How I Am Coping With A Potential Recession as a Consultant Without Taking On More Work
I write this from 2 angles — As a consultant in my day job, and as an owner of a 1-Man consulting practice.
Truth be told, I am one simple guy.
I love what I do. I believe in what I do. But that does not mean I like to spend long hours doing it.
You know how it feels when you have 16 hours of work in you. I doubt another hour of grinding sounds attractive. Not me. I prefer to go run in the drizzle.
But an expected global economic contraction in the future may disrupt that rhythm. Don’t worry. It will not happen down the line.
That is because we are in it. Like, now.
And therefore, we must find ways to keep ourselves afloat financially.
You Can Do This as a Consultant in a Day Job or as a 1-Man Consultant Running Your Own Practice
My professional experience tells me we can help ourselves during bad times. After all, I have survived the 2008–2011 Giant Financial Depression and the 2020–2021 Pandemic years.
People never learn anything by being told, they have to find out for themselves.
― Paulo Coelho, Veronika Decides to Die
Paulo’s right. At the same time, we can leverage on others who have lived through terrible times we have yet experienced.
This is what I intend to do with this article. I will share how I cope with a protracted environment of economic contraction from 2 perspectives.
- A consultant in a 9–6
- An owner of a 1-Man consulting practice
I will start with the 9–6.
My Biggest Worries as a Consultant in My Day Job (And How to Neutralize It)
I have 2 worries and they originate from my fear of a potential protracted recession.
- Retrenchment
- Effective erosion of income through high inflation
Retrenchment is happening at record speed. Robinhood just announced that it will cut 23% of its workforce. This is the latest domino to fall after Meta, Twitter, Tesla, and many others.
We don’t necessarily have to be part of the statistic. This is how.
1. Tie Your Expenses to Work Activities
If you are a consultant, you are expected to move around. And that is a benefit, not a chore.
It helps me reduce 2 types of expenses that are highly susceptible to inflation.
- Meals
- Transport
I eat with my prospects and clients. I get to claim back meal expenses each time I do so. And my boss is happy approving such claims.
I am meeting more people for business than before. Translated, I am more committed to my work than before.
The only contention would be the size of the receipt. However, the company will bear the cost so long as I do not bring prospects to Michelin 1-Star restaurants for 2 meals a day.
During economic contractions, I expand my do-lunch list from prospects and clients to leads and vendors.
Public transport costs can be passed on to the company. Of course, I don’t own a car. Cars are crazy expensive in Singapore. I cab.
I get to claim back 100% of my transport expenses even with multiple receipts in a single day. I know some colleagues of mine having problems getting the company to pay for seasoned parking and mileage-based fuel costs.
Such problems do not exist with cabbing.
And then, there are business trips.
2. Tie Your Vacations with Business Trips
Go for it, especially when you are childless or single. Combine business with a vacation. I initiate trips around the region to visit clients where they are.
Yes, I initiate business trips. I want to visit and speak to my clients. It gives me a better understanding of their work, circumstances, and how I can serve them better.
Hotel lodging, airfare, and other discretionary expenses are covered by my company. My only expenditure would be the night trips to visit the city or weekend drives to the suburbs.
You get to see the world at a massive discount. This is a great deal.
And if you are lucky, you get to secure deals for your 1-Man consulting practice during vacation.
My Biggest Worries as an Owner of a 1-Man Consulting Practice (And How to Neutralize It)
There are 2 problems any 1-Man consultant will face. The Great Client Evaporation and the effective erosion of revenue caused by inflation.
Clients ghost us when times are tough. That is easy to understand. But inflation destroys our backyard.
It does not matter whether current inflation numbers stand at 8.6%, 9.1%, or 10%. My margins get squeezed.
And that means I surrender more dollars to purchase the same amount of goods and services to keep the consulting practice running. It is painful.
I use Foreign Exchange (FX) arbitrage to counter the insidious effects of inflation. In short, I price my consulting services in a stronger currency. As of today, I do business in USD or SGD.
Why so?
Because inflationary pressures can magnify. Sri Lanka is a good example. With an expected 70% inflation by September 2022, your savings are effectively wiped out overnight. The same applies to business earnings.
You will be in a much better position if:
- You service clients outside of the country
- You accept payment in a stronger currency
- You purchase goods and services in the country using local currency
I call this a natural hedge against unforeseen financial calamity. Think about it.
This is that one move you need to counter high local inflation. Just one.
And this is my advice if you operate in a country with a strong currency.
Evaluate how you can accept other stronger currencies. Why is that important? You never know which one is the next target for global inflation.
Portfolio currency diversification for business revenue is an effective measure. Trust me.
Parting Keynote
You don’t have to do more work to survive an economic contraction. I mean it.
I speak for myself. I have a day job and am running a consulting practice. There is no more bandwidth to take on another side-hustle to deal with bad economic conditions.
Or to feed my family.
Instead, we can rethink how finances can be better managed at work and in our business. There are things we can control, as mentioned in this article.
We will be in a much better financial position (personally) when we know how to.
One final piece of advice. Don’t kill yourself by taking on many jobs. It is a toll on your mental health.
Take care, people.
As a content contributor, I write my observations from daily life and my business exposure. Because our life experience is the bedrock of our unique perspectives.
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