If you're a tech freelancer or IT contractor, you're in good company: CNBC notes that fully one in three Americans work as freelancers. This marks a significant rise in freelance employment in the last several years.
In the State of the Union speech he delivered this week, President Obama highlighted the workforce’s trend toward freelancing, pointing out that our economy has fundamentally shifted. With the growth of telecommuting and virtual work-sharing programs, businesses have sought to use freelancers because it gives them a flexible workforce that can be scaled up or down depending on their needs.
This trend shows no signs of slowing down. The freelance market is expected to grow at six percent a year for the next five years.
All of this suggests good things for micro businesses and IT contractors and freelancers, who can expert more work and more clients in need of their technical expertise.
State of the Union Takeaway: Capitalize on Growth in Freelance Market
With the freelance market growing, what can tech professionals do to take advantage?
- Capitalize on new opportunities. Studies have shown that, on average, businesses hire the same freelancer for nine jobs or more. Each new job you start could lead to future work. Make a good impression on new clients because that job can multiply into more work later on.
- Know where to find more work. As companies have looked to hire freelancers, websites have popped up to connect freelancers with future employers. Check out these freelance hubs: Work Market and oDesk.
- Network with fellow freelancers. Get to know other freelancers in your area. Look for meet-ups and / or online groups. When you work on a project with other contractors, take some time to get to know them. The freelancer you rub elbows with today could become a general contractor on a project that needs more workers tomorrow.
- Plan for fluctuations in your income. One of the hardest things about being a freelancer is that your revenue fluctuates. Month to month, you might be working different jobs that pay more or less. Make sure you prioritize setting aside money for slow months. If possible, negotiate with clients to be paid more often and in smaller chunks when you undertake any long-term projects.
- Protect your reputation and finances with business insurance. A lot of big clients won’t sign a contract with a freelancer unless that freelancer can show proof of insurance. Make sure you don’t drive away clients by investing in appropriate insurance policies so you’re ready when opportunity knocks.
Why E&O Insurance Is Crucial for Freelancers
Freelancers and independent contractors are on their own. When you're a fulltime employee, your employer shields you from being held personally liable for mistakes. If you mess up, the company bears responsibility. But freelancers don't have that luxury.
Any mistakes you make as a freelancer or contractor could lead to a lawsuit filed against you. Your bank account and reputation are on the line.
For this reason, it's especially important to have independent contractor insurance. Errors and Omissions Insurance (also called Professional Liability Insurance) protects you from lawsuits over your freelance work.
If a client is unsatisfied with a project, you miss a deadline, or a client is hit with a data breach, E and O coverage can pay for the lawsuit and cover damages you'd otherwise have to pay out of pocket.
Sample Insurance Quotes for IT Freelancers
While there’s never been a better time to be an IT freelancer, it's important to remember that you are still exposed to liability. To learn more about covering your freelance liability, check out these sample insurance quotes for small consulting companies, freelancers, web designers, and other tech companies.