The gig economy: good or bad for freelancers?

The gig economy has been a hot topic for some time now.

This new form of freelancing has changed the employment landscape. It has sparked a debate about whether the low rate of pay-per-job is worth the flexibility of being able to take on a job whenever you’re available.

There’s no single answer to this question. But, by reaching a comprehensive understanding of the gig economy, you will be able to recognise (and avoid) some of the potential pitfalls.

What is the gig economy?

According to The Department of Business, Energy & Industrial Strategy, around 5m people in the UK are now part of the gig economy.

In practice, workers in the gig economy are paid for individual ‘gigs’ – be that a taxi ride, or one-off service through websites like Fiverr. This means people working in the gig economy needn’t be based in the same location as the company paying for their services.

One of the biggest differences between the gig economy and traditional freelancing is that freelancers tend to have an established client base to fall back on, whereas gig economy workers can only take work as it comes.

Is it worth investing time in the gig economy?

The gig economy tends to pay what would be the basic rate for a full-time employee, but comes with several extra costs. For example, Uber drivers must pay for their car, petrol, maintenance and insurance out of their own pocket.

A traditional freelancer, is likely to cost work based on a combination of the service provided, expenses and a nominal sum to reimburse you for time spent in-between projects. The gig economy wage doesn’t account for this.

Those working in the gig economy are likely to have a lower and less regular income. However, all freelancers are likely to have a slow-work week where payment from a one off ‘gig’ may come in handy. It also can provide valuable experience that can’t be gained by repeatedly working for the same client.

However, it’s also seen as a means less scrupulous clients can use to make their processes marginally more cost-effective at the expense of your professional stability.

How can freelancers make the most of the gig economy?

One thing is for certain; you’ll need to get yourself set up properly to make the most out of the gig economy. Here’s some of the ways you can get started:

Availability

The gig economy turns any spare hours you’re willing to invest into income.

To earn more, make yourself available across a broad range of times, or at times when others are less likely to be providing your service.

You also need to make your services as visible as possible. If this isn’t done on your behalf (such as with the Uber app or sites like Fiverr), then it pays to promote yourself on as many freelancer jobsites as possible.

Contracts

Always check your contract thoroughly to make sure there aren’t any hidden surprises that will affect how much you get paid and when.

This is especially important when looking for one-off projects on freelancer job sites. The client may not have the experience or policies to manage this process effectively, which could leave you out of pocket if there are misunderstandings or miscommunications.

Finances

You’ll only really know whether the gig economy is the right option for you by monitoring your freelancer finances over time.

With an irregular client base and income stream, financial planning can become a complex task that takes time away from more profitable tasks. Use advanced accountancy software such as Xero to monitor your cash flow in real time and invoice clients automatically.

Want more professional tips and financial advice for freelancers? Call on the friendly team at 3 Wise Bears.