I just signed up and notice that there are very few responses to posts, including yours.
I too have been feeling deflated. I became my own boss long before you did, and in a different field, but I too saw some developments like the ones you are describing. I saw them in 2009/2010, though. Several clients decided to hire someone else, as an employee, so that they could have the person available in-house (so they could let them work on other projects as well, I reckon, and not have to worry about exceeding project budgets).
Previously, I had another client who wanted me to be at their office every once in a while. It mainly meant standing around a lot and watching other people at work. The person in charge of the project wanted the comfort, the luxury of having me around. This was also a client who would often call me on Sat or Sun and expect me to be there 24/7 (even panicked once when I was on a business trip, away for less than 2 days, which I had let this client know about).
There is a good compromise in many cases. SKYPE! (etc) I currently often spend hours on Skype with someone who is at a great distance. We mainly brainstorm a lot. Using the cameras on both sides means that you can be very present and it is really helpful if a project has many visual aspects. Using Skype enables you to walk away to make coffee, excuse yourself when the phone rings, keep an eye on e-mail etc. There is a lot of education going on via Skype, all over the world. You do not have to limit yourself to working with parties in the UK. You could find a great client in, hey, Seattle or Perth.
I have a few years on you. Like you I started looking into other possibilities. I am highly versatile and can do many things. You'd think that it would be an advantage. I even set up a Limited, to limit my liability and because it might make people take my new business more seriously (a field in which I have no formal qualifications). I put considerable effort into it, but it is clearly going nowhere. (I can be ahead of the market sometimes, which does not help and requires me to educate first. My idea might work much better five years from now.)
So now I find myself returning to my science and technology roots, while putting a new twist on things. Combining something I really love with my old roots. And finding new areas that are still expanding instead of saturated. Leading instead of following.
I think I was trying to adapt myself too much to what I thought were the needs of the market. I like many things, but there are some things I like a lot more than others. I think that can make the difference in the long run. Enthusiasm. Drive. Fire. It makes you "self-propelling".
Your current "down" period may be like an incubator, a renewal process for a breakthrough towards better things, Bob. Don't fight it too much. It may just be like a rain shower when you crave sunshine.
