I’m very grateful to Hugh to allowing me to post on his blog. Thanks, Hugh.
“Man cannot discover new oceans unless he has the courage to lose sight of the shore”
Different people call it different things: freelancing, contracting, consulting. More broadly defined, it is self-employment.
I became self-employed, not by choice, but because of necessity. I came out of school in the 90’s. The early 90’s went through a fairly severe recession. Full-time jobs or internships for new university or college grads were few and far between. Your choices were contract (self-employment) opportunities or not working. I chose self-employment. I was told by a number of people this was a negative work choice and it would haunt me down the road, but so far I have parlayed it into a successful career. Everything I learned about being successfully self-employed is from; watching others, reading and researching, asking questions and personal trial and error.
Advice and Lessons:
When I started out, working as a programmer/analyst. Hourly rates were set in narrow ranges based on years of experience, practical programming knowledge and the economics of supply and demand. Most leads for gigs where controlled by headhunters/recruiting companies. Headhunter/recruiting companies usually tacked on an extra 20% to 25% on to the hourly rate. To keep myself competitive, I use to charge something in between what I would get from a recruiter per hour and the mark up. It proved attractive to my clients.
As my experience and skill set has broadened and become more management consulting oriented, I know from working at some of the big consulting companies at what they bill me out at to clients, my hourly has been adjusted to stay both fair and competitive.
My advice, when positioning yourself in the marketplace, especially if you have broad skill set is to have a sliding hourly rate instead of one fixed rate hourly rate. I’ve had clients, in the past that had work, which I could have done, but in terms of effort and skill was slightly below what I was doing for them and they were “scared off” because of my hourly.
For some of my long time clients, I will give them a fixed price on work as long as they provide me the scope, instead of billing them an hourly rate. This has allowed me to keep some clients for years.
I have also a slightly less than market rate for start-ups and new companies. Being a type of entrepreneur, I have a sort of soft spot for other entrepreneurs. Not always, but sometimes this has led to future work for me at market rates. Some entrepreneurs are very appreciative of any help you provide them when they’re starting out and sometimes this leads to future work at market rates.
Have some flex in your rate. Rates are determined by a number of factors, chief among them supply and demand; the economy goes through up and down cycles. In order to stay competitive and working you will have to adjust your rate from time to time. Don’t get married to a specific hourly rate.
To incorporate or not to incorporate?
This is something that depends on your situation. If you don’t have long term aspirations of being self employed are in between jobs and only contracting or consulting till you find your next full time permanent gig, then incorporation isn’t for you.
If however, you are planning to do this as a career or for an extended period of time, incorporation carries many tax advantages. Being incorporated also allows one to join organizations like local chambers of commerce and boards of trade. These organizations allow “group buy” benefits for everything from benefits, dental care, software, office supplies to local networking and RFS bid opportunities.
This is a question that I’m often asked. Is a long contract better then a short one? My answer, I’ve parlayed 4 week gigs into 4 years. Every client is different, every situation is different. Expect the unexpected.
Pros and Cons of using a recruitment company?
Some self employed folks like using recruitment companies/headhunter and some larger corporations insist that you use a recruitment company(some will assign you one), especially if you aren’t incorporated. The benefit of using a recruitment company/headhunter is that you get paid weekly or bi weekly instead of net 30. The trade off is you make less per hour. Everyone has their own financial situation. Choose what suits you.
end of part 1… to be continued in part 2; Finding work and benefits
Tyger Das is a management consultant with 13+ years experience who originally started his career as a programmer. His experience includes executive advisory, business strategy, business systems analysis, marketing strategy, program/project/vendor management, marketing, consulting or IT operations (including offshore) management, best practice(s) implementation, business process re-engineering (six sigma), cost and work effort reduction through business process optimization, change management and technical(IT/IS) or advertising RFS/RFP process management. Some of Tyger’s past and present clients include: Aon, RBC, CGI, General Electric, Maclaren McCann, various US and Canadian health agencies, General Motors, Ford Europe(Jaguar, Land Rover), Diageo PLC(Pilsbury, Guinness & Co. and Smithwick’s, Burger King), NASA, Rogers Communications, various municipal, provincial and state agencies, a number of non-profits, Porsche AG, a handful of boutique advertising agencies and the National Basketball Association.