One Client Is Not Enough

When you are starting your own business, take care not to focus on just one client. Expanding your client base as much as possible can protect your income from unforeseen events.

This morning I lost a client. The COVID-19 crisis had put their business under pressure to reduce costs. This wasn’t a disaster as I have a range of clients from different market sectors. For decades I have worked to spread my client base as wide as possible to mitigate the inevitable loss of clients or their temporary suspension of freelance spending.

It’s tough in publishing at the moment. Many of the larger magazine publishers have made radical changes to their freelance budgets. A spokesperson for Future said: “During this unprecedented time we have made the decision to temporarily reduce freelance expenditure in some areas, but no brand or vertical has entirely lost its freelance budget. We have no doubt that our brands will continue to return market-leading results. Suggestions that all freelance budgets have been completely cut are simply inaccurate.”

This was in reaction to many tweets that claimed all freelancing budgets had been cut for the foreseeable future. After reading that many of the leading magazine publishers were cutting back on their freelance budgets and also making radical changes to their publishing portfolios set me thinking about how it’s very easy to fall into the trap of working for just one client.

Portfolio careers

When I started freelancing in the mid-1980s, there were few specialist publishers which meant most of the tech and business journalists worked for the same publications. Once you had a foot in the door, it was easy to expand the work for that one client and stop pitching for work from other clients.

The news that .Net and Computer Arts magazine is closing after decades, shaping the digital arts industries illustrates how what appears to be a stable and reliable income, can disappear overnight. A large hole then appears in your income with little prospect of replacing this income in the short term.

My approach has always been to work for as many different clients from diverse sectors as possible within areas I specialize within. Of course, one of the mantras of successful freelancing is to have repeat clients which stabilize your income to a degree, but you can’t rest on your laurels.

It’s vital to have a continuously active marketing component to your working week. I try and pitch a couple of new clients each and every week. This then gives me a potential roster of new clients. If I lose one or more clients, I have a fallback plan to replace them.

Watch your status

Today, we all have to also think about IR35. Working for one client could place you within the regime effectively making you an employee and not a freelancer or contractor. There are subtle differences to be aware of. If you do work for just one client, check your status. The COVID-19 crisis has shifted IR35, which has now been deferred until April 2021.

Steve Barclay, the chief secretary to the Treasury, confirmed: “I can also this evening announce the government is postponing the reforms to the off-payroll working rules, IR35, from April 2020 to April 6, 2021. This is a deferral in response to the ongoing spread of COVID-19 to help businesses and individuals. This is a deferral, not a cancellation and the government remains committed to reintroducing this policy to ensure people working like employees but through their own limited company pay the same tax as those employed directly.”

Barry Stanton, Partner, at UK law firm Boyes Turner explains: “If a freelancer falls within IR35 they can look at the arrangement to determine whether there are any changes that can be made to the arrangement which would mean that they fall outside IR35. Often it may not be possible, for commercial or practical reasons to change the way in which the contract operates. The consequence of falling inside IR35 is that the cost to the end-user is likely to be greater because they will need to pay employer NICs and the contractor will receive less pay because tax and employee NICs will be deducted.”

The delay does give anyone that has one client to define their working relationship to identify whether this is inside IR35. If you are defined as an employee, this could have significant impacts on income. If you’re uncertain, consult an employment and tax expert. Don’t rely upon HMRC’s assessment tool, which has been shown to be inaccurate and can’t be used as reliable evidence in any employment status dispute.

Spreading your client base as wide as possible ensures you remain outside of IR35. When you decide when and where you work and, for whom; you are a freelancer. Having a diverse customer base is tangible evidence, but you must have a portfolio of clients you can point to.

Keep marketing

One of the consequences of the COVID-19 crisis has been an uptick in the number of people moving into freelancing and small business ownership Whether you are an established freelancer, or are seriously look at changing your employment status, think about how you will market your skills and knowledge. Cast your net far and wide inside your niche to locate potential clients from as many different companies as possible.

What will happen is as you expand your freelancing, you will gain regular clients. This is the riskiest time as you will tend to focus on the work you have and spend your time cultivating those connections. It’s vital that you realize your behaviour has changed and re-start or your regular marketing activities.

Marisa Bate writing on UnderPinned learned from her experience: “I learned, the hard way, not to have all your eggs in one basket. Maybe you already have a nice broad range of clients but if you don’t, figure out how to. Right now, it is tricky to meet new clients or pitch for new work, but you can do the strategizing and thinking. Use the downtime to research potential clients in different sectors and fields. Consider how you can sell yourself to a different market. Write up some introductory emails that are ready to go when we get the all-clear.”

Freelancing in the current climate is touch – there’s no question. However, unlike your employed colleagues, you can take complete control of your working life today. It can be challenging to stay positive when you are losing clients. What I can say is that they will come back to your business. The peaks and troughs of the freelance life are well documented.

You may be in what feels like the bottom of a bottomless hole, but you can climb out. Amplify and expand your marketing. It’s the most effective way to locate the work that is out there. If there are freelance work portals you don’t have a portfolio on – get that sorted out as soon as possible. Look at the wider job boards. Set-up alerts and just keep your fingers on the pulse of your sector. When you land a client just think that’s one, who’s next?