The Pros and Cons of the Growing Freelance Economy

The corporate world is shifting. As less people commute to work and sit behind desks in high rise corporate offices and a “Freelance Economy” begins to take over, many wonder whether they should jump ship and either 1) hire freelancers  or 2) quit the 9-5 and become a freelancer themselves. The truth is that there are both pros and cons of the growing freelance economy, for both businesses and individuals. Here are a few examples of what is great and not so great about the quickly growing trend.

The Freelance Economy from a Business Owner’s Perspective

For the small (and even large) businesses, becoming lean and flexible could become the difference between a thriving and prosperous business and one that fails. One of the biggest trends right now that enables business owners to take their companies to the next level is outsourcing work to freelancers in lieu of hiring full time. Because of this growing freelance economy, many businesses that would have otherwise been forced out are now profitable and growing.

But as with everything, there are ups and downs to hiring freelancers and taking a part in the freelance economy. Here are a few pros and cons for the business owner.

Pros of the Freelance Economy

1.  Cost – Arguably the biggest advantage the freelance economy holds for the business owner is the cost. The price of hiring freelancers versus paying salaries is significant. You are able to pay for only the hours you need whether that is 40 or 4. On top of that, companies do not typically offer freelancers any type of benefits such as matching 401k, paid vacation or maternity leave. No HR or IT departments are necessary (in most cases) either. The cost savings is huge for the business owner in the freelance economy.

2.  More Flexibility and Lower Risk – Flexibility is the name of the game in the freelance economy. You can scale up or down quickly with the needs of your business. If you are growing, you can hire more freelancers. Need to put on the breaks? You can cut hours or the number of freelancers easily without having to lay off or fire anyone. All of this means that you are not at risk financially because you pay your freelancers on an “as need” basis.

3.  Higher Talent Pool – When you hire for in-office work, you are limited to the people who live near your business. The applicants who apply may or may not be the most talented people in the market. However, without costly relocation, you are limited. In the freelance economy, you hire remote freelancer from anywhere in the city, state, nation and even world. You are not limited geographically, which means you can find the top talent from all over the world.

Cons of the Freelance Economy

1.  Managing Remote Freelancers – It is a lot easier to manage someone who sits outside your office, but when you hire in the freelance economy, a freelancer is not going to sit anywhere close to you. So, how do you make sure that the work is getting done? How do you ensure the freelancer has the training and skills to do the gig correctly? How do you keep tabs on hours worked? While there are many ways this can be done, it certainly is a bit trickier in the remote environment. You must stay involved and keep up with  your freelancers often.

2.  Finding High-Quality Freelancers – Yes, the freelance economy means that you are able to access a higher talent pool of skilled freelancers. However, you have to find them first. Many freelancers advertise, but how do you know where to find the top talent? From Craigslist to online hiring platforms, they are everywhere. Once you find them, you have to verify their skills and request references and portfolios. Unfortunately there are freelancers who will scam you or take on work they don’t have the skills for. Luckily, there are some platforms such as FreeeUp that take pride in pre-vetting and standing behind the freelancers you can meet through their site.

3.  Freelancers Juggle Multiple Projects – Unless you are hiring freelancers at their capacity, the chances are good that they will be juggling multiple clients and multiple projects. This means that their focus is split and potentially their loyalty as well.

The Freelance Economy from a Freelancer’s Perspective

Being able to work from your bed or the beach certainly has its appeal, especially to younger generations. But it isn’t all peaches and cream. There are several pros and cons of working as a freelancer in the freelance economy.

Pros of the Freelance Economy

1.  Flexible Work Times, Hours and Location – If you like to work in the wee hours of the night, you got it! If you want to pick up some extra cash after your regular day or while the babies are napping, that is possible too. Do your best work in a coffee shop? On the beach? The best part of being a freelancer has to be the flexible work times, hours and location. As long as you have a computer and an internet connection, you can work whatever hours you want, from anywhere you wish.

2.  Unlimited Earning Potential – If you are a skilled freelancer, you get to set your rates and work the hours you wish … which means you have unlimited earning potential. Need more money? Simply pick up a few extra projects. Want to earn more? Grab a certification or build a portfolio. Set yourself apart from the crowd and you will earn as much as you want.

3.  No Wasted Time Commuting – Hours (as many as 4+) can be spent driving to and from work. Time that is wasted in a vehicle is no fun for anyone. You aren’t getting paid, and studies have shown that commuting causes anxiety and stress. Since you can work from home as a freelancer, your commute can be as short as the walk from your bedroom to your office (or shorter if you use a laptop in bed!)

Cons of the Freelance Economy

1.  No Benefits – There are rarely benefits given to freelancers in the freelance economy. This means that you must actively work to make money. If you get hurt, get sick or have a baby, there are no benefits to cover your income while you are out. There also aren’t 401k programs or retirement help, which means you must set aside money yourself.

2.  Inconsistent Cash Flow – If a client chooses to cut back your hours or cut you from the roster temporarily, your income is going to take a hit unless you find another client right away. Hours also often vary week to week depending on your clients’ needs. Some weeks and months may be booming and others won’t be as high. You’ll have to plan accordingly if you want to be a part of the freelance economy.

3.  Juggling Multiple Clients – Very few freelancers have only one client. They often have several. If you are one of them, you’ll have to ensure that all of your clients’ needs are attended to. You’ll have to balance several sets of work hours, commitments and deadlines, as well as how each one of your clients operates.

Conclusion

The bottom line is that the Freelance Economy is growing like wildfire, but it isn’t for everyone. While there are many benefits for both freelancer and business owner, there are considerations you must weigh.

After considering the pros and cons of the freelance economy, write out how you or your business might fit in. Does hiring freelancers or becoming a freelancer yourself make sense in your life?

Still unsure? Need some guidance from someone who has seen both sides of the fence? Set up a free phone call consultation with founder of FreeUp to find out if the freelance economy is right for you.

Melissa Ricker is a nuclear engineer turned integrative wellness and life coach and a professional freelance writer specializing in career growth, technical writing and online entrepreneurship. She runs her own business, Engineered Motherhood, for moms who have become overwhelmed in the chaos and stress of motherhood so much that they have lost their identity as women. She helps them redefine their lives, rediscover their purpose and streamline their days so that they can live as fulfilled and vibrant women as well as amazing mamas! Oh, and she both works as a freelancer as well as hires freelancers in her business!