Last year according to The Freelancers Union and Elance-oDesk, 34% of Americans did some kind of freelancing related work, whether full time, part time or even just one time. This represents 53 Million people.
It’s expected that by 2020 between 40% and 50% of Americans will be doing some kind of freelancing work.
This isn’t just an American phenomenon, this is a global trend. In the EU in 2013 alone the full time freelancer industry grew by 45%, making them the fastest growing group in the EU labor market. This leads to one big question.
There are three major factors for this growth in the freelance economy:
A company can save on average of at least 30% by hiring freelancers over hiring full time employees. This is a very big incentive to cut down on costs. 22.5 million companies in the US have zero employees. Many of these companies have achieved this due to the emerging freelancing labor market. Even startups are supporting both sides of this economy. Startups are hiring freelancers over traditional employees or founders, and startups themselves are bootstrapping themselves via freelancing work. Since 1995 65% of economy growth in the US is due to companies with less than 500 employees. Smaller companies that can quickly pivot and cut labor costs through freelancing are the driving force of the economy.
2. The 90s
In the 90s one of the hot ideas with the coming-of-age of the internet was telecommuting. The promise of working at home. Technology enabled more and more people to work from home. However if an employee can work at home, why do they need to be an employee? If a company can save upwards of 30% by hiring freelancers that also work from home, it makes clear sense to use freelancers over employees. And with more and more freelancing platforms supporting this growing sector, it becomes even easier to become a freelancer.
3. Being your own boss
A recent poll shows that over 60% of freelancers choose to become their own boss, to make their own hours, and to leave the rat race. This idea is very appealing to people stuck in the corporate shuffle.
What Do Freelancers Need?
Unless you have clients, you can’t be a freelancer. This is often times the trickiest part of freelancing. How does a freelancer build up a client base? This is the number one question I’m asked as a freelancer. Building a network and a reputation are the most important resources for a freelancer. Many freelancers compete on freelance platforms. I don’t advise against this, but getting started can be difficult, especially if you don’t already have a large portfolio and good recommendations. In addition, there is almost always someone out there that has more experience who will do the project for less. The best way to get clients is via business networking. Go to EventBrite, MeetUp, Twitter, Xing, or any number of social platforms and look for business networking events in your area. Talk to people, get to know them, make friends with them, and add them to your LinkedIn. LinkedIn is truly the best way of building your business network. Always offer helpful tips and some freebies. This will aid you in building a network and a good reputation.
Estimating your time, whether for project cost estimations or making sure you can earn enough to cover your plethora of expenses from taxes and health care, to sick leave and retirement can be problematic. You have to remember as a freelancer you are not a scalable business, you charge per project or per hour. You don’t want to end up undervaluing yourself and working two or even three times as much for significantly less income. This happens very often to freelancers. The best way to avoid this is to try take projects where you can really calculate the costs involved and as a rule; always overestimate your time rather than underestimate it.
Polling suggests that on average freelancers are paid at least two weeks late 40% of the time they invoice their clients. If you are living from paycheck to paycheck and your paychecks can routinely arrive late, this can be a major issue. There are FinTech solutions to this problem for freelancers nowadays with several upfront payment methods, turning your invoice into quick cash and a third party then becomes responsible for collecting the late payments. Freelancer and startup specific FinTech solutions to invoicing problems will become a regular part of these industries in the near future.
A Simpler Solution
At my company Blue Wave, we were faced with these three needs. So we decided to change to a scalable business model. Having a business model, unlike freelancing from project to project is much simpler. Selling a service can be difficult, customers usual want to know the prices upfront, they want to really understand what it is you offer instead of some vague buzzword-filled website, and they want their project done quickly. The simple solution is Service as a Product (SaaP).
Service as a Product
The productization of your service can totally change the game, whether you are a freelancer, startup, or even a larger enterprise that offer some kind of service. The ability for customers to simply order a service from you much like a product online reduces the time it takes for a client to order, removes complicated project cost projections, turns your service into a scalable business with unlimited growth potential, and can even get you paid faster.
How To Productize Your Service
- Break down your basic services into simple modular options
- Price these modules with your specific business logic
- Add these modules to your website with the ability to order them directly
At Blue Wave, we calculated out our business logic for our services. We are a bootstrapped funded company freelancing our way through funding our own products. To achieve this goal, we develop apps and design websites. Now there are a lot of companies out there that do exactly that. However no company offers these services in a Service as a Product (SaaP) business model. We created a web app for our Service as a Product we call Creator. With Creator a customer can order an app or website just like they would order a laptop or any other product by selecting pre-priced modules and adding options. The customer can see an upfront estimate of their project in our app, and can even order this project directly through our website. This greatly simplified our project estimation, allowing us to have a quicker turnaround, while also lowering our overall costs. These savings were passed on to the customer, making our company a stronger competitor in our market.
Productizing Advisory Services
Even consultants, trainers, coaches, mentors, and medical professionals can capitalize on the SaaP business model.
- Offer an app or platform downloadable from your website for your advisory services including User management, rating, and feedback
- Use upfront pricing and flat-rate monthly billing for your advisory services (Software as a Service)
- Give your Users a free trial subscription
An Advisor has a specific knowledge set. The Advisor’s goal is knowledge transfer to their Users. They use a metric to measure their Users and offer feedback to further improve these Users. Whether the Users are clients, customers, patients, individuals, or even large enterprises, the basic methods of advising Users stays the same. The Users seek improvement from the guidance of the Advisors.
My company Blue Wave, started offering our creative services (web design and app development) as a product with Creator, but we also wanted to offer our own advisory services as a product too. Being able to offer advice as a product through an app using the Software as a Service (SaaS) business model would make our marketing and sales of services much easier while giving us a regular monthly income. It could turn our Advisors into a scalable business model while allowing us to internally control quality and manage our own employees. However there was no such solution available on the market. This is why we created our own app to turn advisory services into products called Overview. Overview is a knowledge management app for Advisors. Any type of Advisor can use Overview to productize their services.
Powerful apps for professionals will disrupt how business is done. Modular service ordering apps will make once unmarketable and complicated services into easy to sell products, overthrowing old ideas of what a successful business can be. Advisory apps will enable Advisors to quickly grow their user base both online and offline while greatly reducing the headaches of building an advisory business such as management consulting or fitness training. The freelance economy is going to continue to grow and these freelancers will need to productize their services. Future technological trends such as FinTech, on-demand Service as a Product, and the Internet of Things (IoTs) will continue to shape the freelance economy, changing business as we know it.
Are you prepared for these changes? Do you know of any great SaaPs helping Creators or Advisors productize their services? Leave your questions, ideas and advice in the comments below, like us on Facebook, or follow us on Twitter.