These days, everyone's looking for ways to make more money. If you've lost your job or just need help making ends meet, you may have considered doing freelance work to earn a few extra bucks. You're not alone. A recent ABC News story said freelance/contract workers now make up nearly 30% of the U.S. workforce. In the same story, Sara Horowitz, founder of Freelancers Union, said the organization's membership has doubled in the past two years. (Freelance work is a way to escape the daily grind - but don't ignore the added responsibility that comes with freedom. Check out Freelance Careers: Look Before You Leap.)
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Freelance Arrangements Can Have Their Perks
Freelance hours tend to be flexible, and for some jobs, you can work in your pajamas if you like. Some good freelance opportunities are out there and pay a decent rate, but there are also many work-at-home scams. And then there's the gray area in the middle – jobs that are legit but may not be worth your time and energy, or jobs that require an upfront investment of money or supplies on your part. (From pyramid schemes to envelope stuffing, many scams masquerade as legitimate part-time work. Learn how to Recognize And Avoid "Work At Home" Scams.)
Splitting The Risk-Reward With Freelancers
"With the recession, we've seen an increase in freelance jobs where the employers want to split the risk-reward with the freelancers," says Sara Sutton Fell, CEO of Flexjobs.com, a site that lists freelance and telecommuting opportunities. "It makes sense that employers are trying to survive a tough economy by keeping costs down, and one way to do that is to hire freelancers willing to prove their worth and sharing in the revenue they bring in. Conceptually it can be a win-win, but it puts more risk on the freelancer."
Six Kinds Of Dead-End Gigs
Here are six types of freelance gigs that probably won't end up paying off – and may even wind up costing you money:
- Anything That Sounds Too Good To Be True
Okay, let's get the scams out of the way right off the bat. We hope this goes without saying, but when it comes to work-at-home gigs, the old adage definitely applies: If it sounds too good to be true, it probably is. "Any 'opportunity' that offers ridiculously high income for menial work, in the end, will not be worth anyone's time because it's inevitably a scam," says Tom Harnish, co-author of "Undress for Success: The Naked Truth About Making Money at Home."
"Why would a company pay someone several dollars to stuff an envelope when a machine can do thousands an hour for pennies?" Harnish says. "The point is, such promises are inevitably 'come-ons' designed to trick you into paying for a worthless starter kit."
- Multi-Level Marketing
Multi-level marketing jobs are gigs where you need to sell stuff, usually by means of a "party plan" or by taking catalog orders. While there's the occasional success story – the people who win new cars or tropical vacations because they're the top earners in their territories – most people who try these opportunities don't end up making much. They often don't even recoup the cost of the "starter kit" or other supplies they needed to buy.
"You'll get howls of protest from the people who've drunk the Kool-Aid, but the fact is those jobs just aren't worth the time," Harnish says. "The vast majority of people actually spend more money than they make."
- Sales And Business Development
"These jobs are all over the place right now," says Fell, adding that these types of jobs often require an investment of time before you see a profit, because most of them are commission-based to some degree, if not entirely.
- Online Writing/Blogging Jobs With Non-Traditional Pay Structures
Fell says these jobs are also abundant right now, but many companies are imposing a lot of "catches" or employing creative payment strategies.
"Many companies have payment structures that are not strictly per article or per word," she says. "Instead, some have payments tied to submissions being accepted according to specific guidelines - opening up a risk of the freelancer writing content that won't be accepted - or calculated based on the amount of advertising revenue generated by the content, which is not guaranteed."
A popular trend right now: sites that offer payment on a per-click basis. The problem: contributors have no way to verify the numbers - and regardless, the per-click rate is usually minuscule.
- Online Education And Training Course Designers
"This is another type of freelance opportunity that often has the earnings based on revenues generated from the sale of each course," Fell says. "The designer puts in the energy and effort up front, with potential of longer-term residual commissions." Also, this type of work may require freelancers to invest in equipment or supplies, or put wear and tear on equipment they already own.
- Freelance Filmmakers
"This is another hot commodity in the online content industry," says Fell. "Filmmakers typically produce short videos for use on the web, often getting paid upon acceptance or upon advertising." Again, these gigs may require equipment or supplies that, in some cases, can be pricey.
The Bottom Line
As with any other job situation, it's important to thoroughly check out freelance opportunities before investing any time and effort. Make sure you fully understand the fees and payment structure, and watch out for any fine print or creative payment tactics that may delay your payment. Plenty of worthwhile freelance gigs are out there - you just need to be careful to steer clear of the duds and dead ends.
Homebodies can save big on their tax bill. Learn how to get in on the action; see How To Qualify For The Home-Office Tax Deduction.
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