Tag Archives: cash-flow

Survival Strategies , , , , , , , Leave a comment

Freelancers Do the Side Hustle

by

When a local small business owner and acquaintance of mine opened her second venture, a tiny breakfast and lunch place with a retro cool vibe that I love, she soon started “moonlighting” as a dinner service waitress three nights a week at a small artisanal pizza restaurant nearby. She burned the candle at both ends, finishing the waitress shift at midnight and crawling into bed at 1:00 AM, only to wake up at 4:00 AM to make the 45 minute journey to the wholesale restaurant market six days a week, to help her contain food costs and offer menu prices that customers would accept. It was exhausting, but Nicky was determined to pay her share of the debts from the failed first business venture in which she was a partner and also maintain adequate cash-flow in the new one, where she is the principal owner.

About three miles away from Nicky’s restaurant is Anthony’s, another tiny breakfast and lunch place that I love. A few years ago, Anthony told me that his venture’s cash-flow foundation is real estate. Some years ago, Anthony was able to buy the building where his restaurant is housed; upstairs over the restaurant are four apartments that command premium rents for his harbor-facing location.

Cathy, a former client of mine (who, sadly, passed away about three years ago), worked for three or four years as a Lyft driver, to build cash-flow that safeguarded her ability to make the weekly payroll and cover other expenses in her medical billing business (which her children sold). My friend Jackie, a fitness instructor and trainer, launched a boutique gym 20+ years ago, yet she continues to teach classes at a large, prestigious gym where she receives training and certifications in new exercise techniques that she passes along to her gym’s fitness staff so that her team has updated skills. Jackie is also able to now and again observe smart business practices used by her mega-gym employer that she can apply at her operation to improve her performance as fitness center owner and manager. Then there’s my friend Paul who once co-owned four outlets of a popular skin care franchise. To provide health insurance for himself, his wife and their four children, for many years Paul worked 20 hours/week as a FedEx delivery driver.

I also created a side hustle strategy to protect my business cash-flow. Until about three years ago, I periodically taught noncredit skills development workshops to aspiring entrepreneurs—business plan writing, sales skills training, marketing and networking skills—at a local school and at a business incubator that serves aspiring female entreprenurs. Unfortunately, pandemic related shake-ups torpedoed my access to both teaching positions but if an invitation is made, I’ll gladly return—and money is not my only motivation—I enjoy teaching! On the plus side, since 2016, I’ve been a contributing writer at Lioness Magazine, a globally distributed publication that’s targeted to female entrepreneurs.

So where are we going with this? You noticed that the recurring theme of these stories is how Freelancers and small business owners take action to strengthen their business cash-flow. Freelancers and small business owners can be dangerously vulnerable when it comes to financial security. Keeping an entity healthy throughout the inevitable ups and downs of the local or national economy or, in the B2B sector, protecting yourself from cash-flow crunches that can result if a client is late paying your invoice or worse, doesn’t pay at all, is an essential function of your risk management strategy.

The phenomenon once known as “moonlighting,” that is, working in a second (or third, or even fourth) job, and now called a side hustle, burst into the public discourse during the pandemic, when the economy as we knew it suddenly turned upside down and most jobs tumbled into a confusing transition. The shutdown resulted in the swift closure of numerous restaurants and fitness centers and was soon followed by waves of lay-offs and bankruptcies that are ongoing, especially in the tech and retail industries.

Life gradually returned to what’s called “the new normal” and markets rebounded and stabilized, on paper anyway. Contrary to the many glowing reports of a low unemployment rate, subsiding inflation and millions of jobs that are unfilled (and, allegedly, looking to hire qualified candidates), many Americans are experiencing a different reality and the desirability of earning extra income has taken hold. The popularity of the side hustle economy has continued to grow, publicized by rideshare giants Lyft and Uber and fueled by financial pressures felt by both independently and traditionally employed workers.

Recent data confirms that side hustles are on the rise and here to stay, with CBS News reporting that nearly half of America’s workforce has a secondary source of income or their own side hustles. Surprisingly, according to Side Hustle Nation, side hustles aren’t exclusively for the financially challenged—the 2024 Side Hustle nation survey found that more than 40% of participants have household incomes that exceed $100,000 and 78.4% stated that they aren’t struggling to make ends meet.

The changing societal zeitgeist gives today’s Freelancers and SMBs the greenlight to radically reframe their feelings and expectations toward “moonlighting,” with its former connotations of operating in secrecy in order to rustle up money needed to supplement an insufficient income, to a potentially impactful revenue stream that could surpass mere cash-flow support and extend into financing new business ventures or other investment. For today’s Freelance professionals and SMB owners, a side hustle can translate into a unique growth opportunity but to make the strategy work, the side hustle must be managed with intention. Proper structure, planning and assessment are required. If you are Freelance professional or SMB owner considering the enhanced security that can be provided by a good side hustle, here are six steps to take to help make your side hustle worth your time and effort.

  1. What’s in it for you? As you’ve seen, the side hustle economy gets lots of publicity and the noise may get you thinking—is there an opportunity for you? Life continues to get more expensive and also, extra money is an essential resource when one has financial or entrepreneurial goals. You might see a side hustle as a vehicle to pay off debt, finance your retirement, or build capital to launch a start-up. Then again, you could be motivated by a basic need or desire to supplement your Freelance or other business revenue or your W-2 paycheck. There are also those who harbor the goal of building out a promising side hustle that will become a full-time business venture and replace their current employment. Before you focus on what might be your most promising side hustle, however, you would be wise to clearly define your motivation.

2. What are your marketable skills and are they expert-level? Once you’ve made an uncensored examination of your interest in launching a side hustle, make an accounting of your potentially marketable skills and evaluate what customers might be inclined to pay you to do. For example, might your knack for graphic design open doors to projects such as designing wedding invitations, or perhaps creating marketing and sales materials? Talented writers might parlay that competence into a Freelance editing side hustle. If you were born with a green thumb and can keep blooms popping, from crocuses in early spring to chrysanthemums in late autumn, then window box and garden management may be the side hustle for you. Be aware as well that it’s a valuable competitive advantage to invest in your side hustle skill with training that upgrades your expertise. Certifications, degrees and experience (communicated by customer reviews) can be posted on your website and social media accounts to increase the confidence that prospects have for you. Skills training helps you stand out against competitors and can increase customer demand, grow your client list, justify premium pricing for your services and ultimately, position your side hustle to earn more money, faster.

3. What will success look like? It’s important to align your side hustle’s driving purpose with your marketable skills that a critical mass of customers will pay to receive and also fit your definition of financial success. This is about managing expectations—will the side hustle you have the skill set to get paid for earn you enough money to make it worthwhile doing? For example, you may want to become a piano teacher but research of the most respected teaching qualifications, or your access to potential students, may not support either the price you’d like to charge for lessons or the billable hours you’re likely to get. You may be able to tap a new market and improve access to students—maybe retired adults who want to revisit their childhood piano lessons?—but since you can’t charge your preferred price for lessons because you lack a certain qualification, so you’ll have to work harder and give more lessons. Basically, you must be honest about how much time and focus you care to devote to your side hustle venture and define your picture of success.

4. How disciplined are you? The side hustle will not get off the ground and fulfill expectations if you can’t make yourself put in the time and effort to make it successful. This seems obvious, but for some it may not be as easy as it seems. Before you invest significant money into developing your side hustle consider likely the time commitment, along with the necessary tools, equipment, relationships, training and administrative duties (marketing and bookkeeping, for example) it will take to launch and operate your venture and guide it toward your definition of success. Estimate the number of hours per week, with a realistic hourly service rate, it will take to make the thing worthwhile. Be brutally honest about the number of hours per week or month you can (or will) allocate to working a side hustle. BTW, as you calculate your estimated time commitment, do not even think about infringing on the time and focus needed to effectively do your day job.

5. Create milestones with timeline and success metrics. Operating a side hustle means lengthening your to-do list and spreading yourself thin, making it essential to be organized. Keep yourself on track and also alert yourself to what is or isn’t working by creating a simple and revealing tool—a timeline. At periodic intervals—monthly or quarterly will be good—over a 12 month period, it will be very helpful to track and assess Key Performance Indicators that demonstrate side hustle growth, or lack thereof. Look at billable hours worked, number of customers seen, revenue generated and business expenses to get the story of side hustle performance. Pay attention to prospects who don’t work with you to learn of some element you may want to adjust. It’s important to use a timeline to project what you think is achievable so that, as an entrepreneur, you are setting yourself up for success.

6. Course correct when necessary. You’ll quickly know if something is not performing as you’d hoped (like revenue generated), but the above-mentioned timeline will confirm the diagnosis with metrics. Along with defining your KPI timeline is to recognize what’s working and what’s not, so you can make corrections where necessary. The big-picture view is a revealing perspective. Take the time to consider why those who tell you no are declining to work with you—are you falling short somewhere? On the plus side, are existing customers referring new customers and/or writing good online reviews? Once a month or so, hunt for time in your very busy schedule to think about your side hustle for a couple of hours, just as you think about your Freelance consultancy or SMB. Know that it’s okay to periodically reevaluate and change course if necessary.

Thanks for reading,

Kim

Image: © Shutterstock. Working as a fitness instructor or trainer has been a popular side hustle since the 1980s.

Administrative , , Leave a comment

States Pass New Laws to Help Freelancers

by

According to the 10th annual Upwork survey Freelance Forward, 64 million Americans worked as Freelance professionals in 2023, labor that contributed $1.27 trillion to our national economy. It’s a ringing testament to our talented and ambitious community but unfortunately, 71% of the 3000 survey respondents also reported that they’ve struggled with the frustrating problem of late payment or even non-payment for their work.

The persistent occurrence of payment gaps that Freelancers and other gig workers endure exacts a terrible toll on the ability to live and work. Late payments and, worse still, nonpayment, wreaks havoc on cash-flow and may threaten the maintenance of normal business operations and the ability to plan for the future. When payment for services rendered doesn’t arrive within 30 days after the invoice is sent, the ability to pay bills can be undermined and the problem is exacerbated as the price of everything continues to increase. But for those of you working with clients based in California, Illinois, or the State of New York, things will soon get better.

New state laws protect Freelancers

It is said in legal circles that a contract is only as good as one’s ability to enforce it and that sometimes puts Freelance professionals at risk for exploitation. You seldom have the leverage to adequately defend yourself against unscrupulous clients who ignore their contractual responsibility, written or verbal, and decline to pay on time and in full for appropriately provided services rendered. But in NY State, IL and CA, a new day has dawned. Freelance professionals and gig workers, who are often in a comparatively vulnerable position when entering into work agreements with clients, are celebrating the passage of legislation that puts the force of law into contracts between the independently employed and their clients. The driving force behind the legislative victories was the Freelancers Union, a New York City-based advocacy group that has championed the rights of independent workers since its founding in 1995.

On August 4, 2023, Illinois became the first state in the country to adopt protections for an estimated 1.2 million Freelance workers when Governor J.B. Pritzker signed the Freelance Worker Protection Act, which took effect on July 1, 2024. The Act applies to work agreements between Freelance professionals and “contracting entities,” i.e., clients, in exchange for the Freelance worker’s services valued at $500 or more over a 120-day period. The Illinois Act excludes from the definition of “Freelance worker” any workers performing construction services, or those defined as an employee.

On November 22, 2023, New York Governor Kathy Hochul signed into law the Freelance Isn’t Free Act, groundbreaking legislation intended to shield Freelance consultants and other 1099-NEC workers from the financial damage done by non-paying or slow-paying clients. The Act was created to guarantee that Freelance workers retained as independent contractors who work with clients based in NY state receive timely compensation for all services rendered. The NY law went into effect on August 28, 2024 and some 2 million Freelance workers are expected to benefit from its much-needed legal protections.

In CA, the Freelance Worker Protection Act was signed by Governor Gavin Newsom on September 28th, 2024. As does the IL and NY legislation, the Freelance Worker Protection Act ratified in CA provides legal protection to Freelance professionals and the independently employed who work for clients located in CA. The CA law takes effect on January 1, 2025 and an estimated 2.2 million Freelancers (11.6% of the workforce as of 2022) are expected to benefit. The CA Freelance Worker Protection Act requires written contracts for Freelance services valued at $250 or more when working with clients based in CA. It is now mandated that contracts must outline the scope of work, payment method, deadlines and other important details that ensure transparency and fairness.

Written Contract
Per the Freelance Isn’t Free Act, all contracts pertaining to NY state clients and worth $800 or more must be in writing. This includes all agreements between the Freelancer and the hiring party (client) that total $800 in any 120-day period. The written contract must specify the work the Freelancer is expected to perform; the amount the Freelancer will be paid as compensation for the work; and the date the Freelancer will be paid for the work performed. Both Freelancer and client must keep a copy of the written contract. The NY Department of Consumer and Worker Protection (DCWP) created a model contract [English] that includes the terms required under the law and optional terms that may apply to different work types and arrangements. 

The Illinois Freelance Worker Protection Act requires that contracts for products or services must be in writing, and that the client provide a physical or electronic copy of the contract to the Freelance worker. Contracts must include certain information, such as the name and contact information of both parties (including the client’s mailing address), an itemized list of all products and services to be provided and their value, the rate and method of compensation and the payment date or mechanism by which such date will be determined. The client must retain a copy of the contract for a two-year period.

California’s Freelance Worker Protection Act likewise requires written contracts for Freelance services, when the value of services provided is $250 or more. Contracts must outline the scope of work, payment method, deadlines and other important details, to ensure transparency and fairness.

Timely Payment
In CA, IL and NY, your client is required to pay you for all completed work and you are entitled to receive payment on or before the date that is specified in the contract. If the contract does not specify a payment date, the client must pay you within 30 days after you complete the work.

No Retaliation
In all three states, it is illegal for a hiring party (the client) to penalize, threaten, blacklist, or otherwise deter Freelance workers from exercising their rights under the Freelance Isn’t Free Act or the Freelance Worker Protection Act. Denying an independently employed worker from obtaining future assignments and threatening to take unwarranted legal action against that worker is likewise now illegal. Freelancers who feel they have been targeted for retaliation as a result of pursuing a claim against a nonpaying or slow-paying client can file a complaint with DCWP (NY), or the IL Department of Labor, or in CA at the Labor Commissioner’s Office.

What is Freelance Isn’t Free (NY)?

  • 30-Day Payment Terms. Unless otherwise specified in a contract, clients must pay Freelancers within 30 days of work completion.
  • Mandatory Contracts. Clients must use a contract when hiring a Freelancer for over $800 of work and they can face fines if they refuse to provide one.
  • Payment Agreement Protections. Clients cannot require that Freelancers accept less than they’re owed in exchange for timely payment.
  • Anti-Retaliation. Clients cannot retaliate against a Freelancer for pursuing payment.
  • Legal Assistance. A city agency will investigate, may try to collect on the Freelancer’s behalf and will provide court navigation services if needed.
  • Double Damages. Freelancers can collect double damages and attorney fees in court and repeat offenders can face penalties of up to $25,000.

What is the Freelance Worker Protection Act (IL)?

  • Written Contract Required. A written contract outlining the products and services to be provided, the dates by which services are to be performed, and the rate and method of compensation (sample available online, and free Union contract templates available) 
  • 30-Day Payment. 30-day payment terms, unless otherwise specified in the contract.
  • Payment Agreement Protection. Protection against coercion for faster payment.
  • No Retaliation. Anti-retaliation measures against Freelancers pursuing payment.
  • Enforcement and Legal Remedies. Double damages for non-payment, covering costs and attorney’s fees.

What is the Freelance Worker Protection Act (CA)?

  • Written Contract Requirement. Freelancers must have a written agreement in place for work totaling $250 or more over a 120-day period. The contract must clearly outline the scope of services, deadlines, compensation rates and payment methods.
  • 30-Day Payment Terms. Freelancers are entitled to payment within 30 days of completing their work, unless the contract specifies otherwise. This provision eliminates the uncertainty many Freelancers face when waiting for payment.
  • Anti-Retaliation Protections. Freelancers are protected from any retaliation by hiring entities if they assert their right to fair payment under the law.
  • Enforcement and Legal Remedies. If a client fails to pay, Freelancers can seek legal recourse, including double damages and the recovery of attorney’s fees. Both Freelancers and public prosecutors can file claims to ensure compliance with the law.

Confirm milestones, invoicing, payment format

On your end, Freelancer friend, remember that the importance of providing a pleasantly efficient and smoothly delivered experience for your B2B clients cannot be overstated. Working together is a partnership and the dance is much more enjoyable when each partner understands his/her role. The contract between your company and the client describes and confirms your mutual agreement in a written document, specifying the responsibilities, terms and requirements and payments associated with the working relationship.

Once your hire has been confirmed, schedule a project kick-off meeting and review with your client the scope and timing of project deliverables, plus the associated payments or other payments. Also, include in the kick-off meeting agenda a discussion of the project or product performance goals, client expectations for the product or service you’ll provide and the ideal outcomes expected to be achieved when using your product or implementing your service. You and the client can then discuss how you’ll work together to make the client’s goals and expectations actionable and attainable. If an electronic invoice payment system will be used, ensure that your client sends the payment registration form to you, to promote a timely first payment.

  • Review and confirm project milestones
  • Review and confirm payments triggered when milestones are achieved
  • Review and confirm the invoicing schedule, if milestones are not used
  • Confirm the accepted payment methods—digital, credit/ debit card, check (electronic or physical)
  • Integrate info with your Client Relationship Management software (if applicable) to capture client data
  • Allow clients to view, comment on and sign e-documents

Thanks for reading,

Kim

Image: The Signing of the Treaty of Mortefontaine 30th September 1800 depicts the signing of the agreement that ratified the sale of Louisiana to the U.S. by France. The treaty was signed by Joseph Bonaparte, a diplomat and former ambassador, on behalf of France and Oliver Ellsworth, a framer of the Constitution and Senator from CT, on behalf of the US. Artist: Charles Etienne Pierre Motte