No Support System – That is the Sacrifice for Risk Takers

I’m an advocate of entrepreneurship, working for oneself, and freelance work in general. I believe there is a performance improvement across the board in these situations. It could be quality or reliability or even creativity (customization). It’s the chance for the greatest amount of wealth creation and it requires the most sacrifice as well.

And when I say sacrifice it isn’t necessarily about the work. It is often about the support system, or lack of one, for these risk takers. Barbara Kiviat from the Curious Capitalist point this out to me in her blog entry called The Freelance Economy Turns South, Too. She uses the example of someone who cuts hair. How just if her clientèle lengthens their time between cuts by a week it results in a 20% decline in income. I wanted to use plumbers or carpenters as an example, but hair cutters work best because it is a routine need that normally doesn’t have much variability (the same person usually cuts the customer’s hair every month or so). Here is an excerpt:

Earlier today I was talking with Donald Grimes, an economist at the
University of Michigan, and we got to playing around with some data
from the Bureau of Economic Analysis.
He was making the argument that a lot of the things in the stimulus
bill meant to help people whose livelihoods are threatened—things like
extending unemployment benefits and COBRA healthcare coverage—do
nothing for the self-employed people out there whose incomes are
getting obliterated, too. Think about all those real estate agents. Or
even people like independent hairdressers. If all of your clients start
getting their hair cut once every five weeks instead of once every
four, there goes 20% of your income. This is a bigger problem than it
might otherwise be considering the shift over the past 15 or so years
towards a Freelance Economy—our increasing tendency to work as
consultants, free agents, project employees and other variations of
pay-as-you-go help.

So if you are willing to go on your own during these poor economic times, just be sure you can deal with changing revenue trends.

One other item I can’t let go of right now is something a friend of mine said to me in reference to a particular situation a few years ago. He said “Many jobs are treated like corporate welfare by the employee” or something akin to that. And it is true to a point. Only certain people really give it 100%. Others do the 9 to 5 and consider it a completely fair deal for both parties. Well, until layoffs come…

I’m an advocate of entrepreneurship, working for oneself, and freelance work in general…


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One response to “No Support System – That is the Sacrifice for Risk Takers”

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