It’s called the “gig economy” and roughly one-third of U.S. workers fall into that category. Those are people who consider themselves independent contractors, freelancers, small business owners and temps. An increasingly large percentage of the workforce no longer gets their paycheck from one employer. By some estimates the number could swell to half of all workers by 2020.
The gig economy is encompassing workers who never really set out to be entrepreneurs. Maybe they started out moonlighting by bidding a few jobs on O-Desk, Elance or Guru. Or maybe dipped their toe in the alternate economies of the weekend Farmer’s Market or flea market booth. Even professionals like doctors, lawyers, nannies and chefs are getting into the act. It’s a great option for people who don’t want to work full time or need flexibility in scheduling. Here are four tips for surviving the gig economy.
Sales, Sales, Sales
Never forget that in the gig economy, you’re still a small business owner, the only difference is that the business is you. Selling yourself well and doing it quickly is the key to making money. Refine your pitch until you can read it in 20 seconds. You’ll get rejected for a lot of reasons and have to learn to let it bounce off. The difference between people to make it and those who don’t in business isn’t failure, it’s how they react to failure.
Talk About Salary
There is huge social pressure not to talk about money which the people doing the hiring will happily exploit. It’s important to network with others in the same business and know the current rates for particular jobs and services. If you’re willing to undervalue your services, there are many willing to let you do so. The two extremes you want to avoid are being the low bidder and the high bidder. The sweet spot is the upper half of the price range. In negotiations don’t lower your price, instead focus on the value added extras you bring to the job.
Focus On Processes
As a gig worker you’ll have overhead, just like any other small business. Most of that overhead will be in the form of processes like bidding jobs, expense tracking and billing for completed work. The less time you spend on unbilled process, the farther ahead you’ll be in the gig economy.
Pay Your Taxes
Many self-employed tend to forget this because they’re used to an employer doing it for them. Taxes come out of your paycheck before you have a chance to spend that money, so there’s no temptation to let it slide. Not so in the gig economy where you’ll likely be subject to self-employment tax, which you have to file quarterly. A lot of people throw up their hands at this point and say forget it, which is really a shame because it’s really not that hard. The IRS has forms for figuring your quarterly tax payments, which you can then make online at the Electronic Federal Tax Payment System. It’s just like shopping online except you’re paying your taxes and it’s easy, easy once you have your account setup.
Like any big change, the gig economy has elements that are good and some that are not so great. If you can navigate the challenges, you can make a surprising amount of money and work at your own pace. It’s also a great way for retirees to work a little extra when they can and make some extra cash.
Oh, and that next quarterly tax payment is due September 15th, so mark that on your calendar.
