The Value of Freelancing / Consulting

With the exception of a one year full time job I have been freelancing and consulting more than 10 years. To many this seems risky, but to me it’s a great way to offer myself as a worker at the higher end of the labour cost spectrum. I say “higher end”, because I have no experience freelancing lower down in the pay scale, so I cannot really comment on dynamics of freelancing farm workers or waiters for example. However, at the professional level in organisations, I think there are powerful incentives for labour to be organised this way.

I don’t believe all workers should be freelancers, but I do think that more people can work in a freelance-type capacity, to the benefit of themselves and their clients.

Freelancing promotes a free association model for business relationships which can be very beneficial for both you and the customer. Essentially the relationship with your clients are based on both parties being able to positively answer the following question: “Am I getting value out of this relationship?” As soon as either party finds themselves struggling to answer “yes" to this question, the relationship should and probably will end. This is a simple alternative to the normal employment model, where the basis of the relationship is a muddled mess of loyalty, beliefs, interpersonal bonds and that vague thing called “performance". Often, when a relationship does not work, it drags on for months or years regardless, with one or both parties not realising appropriate value simply because an employment relationship is inflexible. With freelancing it is relatively easy for any party to determine when the value exchange is not optimal (whenever they “feel like it”) and can move to end the engagement.

Naturally is it very beneficial for companies to sequence and use people according to a Just-In-Time principle. One of the most valuable (but generally undervalued) attributes of any purchased resource, good or service is its flexibility. Ideally a company would only like to use the exact amount of any resource, good or service when it needs to. Think of a company baking bread. It would be ideal if the company could get the exact quantities of ingredients needed to complete the day's bread production, delivered when needed during the day. When there is a power outage and it cannot produce, the company simply stops receiving ingredients, until the power is back on and it can produce again. This kind of flexibility is even more valuable when times are hard, and companies have to source and deploy their resources more effectively.

Looking at traditional employment from this point of view, you can probably see the problem. With employment you pay for your human resources whether you can utilise them or not, and in my experience companies are often bad at utilising their employed human resources efficiently for the purpose they were employed.

But what are the benefits to the freelancer? Why would one operate in such an uncertain arrangement with companies? From my point of view there are four major benefits.

Firstly, flexibility commands a premium. Giving companies the ability to dynamically flex their productive capacity is a big benefit to them and they are willing to pay a more for it.

Secondly, you can identify a productivity and value “sweet spot”, i.e. a small but relevant and valuable set of activities, and spend most of your time there, avoiding many of the wasteful and draining efforts that often accompanies life as an employee.

Thirdly, when you freelance and consult for more than one company at the same time, the power dynamic moves considerably toward you and more in a balanced partnership position. No individual company has total control over you. In many cases your clients will need you more than you need them.

Lastly, as a freelancer or consultant you often have more control in terms of how and when you deliver value. You can sequence your activity so that you can deliver maximum value across all your clients. You can develop your own systems to deliver more efficiently. You can use learnings from one client to deliver more effectively at another. You can balance work and non-work activities for better long-term wellbeing.

This may sound very attractive all of a sudden, but there are a few conditions one has to meet consistently to do work in this manner. You need to be disciplined and self-motivated. You need to be a fast learner and “find your stride” in a new environment very quickly. You need to be good at delivering the value the client needs. You need to be a great communicator and work with people really well.

Many may look at the attributes above and think that these do not describe them, but I believe these are just attitudes and skills that can be acquired with time, if this is really the kind of person you want to be.

To summarise, it is unlikely I would ever want to go into full-time employment, because I have thought it through, and it just does not make sense to me as a personal choice most of the time. Where I offer my time and expertise for sale, it will be as a freelancer or consultant.

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