3 Things I Learned from Unexpectedly Losing a Gig

I’ve been making a living as a freelance writer for a little over a year now. If there’s one thing I’ve learned (perhaps the hard way), it’s projects can fall through with only a moment’s notice. Editorial calendars change. Budgets get slashed. Editors move on to new publications—and usually the freelancer is the last to know.

Within the last couple of months, I’ve had two steady, decent-paying jobs fall through. One was a regular copywriting gig for a medium-sized company; the other was with a well-established news site. Together, these projects were netting close to $2,000 per month. When they came to a grinding halt, I was left scrambling to make up the difference.

Overcoming this hurdle got me thinking about the steps I wish I’d taken to prevent the panic that comes with unexpectedly losing work.

1. I should have protected myself with a contract.

Unless the client presents a contract, the truth is I rarely work with one. The problem is part ignorance (what do I know about legal contracts?) mixed with a natural tendency to shy away from doing anything that might spook a client. Will they still want to work with the diva who kicks up a fuss about signing a contract? But truthfully, contracts offer legal protection we should actively seek out.

If you’re working with a client that doesn’t present a contract outlining the details of your agreement, consider bringing one of your own to the table.

“There are definitely many benefits to hiring counsel to draft one for you so that you can provide one to the client yourself for the circumstance,” said Alex Threadgold, partner at Savur Threadgold LLP. Threadgold represents creatives of all stripes, including writers, filmmakers, and recording artists.

According to him, a solid freelance writing contract should reference a payment schedule. “You could condition the grant of rights to [the client] to be conditioned upon paying you,” he said. “That’s a nice way to turn the screw if things sort of go south.

Addressing rights within the contract is another key point. In simpler terms, what happens to the work product you give them? If the writing you submit is something you’d ultimately like to use elsewhere, you want to legally retain whatever rights you’d like to have.

“Perhaps the client only gets to use it for the Internet, for example, and not print,” Threadgold added. “Conversely, what are the limitations on what you can do with it?”

Also, be sure to include liability concerns, which clarifies you’re only liable for the materials you actually submit.

2. I should have diversified my client list.

I really felt the sting of losing two clients because I broke a cardinal freelancing rule: Too much of my income was coming from one or two sources. When you fail to diversify your clientele, unexpectedly losing a few jobs may be enough to sink your business.

As a general rule of thumb, longtime freelance writer Erik Sherman tries not to let one client make up more than 20 percent of his revenue. Translation: No single client is so important that their departure would significantly hurt you.

So how do you diversify? According to Sherman, first take a look at your skills. The more understanding you bring to a particular topic, the easier it will be for you to build a niche. However, be careful not to specialize so much that you limit your options.

“You really want to consider what diversification means,” Sherman, whose work spans everything from business writing to corporate work, told me. “You’d like to have a mix of clients, a mix of industries, a mix of the type of work you do because some things come in and out of fashion.”

For example, if all your income is coming from writing white papers about the pharmaceutical industry, what will you do if pharma has a bad year? Similarly, what if clients transition from white papers to web-based presentations instead?

Snagging new clients really comes down to marketing, which can take many forms. Sherman, who has been in the trenches for nearly two decades, said there’s no official set of marketing tricks. For some, social media is a rich resource for finding job leads. For other writers, it’s attending networking events. Either way, marketing should be an integral part of your business.

“This is a longer term strategy, but one of the best types is just doing such good work that people want you back,” says Sherman. “So when someone goes from one company to another, they give you a call.”

3. I should have built up my emergency fund.

My current savings account isn’t all that impressive, which made me panic even more when I lost those two gigs. The experience only reinforced the importance of having a sturdy emergency fund.

According to Dr. Hersh Shefrin, a behavioral finance expert, beefing up your savings is really an investment in peace of mind. “People who have uncertain income streams need to think ahead about what’s going to happen during the up times and the down times,” Shefrin said. “What’s going to happen if one of your assignments doesn’t come through the way you expected? How are you going to adjust if you don’t have an emergency fund?”

He also warned against using credit cards, most of which have high interest rates, to get you through unexpected income loss. While he advises folks with traditional office jobs to save about six months’ worth of net income, that number should be nine to 12 months for freelancers.

“The moral of the story is to really try and plan ahead for those uncertain contingencies,” Shefrin said. “You have fewer options when you’re self-employed than when … you’re part of more of an institutionalized setting where there are programs if you want to take sick leave, for example, and you still collect a paycheck.”

If a real catastrophe happens and you’re left with no other choice but to borrow money, Shefrin recommends thinking ahead and getting a line of credit through your bank with more reasonable interest rates. This isn’t ideal, but it’s better than going into credit card debt. Ultimately, having a solid emergency fund in place will help you transition as you search for more work.

“Do yourself a favor by buying peace of mind,” Shefrin added. “It’s not a small thing,”