Freelancer’s Survival Guide: Risks (Part One)
The Freelancer’s Survival Guide: Risks
Kristine Kathryn Rusch
I know, I know. I had a plan and I’m not sticking to it. This is why I have become more and more unemployable as the years go by. I can’t even stick to my own plans, let alone plans someone else imposes on me.
Of course, I respect deadlines, which is why I’ve been able to meet this one for 51 weeks running. But last week, I told you I would write a few columns ahead—and I did—but I’m not posting them all yet.
Because a few things happened this week. First, I read a couple of articles, one a couple of months old. Then, I watched the Oscars, as I do every year. And finally, I’ve been dealing with some major risk-takers in my business, negotiating with them, and finding my own footing.
As I took my run today, I realized that the time to write this opening section on risk—one of the topics I planned to cover—is now, while everything is fresh on my mind. (And while I can find the links.)
Yes, I’m in the middle of the novel. Yes, it’s going well. And yes, I am interrupting my day to write this, precisely what I didn’t want to do. But I’ll get a few pages on the novel after this and maybe lose an hour of reading or an hour of sleep (or put off American Idol for another night). (To see what business reason I have for watching American Idol, check out this post.) Small price to pay to get this off my mind.
As I’ve mentioned before, I have a list of posts I plan to write before I finish the Freelancer’s Guide. The list keeps growing because of excellent suggestions I’m getting from you guys—I got two good ones just this week—and also because some of these topics are not one-post material.
Taking Risks is not a one-post topic either. I’m going to write today’s as a kind of overview of the material out there, and then later, when I’m done with the networking posts, I’ll come back to taking risks.
So what happened this week? A variety of things. I decided to trust my own instincts in a rather brutal negotiation, something I would never have thought I’d have the courage to do twenty years ago. Or ten years ago.
As I’ve said in the negotiation posts, I can negotiate quite well on paper and via e-mail, but I have trouble in person. Or I should say, I had trouble in person. I’d been avoiding in-person negotiation for so long that I hadn’t done it in nearly 15 years. Not only did I realize this time that I wasn’t nervous, I was downright easy-going about the whole thing, quite willing to walk away where I wouldn’t have been years ago. I did everything I said Dean does in the negotiation posts, and more. And I did well. I didn’t get everything I wanted, but neither did the other side.
How that fits into this whole topic is the in-person negotiation was quite a risk for me. I could have passed this off to a third party—an agent, a lawyer, Dean himself—and I didn’t. I decided that, in this particular instance, I knew better than anyone else what I wanted and didn’t want. Since the situation was extremely fluid, it was easier for me to handle it than to guide someone else through the ups and downs.
The risk paid off, and I learned something about myself in the bargain. I learned that I am not the person I had been twenty years ago. I have a lot more knowledge and self-confidence. More than that, though, I have a longer view. I know that if I screw up on this one thing, my life is not over. I won’t die of embarrassment. I won’t even die from the botched negotiation. I’d simply not have everything I wanted.
As a character says in my current novel, “Whoop de ding dong do.”
The next thing that happened to me this past week was that I watched the Oscars. I have watched the Oscars every year since I can remember—even scrounging around to find the telecast when I didn’t own a television set and the internet did not exist so that I could watch highlights on YouTube. (Yes, I’m old.) I love the Oscars for a variety of reasons, most of them personal, and some of them to do with my history. (The Oscars [as well as television itself] was one of the few places where I saw artists talking about their art, even if it was in the artificial environment of an awards show.)
This year, as every year, award-winners talked inspiringly of being true to yourself, becoming an artist, and taking risks. Three things caught my attention. First, the mention by someone—Mo’Nique? Oprah? Geoffrey Fletcher (the screenwriter)—about the difficulties they had bringing a hard-hitting movie like Precious, Based on the Novel “Push” by Sapphire to the screen. The movie is about a topic that most people prefer not to think about. Yet several someones decided to make the movie, to finance it, to distribute it, and even more someones decided to see it, and slowly people realized just how special the film was.
Had the filmmakers listened to conventional wisdom, Precious would not have been made. No one would have considered Push a novel that could become a major motion picture, and Gabourey Sidibe would be attending college somewhere in the Midwest instead of embarking on an already stellar acting career.
The second speech that caught my attention was Mo’Nique’s acceptance speech. She took several risks, not just the risk of portraying a deeply unsympathetic character in a difficult movie. She also decided not to play the political award-nominee game. Nominees go from event to event, campaigning for votes without really ever mentioning their films. The conventional wisdom is that if the nominee wants to win, the nominee must charm the establishment. Mo’Nique refused, saying her performance was on the screen, and she should be judged by that.
Her refusal paid off.
The other interesting aspect to her speech was her phrase “doing what’s right.” Her husband supported her as she decided to portray this character, to go outside of the Mo’Nique brand—and she has quite a brand as a comedian, and as a talk show host on BET—and try something new. She could have flopped. Instead, she became known as a serious actress, one who can go places that more famous actresses refused to travel to.
She said she wasn’t happy with her work. So she took time away from it, to reassess, and decide what kinds of roles she wanted. Then she took roles that challenged her. Again, other actresses had turned down the role in The Blind Side that gave Sandra Bullock her Oscar. Would they have won for the same part? Hard to know. Probably not: she owned it.
Again, she had support. And while she credits the support with enabling her to make the changes, she might have made them anyway. She did so before, after the disastrous film Speed Two. She took more control over her career—producing more films, and making sure she had a lot more creative input. (For more on this, see her interview with Barbara Walters.)
Risk-taking. Very important to those of us in the arts. Important in other ways as well.
But risk-taking in the form of making a knowledgeable choice, one that assesses the pros and cons, not in the form of a flyer or a gamble.
I’ve been accused of being quite fiscally conservative—and I am when it comes to money I already have. I used to think that the way I earned money was risky too, until this economy proved to me as well as to everyone else that my way—as a freelancer—might actually fiscally conservative as well.
Like Sandra Bullock, I prefer to control my career. I can’t do that when I work for someone else. I can work with someone else. But working for them is a greater risk for me than working with them.
I think freelancers must identify the one risk they want to take—starting a business, for example, or becoming an actress instead of a 9-5 worker at whatever job will take them, or stepping outside their comfort zone to attempt something that gives them the greater benefit. Once the freelancers have identified the risk that they want to take, then they research that risk to death. They figure out how to take it in a manner that isn’t risky at all, or that minimizes risk, or that takes the risk into account and compensates for it in another area of the business.
An article that I read this week delves into this aspect of freelance risk-taking in great depth. Malcolm Gladwell wrote an article for The New Yorker’s January 18, 2010, issue called “The Sure Thing: How Entrepreneurs Really Succeed.”
The article discusses the high-level entrepreneur, the Ted Turners of the world, the guys who have tried something seemingly impossible and who have reaped big rewards.
But Gladwell uses his article, quoting many sources, to disprove the idea of entrepreneur as gambling risk-taker. Instead, he discusses how the successful entrepreneur finds a way to make the risk into a sure thing—often at the expense of the entrepreneur’s reputation. (He calls these men—and his examples here are all men—predators. I’m not sure that’s accurate either, because the entrepreneurs aren’t out to kill their opponents. They’re out to achieve some sort of success, often by taking advantage of something someone else missed.)
In the middle of this article, he paraphrases the economist Scott Shane, from Shane’s book The Illusions of Entrepreneurship (which, full disclosure, I have not read).
Gladwell writes, “[Shane] says many entrepreneurs take plenty of risks—but those are generally the failed entrepreneurs, not the success stories. The failures violate all kinds of established principles of new-business formulation.”
He then goes on to list these things that the failed entrepreneurs did wrong. Those things are:
•They undercapitalized the business.
•They didn’t form corporations (which, Shane says, gives a better chance of success).
•They didn’t have a business plan.
•They underemphasized marketing.
•They didn’t understand financial controls.
•They tried to compete on price.
Shane (and Gladwell) list several other factors, too complex to explain here—but some of which I deal with in other parts of the guide. Then Gladwell writes this:
“Shane concedes that some of these risks are unavoidable: would-be entrepreneurs take them because they have no choice. But a good many of these risks reflect a lack of preparation or foresight.” (Emphasis mine.)
I’ve been writing the freelancer’s guide for precisely this reason: I want you all to be prepared before you leap into the freelance lifestyle. I want you to know—as best you can—what you’re getting into.
I’m not saying that you should become a freelancer, and I’m not saying that you shouldn’t. I’m simply saying that you should educate yourself before you make that choice.
I had planned to use this article in a post on risk, written much later in the Guide. And then I came across this article in the Washington Post of March 10, 2010. Written by Steve Pearlstein, the article, “News Flash for Wall St.: Money Isn’t Everything,” also cites Gladwell’s book, but focuses mostly on a book by Daniel Pink called Drive (again, I haven’t yet read this book either).
The Pink book uses decades of research from various sources to show the limits of money as a motivating tool for employees. (Which is why you can find this article in the business section—and why it’s aimed at Wall Street, with its high bonuses and ridiculously overpriced compensation packages.)
“The conclusion Pink draws from all this research,” Pearlstein writes, “is that once people achieve a reasonable level of economic comfort and security, they are likely to be less easily motivated by monetary carrots and sticks than they are by more emotional factors. And in modern workplaces, Pink argues that the most powerful emotional motivators are the desire for autonomy, the satisfaction that comes from mastering a skill or a task, and the need to serve some larger social purpose.”
In his New Yorker article, Gladwell also addresses the emotional side of work, only he discusses the emotional satisfaction the entrepreneur gets from his work. (Substitute “successful freelancer” for “entrepreneur.”)
He writes, “…people who work for themselves are far happier than the rest of us. Shane (the economist) says that the average person would have to earn two and a half times as much to be as happy working for someone else as he would be working for himself.”
This all dovetails with my other experience this past week. I turned down a high-paying writing gig that was mine if I but said I wanted it. It would have paid all of my living expenses for six months, with more income off and on for years.
I didn’t even have to think about my choice. Once I heard what the project was, I said no. When the editor offering the project pushed, offering more incentives, I still said no.
Why? Because I knew that this project wasn’t worth the price. Essentially, for that huge paycheck, I was going to have to be in someone else’s employ until the project ended, and I was unwilling to do that.
The no was so automatic, and cost me so little emotionally, that I didn’t even remember the conversation until Dean asked me later why the editor had called me. When he heard the price tag, he asked why I hadn’t dropped his name into the mix. Then I told him the conditions of the project, and he recanted. “Good thing you didn’t mention me,” he said.
This interaction fit into one more aspect mentioned in Gladwell’s article. He writes, “People who like what they do are profoundly conservative.”
He then cites a study by sociologists Hongwei Xu and Martin Ruef. They asked a large sample of entrepreneurs and non-entrepreneurs which of these three scenarios they’d chose:
1. A business with a potential profit of five million dollars.
2. A business with a potential profit of two million dollars.
3. A business with a potential profit of 1.25 million dollars.
Business Number 1—with the possible profit of five million dollars—has a 20% chance of success. Business Number 2 has a 50% chance of success. Business Number 3 has an 80% chance of success.
The successful entrepreneurs generally went with Business Number Three, “the safe choice.”
He continues, “[The entrepreneurs] weren’t dazzled by the chance of making five million dollars. They were drawn to the eighty-per-cent chance of getting to do what they love doing. The [entrepreneur] is a supremely rational actor. But, deep down, he is also a romantic, motivated by the simple joy he finds in his work.”
What Gladwell misses—or perhaps ignores—is that there is still a 20% chance of failure in that third scenario. A 20% chance that the entrepreneur—the freelancer—will not make that $1.25 million dollars, no matter what he does.
That 20% chance is too much of a risk for most people. Most people want the completely sure thing—the paycheck at the end of the week, the schedule imposed by someone else, the benefits paid for by the company. Most people don’t like to be on a 5% ledge, let alone a 20% ledge. These are the people who got caught flat-footed by the Great Recession. People who thought they had a guaranteed income for the rest of their life, people believed their job was secure because they were good employees who worked for stable companies.
As I mentioned in the Day Job posts, no job is secure. But the illusion of security is often more important to people than the reality of risk.
It’s because of this 20% risk that more people don’t become freelancers. And it’s because of the lure of big money (that $5 million Number One Choice) that too many people give up their day jobs—and then fail big time.
Those of us who have worked for ourselves for a long time have figured out what makes us happy. We balance our income with our taste for risk. We know what we need to survive, and we do that. Then we figure out how much risk we can tolerate—and what we’re putting at risk.
Are we risking our homes? Our families? Then, in my opinion, we’re taking too much risk. Are we risking a $750,000 profit instead of a $1.25 million dollar profit? Is that part of the 20% failure rate? And in what world does a $750,000 purely profit paycheck constitute a failure?
Assessing risk is one of the most important part of a freelancer’s business. If you’ve read through the entire guide, you know that risk-assessment is a constant undercurrent to everything. I’ll get more specific in a few weeks.
Until then, look at these two articles, and maybe do some risk assessment of your own. Figure out what you need as a freelancer and what you want for yourself and your career. What are you risking when you step out of your comfort zone, like Mo’Nique did? A few days of work? An emotional upset? A flop? And if you are risking a giant flop, will it have an impact on your everyday work? In Mo’Nique’s case, I doubt that it would have. She would have continued her careers as a comedian and as a talk show host.
If The Blind Side had flopped, would it have damaged Sandra Bullock’s career? All About Steve flopped so badly earlier this year that Bullock earned a Razzie for the Worst Actress of the Year on the same weekend that she won her Oscar. Not all of her risks have paid off. And yet, she is taking them.
I don’t know the calculations she made in accepting the roles in these two films. Since Bullock has proven herself to be a smart businesswoman over and over again, I’m sure she went into both projects with a lot of analysis, looking at the potential upside versus the potential downside.
As freelancers, that’s our job. We might not earn six months living expenses with one project, but we also don’t have to work for anyone else. I wasn’t willing to trade three months of misery for six months of money. Other people make different choices.
But I might miss the brass ring on occasion as well because I wouldn’t have gone for that $5 million/80% chance of failure choice. I have never taken a flyer like that, although I have failed at businesses for precisely the reasons listed in the Gladwell article. I’ve learned my lesson in that beloved school of hard knocks.
I’ve designed the freelancer’s guide so that you don’t have to go to that horrible school. If you think about your choices, do a risk-analysis, and find the conservative route to the best choice for you.
These two articles, and the various studies they quote, show (yet again) that money does not buy happiness. True happiness comes from doing what you love.
And that, my friends, is worth the risk.
“Freelancer’s Survival Guide: Risks (Part One)” copyright 2010 by Kristine Kathryn Rusch.
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