Careers Finding a Job Self-Employed Survival Guide: What to Do When Work Dries Up Share PINTEREST Email Print Thomas Barwick/Stone/Getty Images Finding a Job Job Searching Career Advice Skills & Keywords Resumes Salary & Benefits Letters & Emails Job Listings Job Interviews Cover Letters Best Jobs Work-From-Home Jobs Internships Career Planning Table of Contents Expand Set Up an Emergency Fund Find Multiple Income Streams Make Networking a Priority Establish a Clear Business Plan Set Up Good Billing Practices Know When It Time to Quit By Miriam Caldwell Miriam Caldwell Miriam Caldwell has been writing about budgeting and personal finance basics since 2005. She teaches writing as an online instructor with Brigham Young University-Idaho, and is also a teacher for public school students in Cary, North Carolina. Learn about our Editorial Process Updated on 01/30/20 When you are self-employed you take on additional responsibility in most areas of your life. No one provides health insurance for you. You do not have a simple retirement plan to sign up for. And you do not have unemployment to fall back on. But one of the most difficult things that self-employed people worry about is keeping a steady stream of work, even in an economic downturn. Whether you own and operate your own business, or work as an independent contractor or freelancer, you may be worried about staying busy—and getting paid—during difficult economic times. Even when the economy is good, you may worry about making ends meet if the business does not continue to grow. Here's what to do when you're self-employed and work dries up. Set Up an Emergency Fund An emergency fund is even more important when you are self-employed because you will not qualify for unemployment insurance if your work were to completely dry up. If you are self-employed, you should have an emergency fund set up to cover your business and personal obligations for at least six months. These costs include all the expenses that keep your business running day-to-day, from payroll to rent to production costs. Though keep in mind that six months is just a starting point. If you are the only breadwinner in your family or you are single, plan for a year of personal expenses for your emergency fund. Find Multiple Income Streams Diversify your income streams. If you are an independent contractor or freelancer you should be working for multiple clients so that if one source dries up you have other ones to fall back on. If you run a service business look for ways to broaden your customer base by offering more services or expanding your product line. When you depend on just one business or company for most of your business you put yourself in a precarious position because you are relying too heavily on that business succeeding in order for you to succeed. The key to staying solvent as a freelancer, independent contractor, or small business owner is to have more than one income stream. That way if one dries up, you have others to fall back on. Make Networking a Priority Keep networking, even when you are running your own business or freelancing successfully. Staying on good terms with past clients, bosses, and coworkers will keep your networking circle open. This can land you business referrals, but it can also make it easier to find a job if you need to go back to working for someone else. If you work as a consultant some companies may try to recruit you after you have worked with them. Try to leave any business you come in contact with on good terms, because they may become a future employer. Establish a Clear Business Plan Create a business plan that includes an exit strategy and a clear timeline about when you should use it. When you first begin planning your business you should have a backup plan and a way to close down the business without causing undue financial hardship for yourself. One way to do this is to avoid business debt and to stay current on your taxes and your accounts with your suppliers. if you find yourself struggling with staying solvent, it may be time to walk away, before you incur large amounts of debt. If you find yourself falling behind on business taxes and payments to suppliers, it may be time to walk away. You don't want to put yourself in a situation where you're incurring a large amount of business-related debt. Set Up Good Billing Practices Make sure you have an effective billing and collection method for your business. Freelancers often run into problems collecting payment for their work. That's because they have little recourse should a client fail to pay them; legal action is often expensive and time-consuming. If you offer lower fees for upfront payments you can prevent a lot of the hassle you would otherwise spend tracking down payments. Basically, you offer your basic services at the rate you want to receive to people who pay upfront and put the late fees into the fees for people who want to pay 30 or 60 days out. Many companies respond well and will pay on time to save money. Know When It's Time to Quit Be honest with yourself about how the business is doing. If you have marketed as much as you can and explored all other avenues, you should admit that you need to change directions before you get yourself in a bad financial situation. Using your credit cards to cover your monthly expenses is one major sign that your current financial situation is not working out. If you have an emergency fund in place and a good marketing plan you should be able to get through difficult economic times even when you are self-employed. Be creative and come up with new services to offer and switch up your target demographic to keep yourself in business. Remember, to take the lessons you have learned from a slower economy and apply them to your business planning in the future. As the economy recovers, be sure to practice these financial habits to make the most of it.