Michael, there are all different kinds of freelance work. Some of it has a lot of overhead cost, and some of it doesn’t. The work I do has virtually no overhead cost, other than my computer. I’m also lucky to live in the United States, where the government doesn’t require people with freelance businesses to register, pay a lot of money for a permit, etc.
In fact, here people with freelance businesses don’t even have to be 18. Here are the websites of two girls who started business with almost no overhead when they were 10 years old! (They’re now about 18 or 19, I think.)
thechocolatefarm.com
wristies.com
These girls just had an idea, or an invention, and they started work. (The Chocolate Farm’s website was created by the girl’s 14-year-old brother. On the Wristies site, check out the picture of the girl at her lawyer’s office when she signed the trademark application. It’s funny!)
Another advantage here is that it costs only about $35 to $50 to form your own corporation (GmbH), and the forms don’t limit your corporation to one line of business or make you pay extra fees for each business you go into, so we get off cheaper that way.
I can’t work the cost of my tough months into my prices the rest of the year. Impossible. I’m competing with the whole market, so I have to keep prices competitive. The way you deal with lean months is to diversify! I know very few freelance workers who do only one thing for a living. In the early months of the year, when some of my clients were too busy to take their English lessons, I had enough money from teaching to keep body and soul together, but it was tough. I made up for the shortfall by doing more translation (I was lucky that it came) and by making money on the stock market. In the fat months, you have to budget for the lean months.
Some people are really creative at finding ways to make money. One of my sisters has a business that you would never think could make money: She manufactures and sells lacemaking equipment, shipping it all over the US and the world, even as far away as Japan. This is not a bad business for her, but she always has her eye open for other opportunities. Once she was at some lady’s garage sale and spotted a box of old lacemaking magazines. She bought the whole box from the lady for $25. Then she went home and put the magazines on eBay one by one. Altogether she made more than $250 from that little box of magazines.
If you want to watch freelance business in action, go to a poor Mexican neighborhood in a large US city. (I assure you that most of those people don’t stay poor for very long.) For a couple years I saw a man pedaling a very old restored Good Humor (= Algida) tricycle around on the hottest days selling ice cream and special Mexican snacks to the kids. When the weather got cold, he changed his offering, but he was still in business. I guarantee you that this man will have his own store in a year or two. I saw another man who wanted to start a lawn care service, but he doesn’t have money for a truck. So he rigged an old bicycle up to pull a very old lawn mower and some other equipment, and he pedals out to the rich neighborhood and cuts grass. This is another guy who experience tells me will have an established-looking business in a year or two. African girls come here with nothing, start hair braiding salons, and use the money to go to university (as well as to support their parents back in Ghana or Senegal and to bring their sisters over to help in the business). This business requires nothing but clean hands.
I love watching the development of a typical business in the black neighborhoods here. A guy will want to start a business, but he doesn’t have any money. He takes over an old abandoned gas station (very cheap) and puts up a handmade sign that says, “Earl’s Hand Car Wash”. He can already charge much more than the regular car washes, because he has no machines that scratch the finish of the car. He’s offering a luxury service. Soon he’s got enough business to hire a few helpers. After a while, he puts up another sign that says, “We steam clean engines.” He’s bought himself some equipment with his savings. Meanwhile, nothing’s going on in the office of the building, so he puts in a couple racks that he fills with pop, chips and gum. Kids on the way home from school buy these, and soon he can expand that offering until he has a real store. In about three years you can’t even recognize the business as the same one he originally started. Plus he’s providing work to other people.