As a freelancer, the key risk can be to choose technology for the future. However, the best is to be open to all the options within a broader niche and remain active when you see more work coming from one over the other.
For me, the most important of all the risks we discussed is the risk of too much dependency on an individual.
- What if you met with a major accident?
- How can you plan to take a long vacation?
And so on.
The day you stop working, your earnings become zero. That is why I personally prefer developing my blogs and forums and recurring passive revenue sources so that even if I am not working, those sites do keep working for me.
One of the key risks for a freelancer is – the model is often not scalable.
As an individual freelancer, if you are working in a tiny niche, you will not find too many people who can work for you. Even if you can find people ready to work for you, they will prefer to be a freelancer very soon and compete with you.
However, the best way to scale up freelancing is to start working in a small niche first. Then either move over to a broader niche or build a product and provide services around the product.
Last but by no means the least risk of being a freelancer is you are in a price competitive environment.
I don’t believe the price is the deciding factor for winning a proposal, even in competitive marketplaces like Upwork. However, when everything else remains the same, the price can impact the decision.
For example, a freelance developer with $500 or $5000 as hourly rates will be tough. The reason being, there may be top-notch developers with the same level of expertise willing to work for $50 or $100 per hour. So, either one has to move away from being a developer into some other niche or look for alternative ways to grab clients.