Why diversification can be a profitable departure for every freelancer
Jack of all trades master of none goes the saying. And it’s this fear of diluting a particular expertise that puts many freelancers off the idea of diversifying into other areas. However, there are many reasons why diversification makes great business and professional sense, provided of course that you take careful note of the risks involved.
Take the example of a public relations consultant who might have started out advising clients specifically on media relations, but now offers a range of services such as copywriting, workshop facilitation, and producing a sponsored blog.
They are all broadly complementary activities, but offer a range of potential advantages to the freelancer, the most obvious of which is income diversification; becoming overly reliant on a single income stream is a constant danger to a freelancer so it is reassuring if you can ensure your income comes from several different activities.
Another big advantage is the additional value that your clients will place in you. A recent study by the Hass School of Business in California found that, ‘by stretching, clients see you as more committed to your career and they have more confidence in your abilities,’ and that, ‘freelancers are more-likely to get hired when having an incrementally expanding career path.’
The third big advantage is your own professional interest. Rather than doing the same thing day-in day-out, diversification offers every freelancer a way to keep fresh, interested and motivated.
There are though a number of pitfalls that the diversifying freelancer needs to watch out for:
- You lose the focus on your specialism – spread too thin and your client service suffers. We’re back to that ‘jack of all trades’ argument but it shouldn’t be an issue provided you don’t let your core business service suffer – in fact, as argued earlier, if anything, diversification should help make you a better freelancer.
- You can’t hit the same quality of service in your diversified activity – again the ‘jack of all trades’ argument but this time on your diversified services. The key here is diversifying into something that is complementary to what you already do; that is, it should play well to your talents and fit in well with what you already do.
- Barriers to entry – how easy is it to start-up in your chosen diversified area(s)? Ask yourself what sort of time/financial investment is needed? How big is the market? There is no point in trying to diversify into an area that will be hard to break in to and will offer little in the way of financial/personal reward.
Don’t forget the insurance implications
Finally, you should consider the insurance implications. If you’ve started doing client visits for example as a result of diversifying, are you covered appropriately for public liability? This is an important cover for the self-employed, even if you conduct your freelance business from home.
What about professional risks? If you’ve started blog writing in your own name for example, you could be running a greater risk of being sued for defamation and will need to look at how your professional indemnity risk is covered.
What’s holding you back?
One reason many freelancers left traditional employment was for the freedom and opportunity to shape their own careers. Diversification is a vital part of doing just that.
At Hiscox, we want to help your small business thrive. Our blog has many articles you may find relevant and useful as your business grows. But these articles aren’t professional advice. So, to find out more on a subject we cover here, please seek professional assistance.