Blog Post by Kaira Sawhney

The gig economy concept has  majorly transformed how people used to work. Offering autonomy, flexibility and tons of opportunities every day, this is helping individuals diversify their income streams. While people around the globe are excited with the idea of the gig economy given that it aims at changing the typical 9 to 5 corporate culture, there are certainly some pre-considerations that you must look at before diving into this realm.

Whether you’re planning to become a freelancer, a delivery person, a rideshare driver or anything else, it is always integral to look at the pros and cons, the practicalities involved and your readiness. This blog post aims to help you go through all those pre-considerations you must look at before entering the gig economy.

Dive in to burst your curiosity!

Assess Your Interests & Skills – 

There is no exaggeration in stating that the gig economy only thrives based on skills. No matter what degree or certifications you hold, it is your core skills that can help you land potential jobs. Whether you’re a software developer, graphic designer, personal shopper, writer, etc. – there’s a gig for you in the market for sure. However, you will need an honest assessment of your core skills and interests before entering the gig economy to ensure you can do what you intend to. Here’s how you can assess your skills and interests quickly –

• Evaluate Your Strengths – Understand what your key competencies are.. For example, if you’re a skilled writer or have experience with designing or development, etc. This can help you decide which type of gigs to look for.
• What Interests You the Most? – Passion plays a vital role in sustaining the gig economy, specifically when your discipline and motivation are self-driven. You must choose a gig that matches your interests. For example, if you’ve always had an eye for details and designing is something you’re good at and enjoy doing – that is exactly what you should opt for in the gigs world.
• What are Your Specialized Skills? – Some gigs require specialized skill sets and training. For example, if you’re opting for web development – you’ll need proper training, courses, and even certifications to master the skill. In contrast, gigs such as ride-sharing and delivery might not require that serious training or specialization. Therefore, it is important to see whether you’ve mastered the required skills for the gig work you’ve chosen before entering this realm.

Assess Financial Stability – 

While the gig economy is great in terms of income, there’s always a threat of financial instability because of the unstable nature of work. Therefore, it is crucial that you look for the following factors especially if you’re transitioning from a full-time, stable job with regular income streams.

• Income Fluctuations – unlike the traditional economy, gig work lacks consistency. The income here keeps fluctuating based on competition, availability, and demand.
• Set a Financial Buffer – given the income flow uncertainty, you must keep a financial cushion for low-income periods if you’re moving from a full-time job that supports your living to the gig economy.
• Diversify your Income Streams – while there’s income fluctuation in the gig work, you always have the option to keep multiple yet diversified income streams. For instance, if your core focus is to land writing gigs, you might also enter the content marketing industry or become a writing trainer by offering online courses, etc. This can help you keep the finances running even at times when your core working gig is not performing really well.

Understand Tax and Legal Obligations – 

In contrast to the traditional 9-5 employees, gig workers are considered independent. Therefore, you’ll be responsible for managing the taxes, healthcare and other legal obligations yourself in this realm. Before you enter the gig economy, always consider the following factors so you do not have to face any obstacles later –

• Self-Employment Taxes – gig workers are often subjected to self-employment taxes, based on residing location and the amount they’re earning. Therefore, it is critical that you save a chunk of your earnings to make sure you can pay the taxes on time and adhere to legal obligations.
• Business License – some industries have legal requirements for a business license if you’re operating as a freelancer. Thus, you must dig deeper into the industry you’re diving in and make sure all the legal requirements are met before starting the operations of your gig work.
• Insurance and Benefits – as a gig worker, you’re most likely not to be entitled to employer-sponsored benefits such as retirement plans and health insurance, etc. So, it is integral that you invest in healthcare and insurance plans yourself and even set up a retirement plan to ensure a financially stable future.

Consider the Costs Involved – 

While gig work seems like a low-investment adventure, it certainly comes along with some ongoing and upfront costs. These costs can have an impact on your profitability and so, you must evaluate them before entering any gig work. These costs may include the following –

• Tools and Equipment – based on what you plan to do, you might have to invest some amount into purchasing a reliable laptop, some specific software programs, and a stable internet connection. If you’re planning to go for a delivery or ride-sharing gig, the ongoing costs can include insurance, vehicle maintenance and fuel.
• Platform Fees – most platforms offering gig work tend to deduct some amount from your earnings as their fees. For instance, platforms such as Upwork, Fiver or Freelancer charge a certain percentage from each of your project’s earnings as their service charges while ridesharing applications deduct commissions on a percentage basis. Therefore, it is significant that you thoroughly understand the terms and conditions of these platforms before starting to work with them.
• Marketing Expenses – if you’re working as a freelancer, you’ll eventually have to invest into personal branding. This might include building your website, enhancing your SEO strategies or even running ads in the longer run.

Conclusion

To conclude, the gig economy can bring incredible opportunities at the ease of your fingertips. From autonomy and flexibility to the option for income diversification, it certainly can revolutionize and change typical employment models. However, it is integral that you approach this with an adequate yet strategic mind-set. Not everyone can simply jump into the gig economy and start making good money. Instead, it requires you to properly assess your skill set, evaluate and manage financial risks, closely understand the legal obligations, and make sure you’re fully prepared to enter this world. While this isn’t for everyone, you can make a rewarding career out of it for sure with careful consideration and strategic planning.