Neil Lewis - Innovative Entrepreneur

Solving problems by growing profitable businesses @neil_lewis

Freelancers: what happens if you fall ill? Why recurring income matters…

What happens to your freelance work and income if you fall ill?

How do you cope with clients projects and deadlines? Or worse, how do you cope with no income for a few months or the inability to meet client needs?

This stark question came home to me over the summer as a good friend was struck down by a completely unexpected illness that lead to 4 weeks in hospital followed by two or three month recuperation…

… and this came with no warning what so ever!

It left me asking, what would I do or what would any freelancer do if they were struck down by sudden illness or hit by the proverbial car?

It seems to me that there are three ways to respond to this

Building a recurring income

Firstly, insurance can provide an income or payment in case of critical or sudden illness or incapacity to work.

Secondly, building a network of really close and trusted freelancers who can just step in and ‘help’ keep the wheels moving, but most importantly;

Thirdly, ensure that as we deliver our freelancer jobs and projects and earn our hourly rates, that we are also building a source of recurring income – that will pay us whether we turn on the computer or fire up the smart phone or not.

You see, insurance is great (although it costs money) and freelance buddies really help you pull through, but at the end of the day, a steady source of recurring income – a bit like an author’s royalty – is what will get you through the most difficult days.

How to build a recurring income

Most freelance work is sold on an hourly rate or an assumption of an hourly rate (ie a fee for the project).

However, the purpose of recurring income is to ensure that you are paid – weekly, monthly or annually – for a piece of work that you created or contributed to in the past.

The typical example of this is an artist or author’s royalty.

Now, not many of us will write best selling books, but the internet does offer us a solution.

The nature of search engines is that if we build a webpage that ranks highly enough, then we will receive traffic whether we open our web browser or turn up for work, or not!

Hence, all web based services and tools – if delivered automatically, have the capacity to create and deliver a recurring income.

The trick here is to ensure that web based traffic turns to cash – or is ‘monetised’.

If we can solve the ‘monetised’ part of the question, then we can pay for the work to expand the marketing and deliver the developments to automated tools to keep the site selling.

Equally, if we fall ill for a day, a week or a month or so, then, yes, new traffic will slow down, but established traffic should continue fairly steadily.

You might even expect a successful website to keep pulling in traffic in two or three months time too – albeit, that traffic and revenue will slowly fall.

However, crucially, at this stage, if the revenue is great enough, then you can always pay for someone else to help to maintain the site and/ or developments whilst you are not able to do it.

Hourly income to royalty shift

The big difference here is that you have shifted from dependence on your ability to deliver hours to a partially or fully royalty basis.

It is also why, the best insurance policy for any freelancer is to build something – perhaps a website – perhaps a book – perhaps a video series or other royalty type income that can pay you whether you turn up to work or not.

The question is how do you do this?
Firstly, a website alone is not enough. The trick is to build a community of active contributors. Then, follow these points…

1. If you are a commercial or marketing person, you’ll need to work or collaborate with technical developers

2. If you are a technical developer, then you’ll need to work or collaborate with marketing and commercial people

3. You’ll need a clear plan for how your website or tool or product or service is going to generate income

4. Depending on your plans, you may or may not need a mentor or someone who can help guide your objectives

Either way, you’ll probably need to work with others; so finding a reliable mechanism of engaging with the right partners and sharing the fruits of the work and success will be critical.

However, the rewards are worth it if you can break the link between hours and income.

I’ll be working with delegates to solve this at the Startup Workshop in Manchester on Thursday 15th September. Please check here to see if any tickets remain…

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Written by Editor on September 12, 2011 and filed in Entrepreneurs, Freelance Jobs, Freelancers, Innovative Entrepreneur, Money, News, Opinion , ,

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