The London School of Economics and the Centre for Economic Performance found that a third of the UK’s self-employed are experiencing financial difficulties paying basic expenses. Many freelancers as a result of the cost of living crisis are having to work longer hours and charge more for their services to survive. Which industries will likely be most affected by rising prices and make it difficult for freelancers to negotiate higher rates?
With the threat of recession looming, coupled with inflation and the effects of the pandemic, freelancers are especially feeling the pinch, with 78% reporting a rise in their costs over the last 12 months, according to a new study carried out by Markel Direct a specialist insurer for the self-employed.
Which industries are most affected by the cost of living crisis?
Freelancers that work in certain industries are especially concerned about their finances for the next 12 months. The industries that are most likely to be affected by an increase in costs are recruitment and HR, public services (such as waste removal or healthcare), construction, tourism and marketing, advertising and sales. Energy (32%) and raw materials (16%), according to the survey,
The impact of lower consumer confidence appears to be hitting many small businesses, too, with 43% reporting a decline in income over the last 12 months. However, this wasn’t the case for all small businesses; 45% reported no change in income, and 12% reported an increase.
Markel Direct also asked its 560 respondents which areas of their business they were most concerned about. Rising costs to run the business were the most reported worry (21%), followed by gaining new customers/clients (19%) and retaining existing customers/clients (16%).
Late payments are still a problem for freelancers
Late payment continues to be a challenge for small businesses, with 22% reporting an increase in late or non-payments over the last 12 months, with over a quarter (27%) of non-payments being more than £500.
Despite these challenges, the study suggests small businesses are proactively taking steps to tackle such issues.
How are freelancers changing how they work?
One in three freelancers increased their day rates in light of increased costs, and nearly one in four (24%) are working longer hours. Only a small portion (5%) have had to take out a new loan to support their business over the last 12 months, suggesting their adjustments are helping to weather the cost of living crisis.
Rob Rees, Divisional Director of Markel Direct, commented on the survey findings:
“Many are understandably not feeling confident about the future, but despite the unprecedented challenges faced, small businesses and freelancers are showing resilience by taking action.
“These challenges make cashflow all the more important for small businesses, and the increase in late payments only adds to the challenges.
As a specialist small business insurer, we understand the challenges our customers face, which is why we’re reminding our policyholders they have free access to an in-house 24-hour legal advice helpline to help handle tricky payment issues, and other legal matters they may face in the current climate.”
Cost of living support hub for freelancers
To further support small businesses and freelancers, Markel Direct has launched a cost-of-living hub which provides guidance and support across a range of areas including marketing a business, managing costs and handling late payers.
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