Entrepreneur
Case closed; freelancing and solopreneurship are here to stay.
Amidst a trying 2023 and 2024 that saw downsizing, diminished budgets, inflation, rising interest rates and global uncertainty, freelancing not only survived but thrived to the tune of 8.27% year-over-year revenue growth for the second consecutive year.
Along with the objective revenue growth for solopreneurs, 90% of solopreneurs expect their conditions to get better, according to a recent report by Collective, the largest finance and tax management platform for solopreneurs.
This has massive ripples across all businesses.
The obvious impact is staffing. How will you staff your teams when full-time employment is shifting to freelance?
However, the deeper impact is second- and third-order effects across all business functions. A shift to hiring freelancers is more than an incrementally different hiring strategy. It’s a radical reengineering of how businesses compete in a global, digital, hyperconnected world.
Ask yourself: what would happen to your business if a competitor reduced costs by 60% by replacing their current junior consulting bench with a freelance workforce? Or if a competitor unlocked a new region by hiring fractional executives and localized freelance talent to acquire 80% market share in under a year? Or if a competitor shipped an AI feature within 6 months because they hired fractional AI experts and a freelance go-to-market team.
As you’ll learn in this article, companies from Microsoft, to PWC, to the US Department of Defense are answering this question by embracing freelance workforces to drive their customer experience, access top consultants, and in the words of Brigadier General Michael McGinley, Director of GigEagle, drive “whole of nation collaboration for national security”.
In this article, I’ll go deep into the data released by Collective and show you how your business can embrace freelancers to drive growth, profitability and innovation. By the end you’ll be ready to embrace a freelance workforce, build a new product or service line with freelancers at the core, or potentially become a freelancer yourself.
Related: This Entrepreneur’s Cheat Code Gives You an Easy Talent Advantage — Are You Using It?
Digging into the data about solopreneurship shows it’s hard, but a sustainable and promising career path for individuals
The data makes three things clear about the freelance economy: freelancers are resilient, highly adaptable and technologically savvy.
2024 was a difficult year for companies and individuals alike. Inflation. Interest rates. An AI inflection point.
Freelancers weren’t immune.
According to the data, for the second consecutive year, average expenses increased 26.7% year-over-year as solopreneurs continued to face inflationary pressures. What expenses do freelancers have? Think about the expenses your business has, then imagine if you were solely responsible for them. Business activities like payroll, bookkeeping, taxes, sales and marketing all require software tools and platforms. Freelancers also outsource to fellow freelancers to increase the scope of what they can deliver and the volume of how much they can deliver.
Freelancers also faced the challenge of AI replacing their work.
However, freelancers persevered by being technologically savvy, highly adaptable and embracing AI across their business.
Collective’s data showed that 60% of solopreneurs use AI tools to make them more productive.
Rather than shrink, freelancers have shifted, navigating this economy-wide dip by embracing AI, aligning more closely with what their clients needed and navigating their business better than most.
The current downsizing and efficiency climate trends positive for freelance
Obviously, downsizing and efficiency are themes across all organizations right now.
Freelancers are well-positioned to capture this work.
Freelance is inherently more efficient, makes it easy to quantify the benefits, and gives hiring managers more control. If a company needs to reduce costs by 50% yet maintain the same productivity, freelancing is a viable solution.
On the efficiency front, freelancers don’t sit as fixed costs on the books, and they have an industry average of 30-60% cost savings (not because individual freelancers are getting paid. Freelancers get paid more in most cases. Rather, cost savings come from paying for the exact outcome or time needed and lack of traditional layers).
Also, on the efficiency front, finding the right freelancer takes, on average, 2 to 5 days (can be hours if the right infrastructure is in place), and freelancers can scale up and down according to business needs with no strings attached.
On quantifying the benefits, both the inherent structure of freelance contracts and the digitization of talent platforms favor freelance environments. Freelance platforms are digital networks that can easily display talent through simple dashboards that show approved talent available, talent currently working and reporting of relevant metrics. The growing trend of freelance management systems further embeds these capabilities.
Freelance contracts themselves are also inherently tied to and easily quantify performance metrics. Rather than a job role or annual performance reviews, freelance contracts commonly tie directly to key results or business outcomes. The closest comparable is a sales team. Like sales teams measure their performance by pipeline and quota, freelancers measure their performance by deliverables and the equivalent business impact.
Last, and arguably most impactful, freelance talent platforms give hiring managers control over hiring themselves. Instead of going through HR or the traditional staffing process, hiring managers can have an Uber or Airbnb-like experience when hiring freelancers on a talent platform. It honestly takes one time to experience the “aha” of using a platform to manage any hiring need.
Freelance models provide opportunitys for every Entrepreneur
If you’re thinking, “I should become a freelancer”, you’re not alone. Experts predict that over half the US workforce will be freelance by 2027, and honestly, that’s looking to become a reality sooner rather than later.
But there are multiple ways to embrace the shift to freelancing.
If you’re an entrepreneur, business owner, or executive, how can you make it easy for freelancers to work with you?
Knowing that they have increased costs, can you help lower their technology, sales, or marketing burden? One way is to create freelancer-focused portals like Unilever’s Open2U portal, PWC’s Talent Exchange, or Johnson and Johnson’s Freelancer Portal.
Knowing that they embrace AI and technology, are there ways you can give them access to your technology licenses or datasets? For example, are there CoPilot licenses or training that your employees have access to that they could benefit from?
These aren’t just altruistic gestures. Freelancer loyalty pays off immensely as freelancers stay with you, innovate with you, and look for ways to expand their win-win relationship with you.
Are there new revenue opportunities by embracing freelancers? Freelancers are more than a staffing solution. They have material growth, profitability and innovation opportunities if leveraged right.
Take a F100 technology company that built a thousand-person freelancer network to drive their customer experience. They realized that technical freelancers have more success in NPS, conversion and product-led growth. Why? Conceptually, it’s simple. They own their own business rather than work for an agency or as an employee; thus, they take personal accountability. Each customer experience is a customer experience for their own business, and the F100 technology company is a key client or partner.
Are freelancers a customer base for you? If you’re a bank, do you have freelancer-specific products? If you’re a CRM, do you have freelancer-specific features?
Time to build
If you follow my column, you’re not surprised to see that freelancing is real, sustainable and high-growth.
In the words of Hooman Radfar, Collective CEO, “Year after year, solopreneurs confront challenges like inflation, rising interest rates and changing legislation. Yet, they continue to focus on the growth of their business. This dedication has not only increased their revenue but has also ignited a global movement toward independent work. With AI tools becoming integrated into daily operations, Businesses-of-One will only become more efficient and profitable, driving the continued growth of solopreneurship.”
The real question is, what will you do knowing this data? Will you leverage freelance talent to scale your team, company, or organization? Will you build a new product or service leveraging freelance talent to land and expand your current customers? Or will you build a business for freelancers as your customers?
The decision is yours. Now, leverage freelance talent or freelance tools and technology to make your freelance journey a reality.
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