Adam Wren

Roving journalist filing dispatches from the Midwest and beyond.

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How to Make It In A Gig Economy

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Mark Twain once said, “Write without pay until somebody offers to pay you. If nobody offers within three years, sawing wood is what you were intended for.”

Last year, I finished my first fully year as a self-employed writer. In the late fall of 2012, I lit out for free-agent territory.

And while more than a few people have offered to pay me for my writing since I struck out on my own, beating Twain’s threshold by a couple of years, I confess there are some days it feels like sawing wood could be in my future (and this would mean things have taken a negative turn, because I’m not even sure where people saw wood in Indianapolis, where I live—or whether that’s even still a thing people do).

 

On the whole, though, working as a professional writer has been good to me. If I’ve gained nothing else these last months, I’ve gained some irreplaceable knowledge about how to run what amounts to a micro-enterprise. About how to pitch your services and value to complete strangers (pro tip: you don’t—build relationships with editors and prospects first). About how to show up and write when it’s the last thing you feel like doing. About how to bring stories into existence through what sometimes feels like mere shoe leather and sheer will, when sources aren’t returning your messages and deadlines aren’t moving. And about how to accept rejection (another pro tip: don’t.)

By no means, of course, do I have everything figured out. I’m still learning something new each day about how to make this proposition work.

Here are 15 things I’ve learned over the past 15 months about how to make it in a gig economy.

Though these lessons are based on my work as a writer, many of them can apply in any creative field within the world of knowledge work. And if statistics bear out, that will be about 40 percent of us by 2020.

1. First, figure out your nut.

Before you leap into the icy waters of freelance writing, you need to define your “nut.” I’m not entirely clear on the etymology of this term, but from what I’ve gathered it has something to do with squirrels and sustenance.

When I was finishing graduate school at the Medill School of Journalism, I had an inkling I might want to give freelancing a go at some point in my career, even if only to earn some extra cash on the side. So I attended a talk by Medill alum Matt Villano, who proved to be an incredible resource in starting my work as a freelancer. That’s who I first heard the term “nut” from, and he defined it as the amount of income you need on a monthly basis to survive.

Before you do anything else in the gig economy, whether your are a graphic designer, consultant or journalist, you need to know this number. Factor in all the basics: rent, food, utilities, internet, gas, student loans—basically any essential line item that you need to take care of to survive and avoid debtor’s prison (again, like wood sawing, I’m not clear whether that’s still a thing, but it sounds old-timey, like wood sawing, so it contributes to a motif).

2. Build an emergency fund of two to three times that amount.

It can take anywhere from 60 to 90 days to get paid for work (as a frame of reference, my longest open invoice was something like a stomach-punching 300 days; my shortest, something like three seconds, thanks to Contently’s incredible policy of paying writers upon filing an assignment), so you need an absolute minimum of a two to three-month emergency fund to make this exercise in freelancing work. Wise freelancers, I believe, will squirrel away an amount equivalent to six times their nut before embarking on this expedition into the hinterland of the gig economy.
3. Create a funnel.

Screenshot 2014-05-22 12.41.37

 

This is a trick I learned from business owners, entrepreneurs and salespeople. They maintain a visual checkpoint of how much business they have in their sales pipeline over a given period of time. For me, it makes sense to chart projects and paychecks over 30, 60 and 90-day periods. That way, I can have reasonable piece of mind that my small business will be profitable in the near term. When checks are late, or when you’re tempted to burn the midnight oil for yet another night in the row to stave off what can feel like impending financial doom (even though it’s not), you can look at this document and take comfort in knowing that money is on its way. You can download a version of 90-Day Funnel Template.key here.

4. Create an ideal week.

What’s the average week like for a freelancer? The average week is that there is no average week. Still, it’s helpful to plan out your ideal week in a spreadsheet, so that you can allocate your work hours from 30,000 feet. Don’t forget to allocate time to tasks such as pitching, revisions and invoicing. A startling reality for many first-time freelancers is that if you plan to work only a 40-hour week, you can’t spend all 40 hours on your craft.

In the words of Jay-Z, you’re not a businessman, you’re a business, man—and you have to think about things that you never thought about within the safe confines of your dulling gray cubicle. (See Michael Hyatt’s excellent post on how to create your ideal week.)

5. Always be pitching.

As assignments start to roll in, it’s easy to become complacent and stop pitching editors and new clients. Fight against that. To get the most out yourself and become better at your craft, you have to do a large volume of work, as Ira Glass advises.

It’s often helpful to back yourself into a corner, as Ryan Holiday notes, so that you have to work your way out of it. And if an assignment falls through, as it occasionally will, you have a slush pile of work already in the queue. Another pro tip: Always over research your pitch before you send it to an editor or client. Make sure that if they decide to green-light your story or project, it won’t fall through as you begin to report it. That’s embarrassing. Trust me, I’ve made this mistake.

One way to make sure you’re pitching consistently: Set aside a morning or afternoon one day a week and dedicate it to crafting pitches. Additionally, I’ve found it’s helpful to have three stories at three different stages in the process: You should be pitching one, writing one and closing one. That keeps the paychecks coming steadily.

6. Always say yes to assignments.

At least in the beginning. Though I’ve only been full time for less than two years, I’ve been freelancing for four years. During that time, I’ve never turned down an assignment. Not one. To make this happen, I’ve had to write on deadline in the back of taxi cabs in Atlanta, edit copy at 6 a.m. on Amtrak trains and respond to editors’ fact-check queries while sitting on beaches off Lake Michigan. But I’ve never said no, because in the beginning, you need to do a lot of work to get good, but you also need to let editors know that they can rely on you. That you’re a professional. And that like the U.S. Postal Service, you work rain, snow or shine.

7. Invoice early and often.

In my experience, but for a few amazing clients and publications, the invoice always arrives late. It’s a shame, and it shouldn’t be this way. The tide, I believe, is slowly shifting, though. While editors at the national glossies may still take 60 to 90-days to pay writers, agencies that want to win with their content are learning that good writers matter—and so does paying them on time. And so they’re paying faster. As soon as you submit a story or project, invoice your client. To reduce friction for my editors, I often attach the invoice in the same email as the assignment and any other collateral.

Another tip: Use a tool such as Freshbooks to manage your invoicing and expenses.* They’ll help you keep this process clean and organized, and it allows you to see when a client opens an invoice.

A few thoughts on how to handle late invoices: If you have a client who is routinely late in paying invoices, part of this is your fault. It likely means that a). you’ve done a poor job setting expectations upfront with your client about payment terms (more on that next) or b.) you’re working with the wrong kind of client.

Finally, Fundbox is a tool that can help with cash flow, though I don’t want to be in the business of using OPM (other people’s money) to keep afloat.

8. Make payment terms work for you.

When you’re working with large publications with a national presence as a new and unknown writer, you don’t have a lot of sway to negotiate your payment terms. I’d say it’s impolitic to even try, especially at the outset. But if you’re working with individual, “boutique” clients or agencies, you need to do your best to negotiate payment terms that work for you. In the beginning, I used 30-day payment terms. But I’ve learned that if a client can pay you in 30 days, they can probably pay you in 15 days. If they can’t pay you in 15 days, they might not be the kind of client with whom you want to work. Additionally, I’ve learned that the 15-day period is short enough that it creates an urgency for clients, and keeps your invoice top of mind.

One way to make payment terms for you, and to get buy-in from your client, is to require a deposit at the beginning of the project—this typically falls anywhere from 25 to 50 percent of the overall project fee, with the rest due upon delivery. Also, if you plan to charge fees for late invoices, include that information on the invoice (Freshbooks allows you to do this, and you can even set automatic invoices for your clients).*

9. Create recurring or passive income to help with cash flow.

I couldn’t imagine surviving in a gig economy without working out monthly retainer relationships with clients, or having a digital product available (I’m still working on this) in place to even out the ebb and flow of one-off assignments. Unless you’re making five-figure checks per piece for a premier national magazine, you’ll run yourself into the ground if you try to survive for an extended period of time on piecemeal work.

10. Stay on top of quarterly taxes.

Depending on your state’s tax structure, you should strive to save between 20 and 30 percent of each check to pay quarterly self-employment taxes. When cash flow is is thin, it’s easy to fall into a pattern of consuming all your earnings without setting tax money aside in a savings account. This can come back to bite you on tax day, in terms of penalties or back tax bills.

Pro-tip: Set up a business checking account with your bank, separating it from your personal checking account, and link it to a simply business savings account.

11. Use a percentage formula to spend incoming paychecks.

Come up with a simple three-part formula that you apply to all incoming revenue. For example, it could be something like 25-70-5. Twenty-five percent of the revenue gets swept into a savings account for taxes, 70 percent becomes your actual earnings and 5 percent might stay in your account for expenses (these figures are just examples, of course, as some types of businesses are more capital intensive—and keep in mind, I’m not a financial expert or professional).

12. Don’t charge by the hour.

Traditionally, most freelance writing work, especially journalistic work, pays by the word, with rates ranging anywhere from 35 cents to $5 per word or more in some cases. But when it comes to copywriting or project work, you have more creativity in pricing. Don’t allow yourself to get trapped into hourly pricing models, unless your working on short-term engagements. In most cases, it makes sense to charge a project fee.

The shrewdest freelancers have learned to use value-based pricing, which works like this: Say a business-to-business client sells a high-end tech service for which their customers pay $10,000 per engagement. They want you to write a whitepaper about their service, and ask you for a quote.

You could quote them an hourly rate of $50, spend six hours on the project and earn $300. Or, you could frame your pricing in terms of value. What if your whitepaper helps them sell their services to two or even three clients, earning them $20,000 to $30,000? Are your services worth five or even 10 percent of those revenues? I’d say so. In that case, then, you could earn closer to $1,500 or $3,000 on that same whitepaper.

Establishing a value-based pricing model with customers takes a lot of trust and work, but I’m convinced it’s the way to thrive in a gig economy. This is just a rough sketch of how it works, but for more information, check out the excellent book Breaking The Time Barrier, by Freshbooks CEO and co-founder Mike McDerment with Donald Cowper.

13. Eventually, you’re going to need more than a home office.

To home office or not to home office? Working from home, or working remotely, is in vogue these days.

But it’s not all it’s cracked up to be. It can be monotonous. It can stifle creativity. It can be lonely. Even as an introvert, I find it helpful to work around other people. I find it also helps if I change spaces midday.

For example, I might start the morning working from my home office, hit up a Starbucks in the late morning and work from there the rest of the day. This summer, I plan to experiment more with co-working spaces, having really enjoyed a recent day trying out the Bureau in Indianapolis.

Here, at core, is why I think it’s helpful to have an office outside of home, even if you maintain one for early morning, late night or weekend work: When you never leave for work, it’s hard to leave work.

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14. Set aside idea days. 

As a freelance creative, your work can suck you dry, leaving you staring out the window at your local Starbucks with a vacant look in your eye. That’s why it’s key to designate a few days a month to get away with a pile of books and a notebook, leaving you time to recharge and dream about new ideas and possibilities.

15. Keep your chin up. 

Freelancing isn’t the kind of manual labor many of our parents and grandparents did. I don’t have calluses on my hand after tapping out a draft at the coffee shop. We are digital day laborers, yes, but this isn’t the Oregon Trail (that was, for those of you counting, a third old-timey reference, thus completing the motif and satisfying the rule of three).

As Ben Arment cleverly tweeted:

But still, it can be hard, lonely work. Don’t go it alone. Enjoy it. Make it fun. Make it matter.

Question: Have you ever dipped your toe into the gig economy? What did your learn from the experience? What have you learned about being self employed?

 

*Note: This post contains a few referral links.

 

 

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