Tag Archives: retainer

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Vacation: Planning Your Restorative Recess

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Labor performed by Freelance workers continues to exert a significant influence on the global economy. Freelance professionals play a central role in leading industries on every continent, as demonstrated by the prevalence of Freelance professionals working in software development, cybersecurity, artificial intelligence, human resources, graphic design, marketing, business consulting and in creative industries, from photojournalism to landscape design. Many of you in the U.S. and around the world have built rewarding and lucrative Freelance solopreneur entities. However, it is not an exaggeration to acknowledge that many Freelance workers struggle with one ordinary, but integral, facet of working life—taking time off.

Culture and customs

Unlike W-2 employees, Freelance workers are self-pay all the way—health insurance, holiday, personal, or sick time, retirement fund and vacation time. While there can be exceptions, such as retainer clients or ongoing projects where billable hours are front-end loaded, in many cases a day or a week without work can mean a day or a week without revenue. Revenue income is directly linked to billable hours, deliverables to the client, or project milestones. It can be difficult to step away from billable hours and risk diminishing your income or, heaven forbid, undermining your relationship with a coveted, but high-maintenance, client. Precarious circumstances can instill a fear of professional risk that can override what is, or should be, a normal part of working life.

On top of that, when working in the knowledge economy, whether you participate as 1099-NEC or W-2 labor, clients or employers may have developed an “always on” expectation of the help, a custom that is common in the U.S. and parts of East Asia and is taking hold in some sectors in the Middle East. Rapid response times enabled by a constant digital presence have become the norm in some industries and, increasingly, the practice now defines the preferred client relationship. Email, instant messaging and video conferencing make it easy for clients to expect immediate feedback from their Freelance collaborator, regardless of time zone differences or observances of local holidays. Unfortunately, the 24/7 always-on business culture can erode the boundaries between working hours and personal time, particularly for Freelancers who already operate without the advocacy of a multinational corporation that can enforce fixed work schedules.

Adding to the Freelancer’s stress is the awareness that platforms such as Upwork, Fiverr, or Toptal give prospective employers instant access to your potential replacement—a talented individual who may reside in your own country or on another continent, and is ready to service those who were once your clients. Under those anxiety-producing conditions, even established Freelancers may hesitate to go off-line and take a break that exceeds a long weekend, so worried are you that even a long-standing client might explore alternative providers while you are out of the office.

Health and wellness

Still, there are persuasive health and even professional benefits associated with incorporating vacations and holidays into your Freelance work schedule. Health care professionals point out the direct links between chronic overwork, cardiovascular risk, anxiety and depression and diminished productivity associated with the neglect of taking time off to relax and refresh your energy and focus. For Freelancers, who must, on your own, juggle client acquisition, deliver excellent project results and outcomes, perform administrative duties such as invoicing and project proposal submissions and conduct strategic planning for your business entity, the risk of burnout is typically higher than for traditional employees who have team support. Your long-term success depends on it.

Rest is not merely a wellness concept; it is a performance driver. Research from organizations such as Harvard Business Review  has consistently shown that cognitive performance, creativity and problem-solving improve after periods of genuine disconnection. Vacations and holidays contribute to building resilience and even creativity. You owe it to yourself to periodically step away from the grind and allow your mind and body to rest and recover.

Budget and schedule

Because you must finance your extended holiday, build projected restorative recess expenses into your company’s annual budget. Your annual Freelance business revenue (your income, that is) should cover your non-billable time, from the administrative duties you perform to standard and local holiday observances and your personal vacation days. Step One of your time-off enablement strategy is obtaining a reasonable estimate of the amount you can afford to spend and when you can afford to do it.

Begin by forecasting your revenue (what you expect to earn), cash-flow (when accounts receivable should arrive and when accounts payable expenses are due) and calculate a reasonable vacation budget. You might feel comfortable setting up a dedicated savings account and depositing 5% – 15% of monthly revenue received to create for yourself “paid leave” fund. Over the course of a year, you may be able to finance perhaps three to four weeks of non-billable time.

Remember also that retainer agreements are an excellent system for guaranteeing your revenue stream and can preserve your cash-flow during holidays and slow periods. Client retainer agreements can accommodate time off for holidays by front-loading your client work, or even reducing the scope of the work you perform, perhaps by yourself and the client negotiating a specified number of hours you will be available.

As for when you choose to schedule a vacation, you might simply confirm the slowest business periods on your calendar—maybe the last week of December or sometime during July or August? Few key clients are in the office during those blocks of time. You will also do well to reframe your approach to holidays; they can be more than random disruptions in your weekly workflow. Open yourself to recognizing a holiday as the foundation of a week’s vacation, for example.

Tech enabling

The rapid evolution of digital tools has significantly transformed what it means for Freelance workers to take time off. Automation and artificial intelligence powered assistants and agents can now play a pivotal role in maintaining operations continuity while the human overseers step away to take a recess. Your newsletter and other marketing emails, monthly invoices, monthly financial statements and sales funnel CRM follow-up can automatically be set into motion. Project management platforms such as ClickUp, Asana and Trello make it possible to monitor progress and status, assign responsibilities and set timelines to ensure that time-sensitive projects can move forward while you are away. If you must take a (brief!) meeting during your vacation, there are numerous videoconferencing platforms that allow anyone with internet access to check in and participate.

If maintaining data security is a priority for you (and it should be), particularly for Freelancers who will travel and also monitor client work from multiple locations. When grabbing internet access from hotels or co-working spaces, the risk of experiencing a data breach or other attack grows. Security-conscious Freelancers will use a virtual private network (VPN), two-factor authentication and encrypted password managers to protect data—their own and the clients’. When travelling, it is imperative that you protect your data, especially if you’ll log-on from remote work environments.

Communication plan

So can you get the ball rolling on a vacation you’ll take sometime before this year ends? A carefully designed financial plan and a date range that can be expected to cause minimal disruption to your work schedule are all good—but will not please your clients if a sloppy communication process causes them to feel blindsided or abandoned when you, their Freelance collaborator, announce a hiatus. Timely information must be the cornerstone of your communication strategy. Put yourself in the client’s shoes and imagine how much lead time would be useful for you and your team?

For example, if you decide to add a couple of days to a holiday long weekend, giving clients four to six weeks notice should suffice; but giving clients eight to ten weeks advance notice if your out-of-office time will extend to a week or two will be much appreciated. The longer your absence, the more advance notice you should give. Freelancers who value professionalism and good manners typically inform their currently engaged clients of planned absences well in advance (depending on the nature of the work). In your communication to clients, be certain to provide precise out-of-office dates, a summary of deliverables and/or milestones that will be completed before your departure and, if applicable, response expectations you will fulfill during your vacation, along with any contingency arrangements developed to preserve workflow that will be put into place.

Thanks for reading,

Kim

Image: © AlikaObraz for Freepik. A healing hot springs soak in Loutra Edipsou, Greece.

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Solution for A Freelancer Pain Point—On-Time Payment

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The often unspoken, always frustrating and sometimes embarrassing conundrum that all but the best-connected Freelance professionals are almost certain to encounter at some point is the dilemma of late invoice payments. Talk about a pain point! Waiting for money to arrive can keep you awake at night. A pile-up of late payments can do a lot of damage to a Freelance business and your credit score, too. I routinely include on invoices the preferred payment timeline, which was originally 30 days, but several years ago was shortened to “payment is requested upon receipt of this invoice.” It’s important to set expectations regarding timely payment for services rendered.

It’s been documented that cash-flow difficulties are among the leading cause of shutting down an independent entity. I don’t think former Secretary of State (1973-1977) Henry Kissinger had to worry about erratic receivables when he returned to civilian life and pursued independent work. The powerful always get paid. Readers of this post, I surmise, ought to devise a pro-active invoicing and collections strategy to defend yourself against 45+ days invoice payments that can undermine your intention to manage your own business accounts payable, along with your personal expenses. Slow payments leave one vulnerable to exorbitant late fees.

Your value transcends billable hours

The moral of the story is, avoid hourly-paid work assignments whenever possible. Clients who outsource hourly project work often have a nickel and dime perspective and they are inclined to under-value you and your solution. The axe they’ll use to chip away at your billable hours, no matter how modest, is always within reach, so that a few more dollars can be made available to fund a project that decision-makers feel outranks your work. The billable hours mind-set labels hourly workers (you!) as a commodity. That your skill-set qualifies you to become a collaborator who is capable of delivering sustainable positive outcomes to the client’s organization is unrecognized by the penny-wise, pound-foolish billable hours types. Those individuals are unable, or unwilling, to recognize strategies and actions that you are positioned to recommend might help the client’s company break out of a stagnant status quo and move forward.

Your first order of business is to transcend the hunger for revenue, which may cloud the confidently rational thinking needed to envision a more sustainable business model for your entity. The goal is to upgrade how prospects and clients see you, the caliber of the solution and the contributions you can make to the client’s organization. For guidance, lean into the fractional model of independent working.

Much will depend on your deliverable and industry, but you may find it useful to reframe the perception of your B2B service and interpret the expertise and insights that are the core of your work and promote it as a systemized package, a process improvement system, that once instituted enables your client’s organization to optimize the realization of the mission and goals. Yet, the billable hours model limits the expression of your value and reduces your deliverable to as a band-aid fix. Reframe how you articulate your deliverable and demonstrate that what you offer is not a commodity.

When you’re invited to manage a large, one-off project, you can set the timing of invoice payments by stipulating that the client make an initial payment of 10% – 15% before you begin work. One or more interim payments can be triggered when you achieve project milestones that you and your client will identify together. Your goal in this instance is to limit the final payment to no more than 25% of the total project fee. Include the payment agreement in your proposal and reconfirm it in your contract. Clients are more likely to take retainer fees and major project agreements more seriously than hourly work and they are therefore more likely to pay your invoices on time.

Find a financial system that you will follow

In the final chapter of this story, you’ll acknowledge that Freelance professionals need a financial management system to document your monthly revenue generated, track where your money goes and how much you spend and guides you to separate your business and personal transactions. Good financial management will help you stay organized for quarterly and annual tax seasons and will also support your business (and personal) decision-making by confirming what you can afford to spend and when.

You may find financial management unpleasant, but no adult can escape, whether one is an independently employed Freelance professional or a W-2 employee. In particular, those who are often faced with irregular payments must buckle down and conduct a money minding session every month. You’ll need a tool for financial record-keeping and your choice will depend on your personality type. You may like a digital platform that offers a good option to single-person business entities, as does Quicken; or you may gravitate toward the Microsoft Excel spreadsheet. If your budget allows, you can outsource this role to a Freelance bookkeeper.

Your financial picture is foundational to nearly all business planning, to ensure that you’ll be able to carry out your actions. A system that works is one that gives you a clear view of your available funds, money that’s available to support business operations (working capital) bill payments you must make (accounts payable) and outstanding client invoices (accounts receivable). Establishing and following a financial management ritual provides an accurate picture of your financial capacity In Real Time and lets you know when you have the green-light to move forward without second-guessing every transaction. Just do it.

Thanks for reading,

Kim

Image:  Edward Pevos for MLive