FEATURE19 July 2023

Independent minds – how are insight freelancers affected by a fragile economy?

Cost of Living Covid-19 Features People Trends UK

A tepid economy in the UK has created challenges across all sectors. Research Live spoke to independent insights consultants to find out how the cost-of-living crisis has affected their work.

home working desk with laptop, notebook, lamp and shelf

Times are tough for many. The UK’s high rate of inflation fell by more than expected in June and was its slowest in over a year at 7.9%, but this is still the highest among the Group of Seven (G7 ) advanced economies. The cost of many goods and services is historically high, with consumers and businesses affected by price hikes and rising operating costs.

Sole traders and freelancers are particularly vulnerable to economic uncertainty, so we asked several independent researchers how they are coping in the current climate, and whether they’ve experienced negative impacts – for example, from reduced client budgets for research.

The ICG (Independent Consultants’ Group), a network of over 400 independent market research consultants, conducted a poll of its membership for this article, finding that from a small sample, the majority reported that they are negatively affected by the cost-of-living crisis, but most ‘not seriously’.

While a lot of freelancers are in good positions, haven’t been hit by a lack of work and remain as busy as ever, there are many for whom things are slow – perhaps even slower than they were during the pandemic, according to James McLintock, who runs insight freelancer collective Future Studio. “From what we’re hearing, it’s tough,” he says. “There are a lot of factors making it difficult for freelancers. On the demand side, it’s partly clients and agencies being understandably cautious about commissioning or outsourcing projects, and partly clients and agencies – having made layoffs – making sure they’re fully utilising capacity before turning to externals. On the supply side, you have a glut of researchers, independent consultants and strategists – particularly those leaving tech jobs – entering the freelance market, so there’s more competition.”

While work is still being commissioned and is not necessarily harder to win, it is slower to sign off, and when clients do sign off, things can move more quickly because internal deadlines haven’t changed, adds McLintock.

The biggest negative impact Nick Bonney, founder of Deep Blue Thinking, has observed from the current economic context is the time it takes for projects to be commissioned during the initial brief and gestation period. “Understandably, clients want to be 100% sure before they commit to external marketing spend and this can lead to multiple iterations of the brief and proposal before the project starts,” says Bonney.

This delay presents bigger issues for smaller suppliers, he adds, as it’s harder for them to manage the pipeline to ensure that they keep the quality threshold high.

One freelance market research consultant we spoke to – who did not want to be named – has noticed that number of enquiries they receive has subsided since the start of the year. Additionally, freelance colleagues who often refer work to each other, have “gone quiet”. They said: “The current economic situation has made me start to think about whether I should consider a permanent role to prevent any potential longer-term gaps between contracts. I sense that during times of uncertainty more freelancers do this so those who decide to continue will get busier. For example, during Covid I did consider taking on a full time role, but once these started to be posted, the freelance opportunities also picked up.”

Businesses having systems in place to quickly bring freelancers on board, and payment terms of 30 days or shorter, would better support freelancers during the cost-of-living crisis, according to our anonymous contributor. “Freelancers should not have to accept contracts with extended payment terms – for example, 60 days from project completion. This is the case at any time, but even more now, when expenses are increasing and the need to earn interest on cash held to offset inflation is required.”

Rising living costs create a quandary for freelancers: with everything going up, day rates don’t go as far as they used to, and so freelancers need to increase their rate but feel a pressure to instead fix them or even cut their rates because of increased competition.

For Deborah Simmons, founder at Camino Insight, about 70% of her work is user experience (UX) research, and in her experience, this side of the industry tends to be slightly busier than qualitative or quantitative research. She notes: “It’s difficult to attribute changes in the industry directly to inflation or the cost-of-living crisis – however, I have felt that it isn't the right time to increase my day rate as I want to make sure I remain competitive, even though that’s exactly what I ‘should’ be doing.”

Shazia Ali, founder of Mint Research, who is no longer freelancing but now operating as a consulting business, says: “What I've heard from my conversations is that many organisations are holding back on spend and managing workload internally as much as possible. A big factor in this is due to many having had high recruitment drives in the last couple of years and being mindful that clients are holding back on spend in the short term. There is positivity though, and an expectation that spend will grow by Q4.”

‘A buoyant time’

Despite uncertainty, many independent consultants are well positioned to succeed in the current economic climate, and some of our contributors pointed to this and the freelance sector’s dynamism and buoyancy as reasons for optimism.

“More and more people are becoming independent and plenty of industry heavyweights are now operating solo. Some of the best work in the industry is currently being done by independents. I'm thinking of people like Konrad Collao at Craft and Mike Stevens at Insight Platforms. It feels like a buoyant time,” says Dan Young, director at Shed Research Consulting.

With clients’ budgets for research reduced and independents tending to be more cost-effective than larger agencies, as well as an appetite for versatility, the cost-of-living crisis has opened up opportunities in some cases, says Young, who adds: “I feel like the old worries around working with freelancers (mainly risk aversion) are melting away. Clients are seeing the value of getting nimble, free-thinking experts to run their projects. And they're getting better insight as a result.”

Bonney notes: “The increased flexibility and reduced costs that come with being an independent can often mean they are providing a more senior team at a lower price than larger agencies.”

Pandemic legacies

Changing business models are also having a negative impact for some independent consultants, as well as pandemic legacies, particularly in the area of face-to-face research. Independent recruiter Lynne Chapman, owner of Considered Response, says: “On paper, the number of projects is broadly the same but the business model has changed totally for those of us who were geographically restricted in our recruitment area. In 2018 and 2019 one project would have been something like two groups or a workshop, where you'd be recruiting usually at least 16 people.

“Now a project is more likely, on the whole, to be something like two people in a nationwide group. I do turn a lot [of projects] down), but for the main part, that’s all that’s on offer.

“For sole trader recruiters like myself and, I suspect, a lot of others like me, the lack of face-to-face has been very painful.”

Freelancer John Jones also points to a shrinking of the qualitative elements of multi-disciplinary research projects, citing fewer focus groups, smaller groups and a greater desire to conduct groups virtually due to the cost savings.

“The pandemic has accelerated interest and acceptance in qualitative research facilitated online – this is a fascinating area where there are great opportunities for real consumer closeness and a deeper understanding. It provides an ‘ethno’ feel to the process and can provide the opportunity for the client to be quite hands on, which is good and bad. In a good way, it has possibly demystified the process but it may erode perceptions of the researcher needing to be there. There is a self-serve appeal about this that can make the client want to run these things themselves.”

How can clients support freelancers?

Payments are understandably a pertinent issue for independents. Several of the freelancers and independent consultants we spoke to cited payment issues as an area they felt clients could be more supportive with.

“I'm seeing more and more talk in freelance circles about organisations paying very, very late. It’s been a slow creep over the past few years. Organisations are having to be chased for weeks – or even months – to settle an invoice, “ says Young.

While it’s usually not end clients who are responsible for delays to invoices being paid – the responsibility sits with finance teams – “it can really affect a small business’ cash flow (we have mortgages too) and also sets a dreadful tone for a constructive working relationship. I do wonder how those delaying these payments would feel if someone held back their wages for two months,” adds Young.

Annabelle Phillips, founder, AP Research, who has previously had to wait 10 months to be paid, says: “Not paying a bill to a small business or independent within a month should be seen as unacceptable. It’s an untenable position to be in.”

Clients should “ really make sure they are looking after the people that are helping them to win and run the work”, adds Phillips.

Bonney agrees with this, saying: “Whilst many research buyers are obviously not directly in control of supplier payment processes, it’s still part of their role to help resolve issues when they resolve rather than leaving partners at the mercy of back office teams.”

Then there is the issue of procurement. “In difficult times, if you can’t put a specific value on something, procurement departments can get obstructive,” says Jones, adding: “Clients need to take the fight to procurement to challenge the ‘commissioning by the yard’ mentality – great insight feeds clients ambition, clarity and objectives and should be seen within the cost-structure of how it will impact the business going forward, not what it costs now.”

Other than reining in payment terms and making sure partners are paid in a timely manner, clients can also support contractors by offering more flexibility in how work is delivered. Simmons says: “It would help me if more of them were willing to allow flexible working (part-time in particular and more remote work). Things are definitely moving in this direction, but some clients are still a bit tentative as they perceive this as having a negative impact on the work or team, which in my experience generally isn't the case. It should really be all about who is the best person for the job. In reality, everything else is manageable.”

Clients and agencies could also support by referring their preferred freelancers to other people, notes McLintock, as well as talking up their work and inviting them in to use their facilities if possible.

However, he adds many freelancers are experiencing being asked to prepare bids and proposals and then just being “completely ghosted”. He says: “That’s never pleasant at the best of times, but during times when people are more worried than usual about what the future holds, it’s even more dispiriting. Don’t ghost! The danger is that if the sector doesn’t support its independent workers it’ll lose a pool of flexible, highly skilled and cost effective talent, just when it needs it most.”

It is not just sole traders feeling the pinch, but small agencies, too. Kath Rhodes, who runs micro-agency Qual Street with two colleagues, says: “This week I’ve had a project pulled because of lack of budget, a project down-scaled and another potential project shifted back. It’s really hard to know if this is cost-of-living related or ‘one of those things’. What I can say is how it feels – demoralising.” 

She adds: “Running a small business is all-or-nothing. We get the freedom to be who we want, to do research the way we think is right, to push boundaries, and that’s amazing. But when you have had a week like mine when work drifts away, it can feel hard.”

However, self-funded work, project reviews and reading during quiet periods means there is an opportunity to come up with fresh ideas and approaches for when the enquiries do come back in, adds Rhodes, saying: “Being an indie is all about ups and downs and learning to ride the rollercoaster.”