by Gill Pavey
Image by ipuwadol, iStock
As freelancers we are running a business and are therefore subject to business risk; one risk is loss of work through a regular client disappearing or substantially reducing the workload at no notice. A client’s position can change overnight for reasons such as restructuring, changes in policy or the political landscape, another freelancer being preferred by a new manager, or bankruptcy; the freelancer is often the last to know. If the client is an intermediary, they may not go off the radar completely, but there could be an unexpected downturn in workload if they have lost one of their own clients whose work you are involved in. If one organisation normally provides a significant proportion of revenue and this vanishes or substantially reduces, this can leave you having to find a replacement – and fast.
From boom to bust
This story relates to a certain group company operating in mainland Europe. The parent company, through its operating subsidiaries, used a large number of freelancers, had an impressive website showing five-star clients, and had been in business for a long time. Some years ago, a freelance proofreader was introduced to the group and had regular, interesting work throughout the years. Through its sheer size, this group looked secure. How could it go wrong? But it did.
Suddenly, after a particularly busy few months, work abruptly tailed off to almost nothing for the proofreader with no explanation or at least, not one that made sense. Eventually, it was announced that the parent company was bankrupt. The proofreader, having been extremely patient and hoping everything would come right again, was left – along with the remains of the freelance pool – with little prospect of further work, and unpaid invoices.
So what is the best way to minimise this risk? Is it simply a case of maintaining a certain number of clients as far as possible? Is there ‘safety in numbers’ when it comes to a client portfolio? Not quite.
Even a long-term client can disappear without warning.
Photo: Andrea Piacquadio on Pexels (ref. 3784324)
Portfolio theory
From the world of finance comes the portfolio theory. Briefly, this means that if you invest in stocks and shares, you should have a minimum number of different types as well as values of investments across organisations of various sizes – a diverse, multi-dimensional portfolio, spreading and thus reducing the risk of unexpectedly poor financial returns overall. Note: this can only reduce risk; it cannot be eliminated.
So if diversification can help in this scenario, perhaps it can be applied to clients.
Most freelancers have a number of regular clients to keep the work coming in, but how much reliance is placed on a key client continuing to provide work? Applying portfolio theory means that you have (a) different types of client; (b) clients that can offer different quantities and frequency of work; and (c) clients of different sizes. Different types of client could mean considering a mix of commercial, academic, and public sector organisations, then direct clients and intermediaries; different values of work may be a 2,000-word article or a 75,000-word academic book; different client sizes may range from individual authors to €50 million turnover organisations. It can go further depending on the client characteristics, such as geographical location, specialisms, or genres.
And in the commercial world in particular, size – and even longevity – isn’t everything. Look what happened to Polaroid, Blockbuster, Pan Am, and Kodak1. At the other end of the scale, novelists and academics can give repeat business then disappear when something happens to delay or stop their output. Of course, the impact of losing a small, infrequent client is far less of a disaster than losing a single client contributing a significant percentage of annual revenue. However, if a key client goes under, the smaller clients will go some way to propping things up until you find a replacement.
Diversifying the client base can reduce the risk of a substantial loss in revenue should
a key client disappear. Photo: Andrea Piacquadio on Pexels (ref. 3784315)
Diversity can make a difference
A client portfolio that is well managed and is as diverse as far as possible could help to reduce the extent of a drop in revenue if a client goes under with little warning, or the amount of work offered shrinks without explanation. This should be reviewed from time to time to see if any adverse patterns are emerging, which may signal a need to find replacements. Have you contacted a client who has been unusually quiet to check on any work coming up, so you can assure them of your availability and perhaps find out what is going on? Has the tone of their emails changed, or have your emails been left unanswered?
If you see what might be red flags or are generally uneasy, it might be time to consider looking for a replacement or two. But before you pitch or consider approaches from potential clients, evaluate how they might fit into your portfolio. ‘Safety in numbers’ may work up to a point, but having clients with their own, differentiated characteristics will help to reduce the risk that one doing a ‘moonlight flit’ will sink you as well.
1 https://www.stash.com/learn/famous-companies-bankrupt-no-longer-exist/
Gill Pavey is a full member of AFEPI Ireland, and a freelance proofreader, editor, and copywriter. Her clients include SMC Media/European Journal of Case Reports in Internal Medicine (Milan), Forest Stewardship Council (FSC®) Bonn/worldwide, and Istituto per la Ricerca Sociale (Milan, Rome, Bologna), plus a number of smaller organisations, and individuals.
The views of the author do not necessarily reflect the views of AFEPI Ireland.