Freelancers now make up an increasingly large slice of the economy. Workers and businesses alike can benefit from the freedom this brings, but both should be aware of potential pitfalls.

Holding one’s job for life is officially a historical relic, as a large and growing number of workers are choosing to work for themselves, rather than remaining tethered to any one employer.

In 2010, the software company Intuit predicted that in ten years, 40% of the US workforce would be made up of freelancers. This prediction looks to be coming true, as a 2014 survey revealed that 34% of American workers had “engaged in supplemental, temporary, or project- or contract-based work in the past 12 months” up from only 7% in 1995.

Self Employment And The Future

The rise of the sharing economy has made it easier for people to find one-off gigs and sell products directly to the consumer. Uber and AirBnB have allowed freelancers to invade the hotel (and in some cases, short-term rent) and taxi markets, previously controlled by large businesses, giving their customers a cheaper and more personalized experience by cutting out the middle man.

Sharing economy startup Tispr, short for “talented independent skilled persons,” generalizes this idea by allowing freelancers to advertize almost any service they wish to their growing userbase. If you have something to offer, it’s easier than ever to find somebody who’s ready to pay for it directly.

Freelancing is increasingly popular across demographics. As the baby boomers retire, many are choosing to keep a foot in the job market, leveraging their experience to get work as consultants. Their children and grandchildren also have a positive view of self-employment: 79% of millennials would consider quitting their job and freelancing in the future, drawn by its “flexibility and control.”

The cultural winds seem to be blowing towards a mostly freelance-based economy, and the statistics back that up: the world of work could look quite different in 2020 and beyond. However, there are distinct advantages and disadvantages to non-permanent work, both for service providers and receivers, which need consideration before choosing to engage or work as a freelancer.

The Downsides of Being The Boss

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Being a freelancer means functioning as a one-person organization, so on top of managing your business’ service offerings, you have to keep up with business and personal finances, marketing, and long-term management. As well as taking time, these activities take skill to do effectively, so many DIY-ers take to outsourcing work that falls to far outside of their purview.

Trying to do it all can mean freelancers run the risk of “Jack of all trades, master of none.” By contrast, permanent employees can feel free to concentrate solely on their fields of expertise as their employer likely has other staff members dedicated to managing its finances, marketing and operations.

Working for oneself means more control over workload — however, this can be a curse as well as a blessing. Rather than having an employer who determines how much employees can handle, based on an incomplete and possibly biased perception, freelancers can take on work according to their abilities.

This means that freelancers are more able to control their workload, but they may also feel more pressure to take on more work in order to make ends meet. Having to pay for rent, health insurance, retirement savings, and more can take a lot of billable hours.

On that note, freelancers often have difficulty maintaining boundaries between their work and personal life, which can lead to overwork and burnout. While managers can certainly be guilty of overlooking employee welfare to squeeze more hours out of their staff, the fact that quantity of work is not directly indexed to an employee’s personal pay can reduce the motivation of a worker to burn the midnight oil.

Getting ahead is easier said than done: not having a permanent contract means that freelancers are effectively employed “at-will,” and have little recourse after being terminated. This can be especially disastrous for freelance workers without a wide client base or savings to fall back on, and replacing customers can be a major challenge: for 21% of freelancers, the biggest challenge is finding clients.

While a perk for freelancers may be not having to go into an office every day, humans are social animals, so lone workers can suffer from lack of company. Apart from the well-documented health risks of social isolation, working in a team means benefitting from different viewpoints that will cover a single person’s blind spots. Also, having a manager who has the final word cuts down on the number and weight of decisions to be made, leaving workers free to concentrate on their skill.

Freelancing For Businesses

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Small businesses with high seasonality can particularly benefit from taking on temporary workers, only expending wages when they can make a net profit. While they might not be able to afford the full-time wages demanded by industry stars, they can still benefit from short consultancies, continuing to apply systems and ideas once the consultants move on.

However, while keeping permanent staff represents a larger investment, committing to the right team of people is still well worth it. Employers lose out from not having a permanent team working towards mutual goals. Having a shifting cast makes it hard to establish organizational culture, which is closely correlated with a business’s long term outcomes.

Freelancing is set to be a fact of life in the future marketplace, but both employees and jobseekers considering this option need to evaluate the situation carefully. While the flexibility of freelancing can be tempting, it needs to be weighed against the added uncertainty and the risks of isolation. The optimal solution will be different for every workplace and individual.

Ultimately, making the right choice depends on understanding your own needs, analyzing the market, and applying your best judgement.

Longneck and Thunderfoot offer employer branding services to reach prospective candidates before they know to look for a job and establish your organization as a leader in your space. Learn more about employer branding here.