Don’t let the details of your contract hurt your potential income. Self-employed workers and independent contractors are affected severely during emergencies, unexpected events, and global crises, as they typically rely on a revolving door of clients. When an emergency (such as a global pandemic) shuts down large portions of society, those clients often cancel contracts.
With several cancelations at once, many contractors lose their reliable stream of income and are forced to make hard decisions, such as drawing from life savings for month-to-month bills. Take these steps to protect your self-employed business and address contract cancelations before and after accepting work from clients.
Develop a crisis communication strategy
No matter which industry your business is in, it’s important to develop a crisis communication strategy in advance. Even if a crisis has already taken place, you can develop a clear and thorough strategy for the next unexpected event that disrupts your business. Concise communication on your part demonstrates accountability, empathy, and responsibility to your clients during a time of uncertainty.
Crisis communication plans include key messaging that you can edit to address any event that disrupts your work. Your plan can outline causes, effects, and solutions. For example:
- Explain to your clients how a crisis directly (or indirectly) affects your work.
- Alert them to any deadline extensions you might need.
- Offer to work remotely or develop a strategy for completing the work in segments—whatever you can do to provide a solution.
Your plan should also outline a delivery strategy, including which mediums to communicate through (website, social media, email, etc.) and how often to provide updates.
When it’s time to implement your crisis plan, update your talking points and delivery strategy to suit your current situation. Keep constant communication and follow your plan so your clients and colleagues understand the project’s progress.
Set clear expectations about the work you’re offering to provide at the time. Deliver solutions early on to avoid a contract cancelation.
Reschedule meetings and plan for remote work
If you’re a self-employed entertainer such as a DJ, musician, or stand-up comedian, ask your clients if they’re willing to postpone an event rather than cancel it.
Large events such as weddings or fan expos take a lot of commitment to plan. If you’re willing to wait for the event to occur at a later date, you’ll likely be saving your client money, time, and stress. Plus, you’ll be securing work for yourself.
Reschedule an event with a client in a manner that conveys their importance to you and keeps your professional relationship intact. For example:
- Apologize for being unable to keep your appointment.
- Be as specific as possible when setting future dates.
- Explain how it would benefit both of you to maintain your contract.
If you run a business that provides professional services—such as consulting, information architecture, or accounting—working from home is another option. If you have to cancel a meeting due to a crisis and rescheduling doesn’t work for the client, suggest a remote meeting instead.
Some clients may prefer face-to-face interactions but you can help them transition into a virtual relationship by introducing helpful technology:
- Research applications that can help you connect and collaborate with clients and coworkers (e.g. remote desktop connection and real-time communication software).
- Provide instructions or tips for implementing these applications.
- Reassure your client’s privacy and security by implementing best practices to keep devices safe (e.g. frequent password updates and the latest anti-virus protection software).
Show your clients how you can accommodate their needs by rescheduling or working remotely. If they agree to new working terms, document any changes in your contract with a Contract Addendum. This form allows you to make minor adjustments to contract terms without invalidating the original agreement.
Read more: Why Freelancers Need a Freelance Contract
Enforce retainer fees and provide continuous value
Retainer fees ensure that your clients pay a portion of your total costs upfront rather than after you perform a service. Retainers work well for freelancers who provide consultation services and contracts that don’t specify an end date.
When drafting a Consulting Agreement, be as clear and descriptive as possible about the services you can provide. Communicate the value of your work to justify the price of your retainer fee.
Present your service as a tangible product to show your clients your value:
- Commit to a set number of reports, instructions, or articles each pay period.
- Continue to test, maintain, and improve past projects.
- Create training opportunities to keep clients updated on the latest industry trends.
A non-refundable retainer fee guarantees you’ll be compensated regardless of how a project goes. Plus, your client will be financially invested in your work, making them more likely to see it through to the end.
Strengthen the cancelation terms in your contracts
Draft a strong cancelation policy in advance to ensure that you get paid for any work you’ve started. To strengthen the cancelation terms in your Freelance Contract, consider including clauses that address:
- The delivery of a written cancelation notice within a certain time period
- Reimbursement of work-related expenses (e.g. tools, travel, shipping, etc.)
- A cancelation fee
A cancelation notice period is a professional courtesy. For most short-term projects, notice periods range from 1–2 weeks, while long-term projects may require 2–4 weeks’ notice. Within this time, you can wrap up your work, calculate work-related expenses, and end your relationship on a good note.
Be reasonable and considerate when addressing a cancelation fee. You can’t require an overly weighty payment from your client, as courts will likely consider the clause to be an unenforceable penalty. Instead, consider calculating a fee based on wasted costs or lost profits.
Calculating wasted costs
Many independent contractors discuss which items qualify as work-related expenses with their clients ahead of time. Often, expenses include things that are needed to complete a project, such as supplies, tools, travel, or accommodation. If you spent money on these things and the client cancels the project, it’s only fair to ask them to reimburse these wasted costs.
Calculating lost profits
There are multiple methods for calculating lost profits. You’ll need to research which method works best for your line of work, as formulas can vary by industry, location, available data, and type of loss. In some cases, you may benefit from having an accountant determine a generic formula that you can include in your cancelation policy. This way, your clients won’t be surprised by the fees you charge if they cancel a contract.
A valid contract legally binds a client to their obligations. If they don’t give you the appropriate notice or reimburse you for the money owed, you can take steps to enforce the contract.
Create an exit strategy
Although offboarding might seem more practical for well-established companies, self-employed workers can also benefit from creating positive exit experiences for their clients.
In fact, how you handle the end of a contract speaks largely to your reputation as a professional. Successful offboarding commands respect and generates goodwill from clients. Consequently, this strategy improves your chances of getting a referral or being hired again.
End your relationship with a client on a high note; thank them for the opportunity and tie up any loose ends:
- Write a summary of your work.
- Provide a status update on incomplete projects.
- Include suggestions for how to proceed with an incomplete project later.
- Ask for feedback on your strengths and weaknesses.
An open dialog with your client demonstrates your investment in their success—and it’s a reflection of your personal success as well. Once a client recognizes your commitment to your work, they’ll be more inclined to seek your services again later.
Read more: Positive Offboarding in the Workplace
Continue to market yourself
It can be difficult to continue marketing yourself after an unexpected event causes several of your clients to cancel their contracts at once. However, if you adjust your message and send it with appropriate timing, you can stay relevant and socially responsible to your clients during a time of crisis.
Listen to your target market, find out their needs, and offer help in any way you can. If it’s financially possible, consider offering some of your services for free or at a discount. Post positive and uplifting messages on your social media. Share helpful and accurate information or resources. It’s probably inappropriate to use hard-selling marketing tactics, so focus on connecting with people one-to-one.
Keep your finger on the pulse of your prospects to make the process of rebuilding your client base much easier when things return back to normal.
The crux of self-employment during a crisis
Self-employed workers, freelancers, and independent contractors don’t get the same benefits that employees do. They work especially hard to maintain their businesses and manage their budgets during tough times.
Still, some things are simply out of our control. But by filling your freelancer toolkit with the proper tools—a communication strategy and a strong contract—you’ll be better equipped to deal with a crisis as it unfolds.