Freelance Business Recovery Planning: Breaking a Slump

Business slumps. Sometimes they come on suddenly. Like when your biggest client decides to stop using your services, and you’re left high and dry.

Or they sneak up on you through a series of unfortunate events. For example, you just submitted a big proposal, but you didn’t get the job. Then there’s that project you were hoping to promote so you could gain more business. Well, it ends up taking forever, and, once you’ve handed your completed files over to the client, it doesn’t get launched. What’s worse, you’re finding that many of your clients are taking their sweet old time about paying you, and you’re draining your savings in the meantime.

Whether it came on suddenly or sneakily, the end result is that your freelancing business is in a slump.

Another thing about sneaky slumps is that you probably felt something coming on, but you just didn’t want to look at your financials to see how bad things are. Well, procrastinate no more. We’re going to pour ourselves a good stiff drink of water (because you can’t afford anything else) and look at your income statement for this year.

First, let’s start with a look at this year as compared to last year. Income way down? Okay, you probably knew that already. It’s time to do some freelance business recovery planning.

Now, let’s look at the things you subtract from your income – the costs of sales and the operating expenses. As a freelancer, your cost of sales figure is probably quite small unless you’re subcontracting work. For example, if you’re creating a new website, you may need to hire a programmer, a copywriter, and a Flash developer.

In other words, you’re creating a virtual team to complete the project. Make sure that the fee you’re charging the client is sufficient to cover the subcontractors’ fees. You don’t want to lose money on your projects.

And take a good, hard look at the things you’re subcontracting. Can you bring them back in house until business picks up? Or eliminate them?

Enough beating up on the cost of sales. Let’s thrash those operating expenses. Compare with last year. What’s up? What’s down? What are your top three expenditures for this year? Why are they so high? Were all of those things you spent money on truly necessary? Don’t be afraid to holler “No!”

For the time being, you are going to focus on survival spending. Nothing more. Be forewarned: You’re going to use the word “no” a lot.

Self Education Without the Expense

Finding yourself in a slump is a good way to discover what you don’t know. In the past, you may have remedied this lack of knowledge by going on a buying spree. As in, purchasing this business-building e-course, that book, and, just for good measure, a DVD.

Sorry to break the news to you, but you can’t afford to do that. For now, your best friend is going to be a four-letter word spelled f-r-e-e.

Which means that you are going to lean on that fabulous, free resource called your public library. The price is right. So get yourself a library card if you don’t already have one.

Then there are the free online resources. You’re using one right now. There are hundreds of articles on FreelanceSwitch that can help you build your slump-busting knowledge, so search for what you need and get reading. Start with how to weather a downturn, holiday slumps, and following up on prospects. Be sure to read the comments below the articles – they’re a real treasure trove.

Likewise, join the FreelanceSwitch discussion forums. Even if you never post, you can learn a lot by lurking. Use this same approach at any other online gathering – free articles, comments below them, and discussion forums. You can learn a lot from your fellow netizens.

Asking Others for Help

Okay, so we’ve covered the public library and online resources like FreelanceSwitch. Here’s another fabulous, free resource: people. That’s right, people.

Quite often, a freelancer in the throes of a slump starts to feel like he or she must fight the battle alone. And the withdrawal from other people begins in earnest. After all, they’re so much more successful, and there you are, wearing a big “F” for “Failure” on your chest.

Don’t do this. You need to increase your income so you can bust out of this slump, and here’s how you’re going to do it, Lone Ranger. You’re going to ask for help. Now. Here are two places to go:

1. Your local Small Business Development Center. This is a free service provided by the U.S. Small Business Administration, so give them a call and make an appointment with a counselor.

I’ve been working with an SBDC counselor for a few months. (Yes, I’m climbing out of a slump, and yes, the second paragraph of this article is autobiographical.)

During our second meeting, Tom described the software company he used to operate in a small Midwestern city. The company developed and sold software to law offices, and there were only so many of those in town.

So, the company had to promote itself nationally. It did so via a six-person telemarketing operation. The law offices that showed interest got follow up calls from Tom. (Follow up is important.) Every 90 days, he made these calls. Without fail. He never got too busy, too successful, or too presidential.

There was the error of my ways, revealed in one brief, low-key conversation. Tom’s company never slacked off on its outreach and follow up. Ever.

Guess what my little freelancing self had done?

Slacked off in a big way, that’s what! Especially last year, when my studio seemed to be filled with interesting, well-paying projects that were just falling into line! It was like going fishing and having the fish jump into my boat! Life was good! No more cold-calling and follow-up marathons like back in 2007 and 2008!

Well, 2009 turned into 2010, and life wasn’t so good anymore.

I left Tom’s office with a resolve I didn’t have before. It was time to get back on the prospecting trail and stay there.

I now set aside at least an hour of every day to do cold calls and follow-up calls. (After all, they worked in ’07 and ’08.) Like Tom, my follow- up calls happen every 90 days. Without fail.

Sales is now Job #1 around here. Just as it always should have been. And, ever so slowly, my business is coming back.

In addition to getting a little “back to what worked so well before” nudge, I’ve been using another kind of help. That’s the kind of help that a freelancer needs when it’s time to break into new markets where money is being spent right now. Permit me to introduce you to…

2. SCORE. This is a volunteer-powered organization that operates throughout the United States. You can ask SCORE for help on just about any business topic, and the help is free. Here’s how I’m working with SCORE:

For many years, I’ve focused my outreach efforts on academia. As a result, I’ve done design work for universities all over the United States. But, with the way things are going with academic budget cuts, it’s time to diversify the client base. So, I’m working on becoming a U.S. federal contractor.

I met my SCORE counselor in the Answers forum on LinkedIn. His focus is on helping small businesses through the process of becoming a certified federal contractor.

So far, I’ve found that this process is much more involved than cold-calling university faculty and pitching design services, but it is doable. Since my SCORE counselor is in another state, we’re corresponding by e-mail, and things are working out quite well.

Okay, time to wrap things up. I’m going to leave you with four pieces of advice from The Wealthy Freelancer book.

Invest in yourself. (To which I’d like to add, even when you don’t have the money. Avail yourself of free resources instead.)
Have an unshakable belief in yourself. (If it’s shaking, get some of that free help mentioned above.)
Know that this belief will be tested. (Let me tell you, a business slump will do that to you!)
Get ready to enjoy success when it comes. (And, yes, it will come.)