[HN Gopher] Ask HN: How did you transition from FTE to self-empl...
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Ask HN: How did you transition from FTE to self-employed/sole
proprietor?
I would like to transition from my FTE position to a specialized
consulting/contracting business that I have been operating for the
past several years with annual revenues of $10-12k. Revenues are
low because there is not enough time in the day to maintain both
FTE and consulting. If you made a transition, how did you do it? I
believe I could simply quit and then hold my nose and jump in feet
first, expecting a ramp-up time where I draw from savings and hope
for a reasonably quick recovery of income. But I suspect there are
more strategic options.
Author : psim1
Score : 79 points
Date : 2021-04-30 16:47 UTC (6 hours ago)
| vbsteven wrote:
| I have been doing this since 2013. Here's my journey:
|
| Full time job at startup doing web/mobile dev and infrastructure.
| I'm the fixer on the whole stack. Lots of personal side projects
| after hours.
|
| 2013: started moonlighting after full time job. An angular web
| dev project.
|
| 2014: started sole proprietor to have the after hours work on the
| books. Another Webdev project and a few websites. New client for
| which I am developing a platform that they can resell over and
| over.
|
| 2015: quit my job. Full time on my own. 3days/week at client
| office doing web/infra/uit. Other client projects on the side.
| Incorporated instead of sole proprietor for tax reasons.
|
| 2016: signed FTE contract as freelancer for more than a year
| doing web/mobile/backend/infra at startup. Other small client
| projects on the side.
|
| 2017: same
|
| 2018: same
|
| 2019: scale down long term client. Add other clients on the side.
|
| 2020: took on more than I could handle and I burned out. In two
| steps in June and September.
|
| 2021: spent 6 months at home not working. Living on my company
| savings.
|
| Now I just started working again 3 days a week to make sure I
| have an income. 1 client in an R&D role. Some creative personal
| play project on the side.
| bdcravens wrote:
| The bigger issue shouldn't be ramp on up work, but rather,
| dealing with the time it takes to get paid. The more of a
| concrete payables policy you have with your clients, the easier
| that will be.
| sneak wrote:
| Charge an immediate $1k late fee plus 10% interest per month
| (accruing daily from due date +1) on unpaid balances. This
| isn't usury because it isn't a loan.
|
| Put this plainly in the contract they agree to and sign up
| front before the work. Refuse to do business with anyone who
| pushes back on the late fee or late payment interest rate. This
| is a huge red flag.
|
| Make sure you have a lawsuit loser pays for both lawyers clause
| in the contract.
|
| Never quote without a discount (min 15% with 30-50%
| permissible) and have a clause that discounts are void on late
| payment.
|
| 14 day payment terms in the contract.
|
| Don't accept checks. Specify wire and exclude checks in the
| contract. No "the check's in the mail" bullshit.
| jelling wrote:
| There isn't enough time in the day to be an FTE and run a
| consulting company. But there is enough time to do your FTE work
| and then go out at night and network your ass off to get a large
| consulting contract of some sort. I.e. actually doing consulting
| work is blocking you from landing a big enough client / contract
| to quit your FTE.
|
| That said, if the thought of shaking hands, giving free talks,
| and doing anything else to get a _large_ client that you can be
| certain will actually pay their bill, then you probably shouldn
| 't quit your FTE.
| jconley wrote:
| I think the comments so far are spot on. #1 big deal is you need
| to be networking and finding clients. My comments assume you are
| USA-based. Many contracts are awarded by someone in an org saying
| "hey I know a company that can do that."
|
| You should also be charging _at least_ 2x your desired "salary"
| rate for your own time, more if you can pull it. E.g. if you made
| $100k/yr that works out to about $50/hr full time. Charge at
| least $100/hr. You'll need the buffer for taxes, healthcare,
| finding new clients, liability insurance, un-billable hours (e.g.
| writing quotes), etc.
|
| If you are good at estimating, try to get fixed bid contracts
| rather than time and materials. They'll be more flexible and you
| won't have to be as meticulous with your time tracking. The
| projects are usually more interesting as well. Hourly contracts
| are often more like staff augmentation.
|
| A good way to get work if you need to bootstrap can be to
| subcontract. Research and reach out to other, larger, consulting
| agencies. They're always looking for subs. Even the bigger ones
| like TEKSystems and RHI will take on subs (well, at least they
| used to, I haven't looked recently).
|
| I would plan to work billable hours at most 75% of the time you
| want to spend working. The rest should be running your business.
| Marketing, fishing for your next client, networking, handling
| your business affairs.
|
| Bring on subcontractors if your marketing/sales efforts get you
| too much work. This is easy profit if you can pull in the work.
| You should establish a network of trusted people to send
| subcontract work.
|
| You probably want to use a pass-through LLC as this is a high
| margin business and you'll want to take profit sharing rather
| than salary to avoid double taxation and also want the liability
| protection of LLC. But talk to a good CPA in your area.
| pasttense01 wrote:
| Frankly I don't think your business will ramp up enough if you go
| full time. It will probably only double or triple--given that the
| revenues have been flat. I doubt if that is enough to support
| your lifestyle.
|
| Figure out what your minimum living expenses are and acquire a
| part-time job to meet this level (either cutting back at your
| current job or switching jobs). Then when your business has
| ramped up enough you can quit this part-time job.
| hluska wrote:
| You've gotten some excellent advice here so far but I wanted to
| add a few bits that I've picked up:
|
| 1.) You're going to do sales, invoicing, collections, bookkeeping
| and regulatory shit. At various points, these five jobs will make
| you want to go back to your FTE status.
|
| 2.) You will eventually become your own pointy headed boss (at
| times).
|
| 3.) The difference between net income, profit and cashflow will
| always surprise you in the wrong direction. Try not to spend
| theoretical dollars...
| irvingprime wrote:
| The fact that you don't have enough time to do both could be a
| red flag indicating that the business is going to be hard to
| scale up to the level you need.
|
| Are there aspects of the work that can or should be automated?
|
| Are there aspects of the work that should be offloaded to third
| party services to free you up to concentrate on the bits that
| bring in the money?
|
| Are you charging enough? I ask because not charging enough to
| cover your needs is a common mistake. Increasing your rates might
| reduce the amount you need to scale.
|
| Do you have enough saved up to endure a year or so of reduced
| income while you work out the problems of scaling?
|
| Figure out the tactics. Plan for the transition. Don't just fling
| yourself into it. I don't say any of this to discourage you. I
| hope that, after some planning, you make the leap and I hope you
| do very well from it.
| PragmaticPulp wrote:
| Two options come to mind:
|
| 1) Find a single large client with a steady stream of work. Quit
| your job to contract with this client, use new freedom to solicit
| additional clients. Avoid becoming entirely dependent on this
| single client, though.
|
| 2) Establish enough savings that you can reasonably coast for 12
| months while building up the business. Make acquiring new clients
| your #1 priority.
|
| The biggest challenge with consulting is not doing the work. It's
| getting the clients. It's an entirely different skillset than
| engineering, which is why so many freelancers fail. You should
| start networking and building relationships with potential
| clients long before you quit your job.
| 35fbe7d3d5b9 wrote:
| > Avoid becoming entirely dependent on this single client,
| though.
|
| I watched a friend grow his business over the course of 10+
| years from a sole proprietorship to a small LLC to a great
| digital agency which employed dozens.
|
| One of his first contracts, _somehow_ , was doing design work
| for a Fortune 100 company. As his agency grew his relationship
| with them did as well. His company ended up essentially
| becoming their outsourced design shop, and 65%+ of his revenue
| came from them. Towards the end he and his team were being
| flown to Dubai to set up exhibition spaces and shows, then
| flown around the country for meetings, and times were great.
|
| Then Covid hit. Nobody wanted on an airplane, which tanked his
| client's financials. Costs needed to be cut, so his client axed
| their design projects for the next few years. 65% of his
| revenue went away - along with a huge chunk of his pipeline.
| The ending wasn't pretty.
|
| Avoid becoming dependent on a single client.
| garrickvanburen wrote:
| To restate this in the positive: "Target no fewer than 3-5
| simultaneous customer engagements
| mooreds wrote:
| > Avoid becoming dependent on a single client.
|
| I've seen this go the other way too, where the client ends up
| talking to the consulting shop and saying, essentially, "what
| is your price to join us?"
|
| But yes, I agree, in general you don't want to have anywhere
| near the majority of your income every year come from the
| same client.
|
| Otherwise it's just a job with additional stress and tax
| perks.
| janha wrote:
| My best advice would be to partner with other consultants,
| agencies or contractors and create a productized service that
| they can include in their offerings. Seek out agencies in your
| area and cold call them - good way to train your sales muscle
| without really selling anything to them.
|
| That's what made the difference for me. I partnered with a
| marketing consultant and she added me to her services every time
| she got a new client.
|
| The best book on this would be Million Dollar Consulting from
| Alan Weiss. Do your job well and then promote yourself to reading
| Trillion Dollar Coach ;))
| ska wrote:
| > But I suspect there are more strategic options.
|
| Some other suggestions things to think about:
|
| * you'll need a significant buffer (bare minimum 4-6mo) to smooth
| out income variability. If you are on your own, you will probably
| always have high variability.
|
| * Having an "anchor" contract before you transition would really
| help - e.g. 6-12mo with enough time committed to cover your
| basics. This shouldn't be more than max 40% time commitment, or
| else you won't get anything else done.
|
| * You are going to become a salesperson. Commit to being decent
| at it.
|
| * Understand what service you are selling and who you are
| targeting. You could have a high value, short engagement
| consulting business where you mostly talk to execs, you could
| have a higher volume (hours), lower cost, longer engagement
| business where you mostly provide bandwidth or experience
| variability to engineering managers. These are not the same
| business; trying to do both will probably fail.
|
| * pricing is a signal. It's also hard to change.
|
| * billing hourly is easier for you and them at first, but will
| put you in a box. billing by value will bring in a lot more $
| assuming you can a) sell it and b) deliver
|
| * what work you accept and don't accept is also a strong signal,
| but in the early days there is a tendency to take anything that
| comes along when you need revenue. Be careful not to pigeonhole
| yourself this way.
|
| * cashflow issues will surprise you. If you are billing large
| orgs (especially public sector) you may have no choice on payment
| terms (but you will get paid). Outside of that, decide some you
| can live with and communicate very clearly. Net-15 or Net-30 with
| a proper discount will help you on flow.
| gred wrote:
| I think the anchor contract is a great idea. Basically, try to
| make the type of time commitment that you've been avoiding due
| to your FTE status.
|
| If you're able to do that, it's both a good indicator that
| you'll be able to do it again in the future, and a good way to
| avoid too much of an income gap when you quit. Signing that
| contract is the trigger to quit your FTE job.
|
| However if you can't do it, it's a good idea to figure out why
| and address the issue before making the jump.
| mrcartmenez wrote:
| I'm an Angular/full stack dev consultant in the UK. I quit my job
| and took a contracting role. That was it.
| andrewmcwatters wrote:
| A contracting "role" is not being an "owner-operator" of a
| consultancy.
| jijji wrote:
| The way I did it was I saved up money every month and then I
| would go on the tax auctions and buy property at the courthouse
| for one third to one tenth of retail value around 15k for double
| wides and 30k for block houses, and then do house hacking put 5
| people in each house efficiences at 600/month per room and did
| that until i made more per week than i made at my job, then quit,
| then wrote my own software and I make 1000x what i make by myself
| through my own SaaS and service sites, mostly automated, and use
| the cash to put new property... now i have over 500 renters and
| it runs by itself and 95% pay on time... its just a good passive
| income investment and i make my money back in less than a year
| from each investment... i also have a crew of guys thats work on
| two houses simultaneously getting them ready and once the rooms
| are setup, i have a waiting list so the rooms get rented the day
| they sre ready...
| wessorh wrote:
| It was 1993, my first job in Silicon Valley. After about 6 months
| my boss said "you don't belong here." He hired me as a consultant
| an 1/2 time and the same salary. Danny helped me start out as a
| consultant building "webistes" for companies. I've been on my own
| ever since, helped many a friedn start their own companies too.
| Thanks Danny Baron that was a solid move.
|
| -rick
| sneak wrote:
| Cut your expenses! You shouldn't be dipping into savings.
|
| A B C: Always Be Closing. You need to be closing your next deal
| while you are still working the last one.
|
| Don't be afraid to hire an EA to do contracts and quoting and
| invoicing and whatnot. Your job is sales and the work itself.
| jokethrowaway wrote:
| Try to plan work ahead with paying clients so you have some
| guarantee you'll have some income.
|
| I personally moved to contracting, got a 6 month contract, which
| wasn't too dissimilar to being employee.
|
| That gave me time in between contracts to build products, which
| ramped up. Incidentally I went back to FTE with side projects for
| personal reasons (paternity leave in primis) and I'm now about to
| do the jump to product only. I'm not excluding doing the odd
| contract if money is low in the future.
|
| Savings wise we're a bit on the extreme side, we can either buy a
| house or live for 15 years without work.
|
| I would say 1-2 year of savings would be plenty.
| andersource wrote:
| I had a lot of PTO accumulated from years of FTE, mostly unused.
| Talked with my manager to get approval for starting a side
| business, then used the PTO to get 1-2 days a week to work on it
| (also with manager's approval of course). I did this for 4 months
| and by the time my PTO ran out I was ready to go for it and quit.
| The plan was, if after 2~3 months it doesn't start to get off the
| ground, rethink my plans and probably not quit.
| tomlagier wrote:
| Hmm, I'm doing this now & it's been a lot more of an informal
| process than the top comment. I'm still working with mostly
| startups who need extra bandwidth on their MVP.
|
| The reason I started is for the flexibility. I'd like to be able
| to schedule a month or two to travel each year and this seems out
| of the parameters of most FTE positions. I'd also like to enjoy
| the outdoors more than a typical 9-5 + commute will allow for.
|
| I actually quit my FTE job at the beginning of the year with the
| intent of traveling for most of 2020. COVID cut that short, and I
| decided to contract once we got back for maximum flexibility. I
| did have enough savings for at least 6 months to start, but only
| ended up needing to draw down about a month's worth before the
| contracting income was enough to live on.
|
| I started by tapping my network. I also reached out on hiring
| platforms and tech communities, and started self-promoting via
| blog and social posts (though I havn't kept this up at all,
| perhaps to my detriment).
|
| It didn't take long to secure some small contracts, in the $5 to
| $10k range for a month or two of work. Doing a good job on these
| opened me up to further work with those companies. I also kept my
| ear open on LinkedIn, though the vast majority of people on there
| and most hiring platforms are looking for FTE.
|
| Every company that I've worked for has wanted to engage me for
| longer, but I've found that startups are most willing to look to
| contractors for flexible and part time work.
|
| My most lucrative but least fulfilling contract was 6 months of a
| mostly-9-to-5, this just felt like being an employee with worse
| benefits.
|
| Currently, I am working hourly for a couple of small orgs doing
| some odds-and-ends feature work that's outside of their in-house
| developers expertise, and I have an 11-day-a-month contract with
| one of the companies I did project-based work with last year.
|
| This is enough to provide a stable SWE salary with a lot more
| flexibility. I won't be multiplying the value of my time unless I
| get into "product-esque" consulting (security, SEO, privacy,
| accessibility audits), or start working with larger companies.
|
| My workload meets my needs for now, but if I want to grow a
| business I'll need to refine my offering, target larger
| companies, and generally put a more professional face forward.
| I'm not sure this is what I'm interested - I've always been more
| of an engineer than a business person, so I'm leaning towards
| working on product with some other people in the free time that
| my flexible schedule affords.
|
| Some tidbits of advice:
|
| * Get an accountant early on. Money well spent, and will save you
| a brutal headache when you run into tax questions in the next
| year.
|
| * I havn't felt the need for a lawyer yet. I suspect if/when I
| start working with larger organizations, I'll need that next. I
| have not had much difficulty putting contracts together or
| getting paid, but I suspect my good luck will come to an end
| eventually :)
|
| * I did incorporate as an LLC. It hasn't been particularly useful
| yet, but it might in the future.
|
| * Knowing _why_ you are contacting is important. If you're
| working with people from the same company 9-5 for months at a
| time, having a daily standup with them - is that really much
| different from being a FTE? In some sense, yes, because you can
| change teams more quickly and easily than FTE, but you take on
| quite a bit of overhead to do it. You'll need to really work at
| building a schedule that accomplishes _your_ goals. Everyone
| wants more of your time!
| k__ wrote:
| Depends on how much money you need.
|
| I only did big projects (>4 months).
|
| This way I only needed 2 a year.
|
| I searched online and send like 10 applications a month. Which
| isn't that much.
|
| But since I only needed two companies to agree every year, the
| odds were in my favour.
| Wolfr_ wrote:
| As a dev? Just put yourself out there as a freelancer with a nice
| website. Take jobs, ask money, bill it.
| siralonso wrote:
| I've been consulting full-time since my early 20s - it's been an
| adventure!
|
| You could talk to your current employer about switching to a
| part-time contract - it seems like in the last couple of years,
| more companies (especially startups) are comfortable with this +
| remote. If you can get them at 20/wk, that will give you some
| good security while you work to fill the other 20 (sounds like
| you may already have a jump on that).
|
| Have a lot of meetings with friends and past coworkers, and let
| them know you're striking out on your own with a particular
| skillset. All of my best projects have come from connections, and
| my worst ones have been anonymous inbounds/etc. If you're in-
| demand, you should be able to line something up before reducing
| your FTE hours or quitting your job. It might take some time to
| find a good set of clients + rhythm, and you want to avoid
| "burning savings" during that period as much as possible.
|
| Do good work. It's good for your clients, good for referrals, and
| good for your soul. You're a craftsman, and your name is attached
| to your work in a new way as a consultant.
|
| I charge a reasonably high hourly rate for my work, and my
| clients are usually around 15-20 hours a week. I've found two
| clients to be the right number for me. For them, it's a way to
| get senior experience on the team for the yearly price of a more
| junior dev, and for me it's a way to make a good salary, while
| getting to work with startups and enjoying some freedom and
| flexibility to do the things I love (traveling and learning to
| fly!).
|
| I try to keep a bit of "slush time" (like 5 hrs/wk or so) to work
| on interesting one-off client projects that come along. They're
| fun and stimulating, and they keep me sharp at selling my skills
| to completely fresh clients. I normally work on the
| frontend/backend, so getting to work with things like Swift or
| ARKit is great. These projects are also really low-pressure,
| because my main stream of income comes from steady long-term
| engagements. This is my "blogging".
|
| I jumped in feet-first, but I was a broke college student (and
| self-taught developer) when I started so my burn rate was
| ridiculously low. It took me a long time to find a good pace and
| to build a good network, and I started a few companies along the
| way. I'd only recommend doing it this way if you're young and
| resilient - in retrospect, I could have been doing many of the
| things I needed to do (getting experience, finding clients,
| making friends) with a more stable salary. I don't know if I
| would have, though - so the pressure was helpful in some ways. I
| was also lucky to be in a stage of life where stability was less
| important than adventure.
|
| Hope some of that is useful, and best of luck striking out on
| your own!
| rodolphoarruda wrote:
| I did it the first time back in 2009 when I was laid-off from HP.
| I was in close contact with external teams in India doing
| programming work for the projects I was in. So when bad news
| came, I asked the engagement managers from those companies if I
| could partner with them in case I decided to run my own business
| selling outsourced dev work in India. One of the answers was:
| "Not really. We are too expensive for you... but, I can put you
| in contact with my cousin who runs a much smaller company with
| prices you can afford". So I went ahead that way and ran my
| business in partnership with this Indian company for 4 years. It
| was a remarkable experience for a first time entrepreneur.
| andrewmcwatters wrote:
| Most comments here are about right. What they do not discuss at
| length is that you'll need to be searching for clients in the
| middle of projects and possibly scheduling them in or adjusting
| your staff appropriately as needed. Smaller consultancies may
| need to search for clients and schedule them in months later, or
| adjust staff on-demand to account for onboarded clients.
|
| Yes, finding work is important, doing the work is important, and
| getting paid is important, but the latter two are not as
| important if you know what you're doing and you work with people
| who will pay you. Those parts are _not_ hard. Sales _is_ "hard,"
| in so much as it takes time.
|
| The risk factor involved in my previous statement is that they
| shop around and rescind the work agreement because their
| timetable has immediate needs. Not a lot of clients are patient.
|
| It's sort of a basic thing that goes without saying, but once you
| get into this line of work, you'll learn a lot about HR,
| compensation packages for your contractors/employees and
| corporate tools.
| mooreds wrote:
| A friend (who has consulted for a long time) once said that there
| are three parts to being a successful consultant:
| * finding the work * doing the work * getting paid
| for the work
|
| When you are an FTE, the only thing you have to focus on is doing
| the work. That's one of the reasons you get paid less as an FTE
| than as a consultant.
|
| I've transitioned twice from FTE roles to long periods of
| consulting.
|
| Things I'd consider if I was doing it now (some advice only
| applicable within the USA, sorry): * have
| savings. I think 12 months is too much, I'd probably aim for 6.
| If you have a house, open a HELOC now and draw it down. *
| more important than the number of months is your comfort with
| your runway and your planning on how to exit consulting if things
| don't go well. Don't wait until you have no money left to apply
| for jobs. * if you want to buy a home, talk to a mortgage
| lender while still employed and see what the options are for self
| employed folks. When I last checked (years ago) you needed to
| have two years of self employment income to qualify for a
| mortgage. * Depending on your skills, you may be able to
| find part time work pretty easily. For instance, if you are
| devops person and want to do training, there are opportunities
| out there. Training on cutting edge tech, if you like to teach,
| pairs quite nicely with consulting. * Reach out to past
| colleagues and ask if they have any needs for extra hands. These
| folks who know you will be a great source of work and you won't
| have to spend as much effort selling them--they know you are
| great. * cut your costs now. If you aren't watching your
| finances closely, take a look and plug any leaks. *
| discuss the risk/reward with your family, if you have one. You'll
| be taking on additional risk and stress. Don't have that be a
| surprise. * start a blog about your specialized business
| if you haven't already. This is a great way to 1) showcase your
| expertise in a scalable manner and 2) keep you on top of your
| game, since you'll be researching to write the posts.
|
| Best of luck!
| mooreds wrote:
| Oh yeah, one more USA specific thing. Factor in health
| insurance costs. A catastrophic or high deductible plan is
| probably a good option, but the right plan depends on your
| circumstances. Don't forget it though.
| EvanAnderson wrote:
| This can't be stated strongly enough: You _must_ have the
| stomach for dealing with a lot more "medical billing B.S."
| if you're going to purchase a high deductible health
| insurance plan.
|
| I was on an individual HDHP for nearly 20 years (pre and
| post-ACA) and it maddening trying to explain to medical
| professionals that I actually cared about the cost of
| treatments. (Never mind trying to get cost estimates before
| treatments-- that's nearly impossible.)
|
| I once found myself nearly begging an ER physician to order a
| specific lower-cost diagnostic test in lieu of the higher-
| cost test she wanted to order. She couldn't seem to believe
| that I had a low 5-figure deductible and that I cared about
| the cost of treatments. She was incredulous. That's happened
| multiple times.
|
| (If you have children and you talk to medical professionals
| about pricing be prepared to be treated like a bad parent who
| places economic value over their child's well-being.)
| binaryblitz wrote:
| This is a hard one for me. My wife and I want/need a good
| plan. One that doesn't require us to get referrals, and has
| good coverage for medication. I would happily pay for this
| plan, but I can't seem to find one on my own. Nothing is
| comparable to what I currently have through my employer.
| atweiden wrote:
| In the US, decent health insurance plans are all corporate.
| Particularly if you want something non-HMO with reasonable
| out-of-state coverage.
|
| A few states have laws on the books which compel health
| insurance companies there to sell corporate health
| insurance plans to sole proprietors and single member LLCs.
| Florida is one example.
|
| (Florida also tends to have some of the best health
| insurance options in general in the US, at least as of
| several years ago.)
|
| Sadly, just because the state law says health insurers must
| sell corporate plans to sole proprietors and single member
| LLCs doesn't mean those health insurers will happily sell
| you a corporate plan without a fight. For example, I tried
| to buy a corporate health insurance plan via a Florida sole
| proprietorship, per the state law. Every Florida insurer I
| contacted refused to sell me a corporate plan.
|
| I ended up calling the FL regulators who ensured me Florida
| law indeed does compel these companies to sell me the plan.
| They either just didn't want to sell me the plan, or their
| corporate division was entirely unfamiliar with working
| with sole proprietors. I left the US shortly thereafter.
|
| If I were in the US, I'd try for a corporate plan again,
| maybe even in Florida. Unless something has changed, the
| alternative is far worse. E.g. paying $600+ per month for a
| plan with essentially zero out-of-state coverage, a
| deductible so high it almost makes no sense to even have
| the insurance plan at all for a healthy young person, and a
| bunch of weasely out clauses that let them screw you over
| even if you pay them ludicrous sums of money. Plus if
| you're on an individual plan, the health insurers tend to
| systematically deprioritize you compared to their corporate
| customers who have far more bargaining power than you do. I
| would sooner go uninsured, or leave the US entirely.
| mawise wrote:
| If you're in the US, have you explored
| https://healthcare.gov ?
| fiftyacorn wrote:
| I'd add a 4th as there is getting the money to your company
| then getting it to you as tax efficiently as possible. This
| normally involves waiting for year end or pension
| mooreds wrote:
| I think that's a great thing to think about when you are
| established.
|
| A bit of overkill/premature optimization when you are
| starting, though.
| tomlagier wrote:
| > * if you want to buy a home, talk to a mortgage lender while
| still employed and see what the options are for self employed
| folks. When I last checked (years ago) you needed to have two
| years of self employment income to qualify for a mortgage.
|
| This is still true per the lenders I've talked to as of late
| last year.
| garrickvanburen wrote:
| I was on my own for 14 years.
|
| Yes, doing the work and selling the work and getting paid are 3
| different jobs.
|
| It is possible to build a sustainable business on top of 90 day
| engagements. I don't recommend it, but it is possible.
|
| You need to consider yourself a small business. Not a
| freelancer, not a consultant, but a small business.
|
| Get a good accountant to keep you um...accountable.
|
| Alan Weiss is my favorite author on how to run a high margin
| solo business.
| mooreds wrote:
| I never had the guts or expertise to do value based pricing,
| but that is certainly an intriguing path.
|
| The "value based pricing" book was great. Here's a nice "hot
| take": https://www.alanweiss.com/styles/pdf/The%20Case%20for%
| 20Valu...
| jmll wrote:
| Which works by Weiss would you recommend first? Thanks!
| EvanAnderson wrote:
| I was on my own for 15 years (ending in 2019). It was a great
| ride, and if factors outside the business itself hadn't put
| the brakes on it I'd still be doing it today.
|
| re: sustainable business on short engagements - I had a mix
| of long-term contracts and short-term gigs. The short term
| gigs were the most fun, but most stressful, so I always tried
| to bill them at the highest rate (and didn't mind if I didn't
| get the gig because I was bidding too high). I valued the
| long-term gigs tremendously for the "stability" they
| provided.
|
| Having a diversity of Customers was the key to my piece-of-
| mind. As long as I didn't do something so bad that my name
| would appear in the newspaper I knew I could screw-up with
| one or more Customers and still have a livelihood, even if I
| did have to tighten the belt for awhile.
|
| I can't agree w/ the statement re: considering yourself a
| small business enough.
|
| Definitely have an accountant. Learn bookkeeping if you want
| to minimize accountant expense. Take a 100-level college
| accounting class and you'll know enough for a solo venture.
| fergie wrote:
| The 'Nike' approach: I just did it.
|
| I wasn't independently wealthy, but I am pretty good with money,
| and had a fair bit of capital tied up in my house, so I had
| enough runway to last a few years without earning a penny.
|
| Although I am first and foremost a software engineer, I had also
| worked a bit with sales in a software consultancy, and had also
| had a few years as a CTO where I had to hire consultants (its not
| super common to have experience in all three of these areas).
| Additionally I had a few semi-successful projects on GitHub (~2k
| stars, 1m+ downloads a year), so I had a modicum of tech-
| credibility.
|
| So as it turned out getting work was super easy. I knew the sales
| process pretty well from a vendor and customer perspective, and I
| could also do the work myself. I had expected it to be harder
| than it was.
|
| What was a bit unexpected was getting somewhat "stuck". 2-3 years
| in I began to realize that being a "super consultant" is a bit of
| a poisoned chalice. If you are always billed out 100%, then it
| doesnt really make sense to work with other people because you
| either have to partner up, in which case you can only make the
| same or less money; or you have to run a stable of less qualified
| consultants, which basically means a lot less money until you
| have got 10-20 or so, and then going hard after government
| contracts or subcontracting to more established consultancies.
| Consultancy is a bit of a grind, and thats a shame, because the
| exciting thing about software is that you can make stuff that can
| become really popular and really lucrative, really quickly. Tech
| consultancy is quite similar to corporate law- you make _quite_ a
| lot of money, but you wont get properly rich, and you will really
| have to work for it.
|
| If I was to do it again, I would partner up with some like minded
| people, get financing for a couple of years and build a product
| company. It might do well, it might not, but it would be more
| fun.
|
| (Also, practical advice for being a consultant: ask for much more
| that you think is reasonable- they quite often say yes to
| whatever terms you suggest)
| psim1 wrote:
| Nearly every comment here has provided valuable words to
| consider. Thank you all.
| alfl wrote:
| In the end I just jumped. For me, thinking about how to jump
| optimally was procrastination. "Jumping optimally" was a fine-
| grained optimization whereas the act of jumping, itself, was a
| huge huge coarse-grained optimization.
|
| Do what's right for you, but I jumped and never looked back.
| xyzzy21 wrote:
| You have to start somewhere but it will involve pain. No matter
| what you do.
|
| You also have to be willing to let go of everything you think you
| "can't live without". Likely that means being willing to
| dump/avoid women and/or no longer being an over-extended
| financially by expenses like having mortgage and run-up credit
| cards.
|
| You will fail - that's 100% NECESSARY to learn enough to succeed
| to not fail. So you have to deal with losing these things. Women
| don't care about your struggles; they only care about standing at
| the finish lines and picking the winners.
|
| I was forced into it by Silicon Valley age-discrimination - I had
| to find a way to pay my bills, but every company was telling me I
| wasn't a good "cultural fit". I was also seeing this when I was
| passed over for promotion by yes-men who have demonstrably worse
| track records and lower IQ.
|
| My "lack of cultural fit" was both reaching an age where I no
| longer gave a shit about "playing the game" and realizing I was
| smarter than my bosses.
|
| I ended up losing my marriage as a result of jumping off - she
| didn't want someone struggling to make something better - she
| only wanted a winner. I had been one but it collapsed on me and
| she has zero fucks for that.
|
| Eventually I lost another marriage but after that, I had only my
| own spending to worry about and my own lifestyle needs to meet
| which were far cheaper than what most women will put up with. You
| can only succeed as being self-employed or sole proprietor or an
| entrepreneur if you are willing to lose everything and still claw
| back to try again.
|
| I sold one of my companies a few years back and that pretty much
| set me up for several more companies I had in mind. They involve
| things I love and that are in demand so they will make money.
| That's how you win. It's ONLY about you, and never we.
| cupcake-unicorn wrote:
| Wow, this is really sexist/misogynistic. Don't project your
| issues onto women in general due to the outcome of your
| marriage. Also, I'm going to go out on a limb and guess that in
| this case and a lot of cases relationship issues has to do more
| with the partner's unavailability, physical and emotional and
| bringing stress over finances into the relationship, more than
| the actual financial limitations themselves.
|
| If people in your life are constantly dissatisfied and jumping
| ship due to your self employment work you may be suffering from
| workaholism. It's true that during certain periods people just
| don't have time for a relationship and that's fair to avoid
| that but if you're in an established relationship you need to
| examine your priorities and have a really serious talk.
| medicineman wrote:
| Wow, way to ignore the age discrimination so you can virtue
| signal with a clean conscience.
| chexx wrote:
| Do you have an email/discord? Would like to connect with you on
| a few things.
| jan_Inkepa wrote:
| Company I was working for went bust (probably too much of a wimp
| to quit of my own accord), came into some money from family, and
| someone else just gave me a lump sum of money to get started.
| Quite the long take-off strip. Once I got into the air I was able
| to stay there, have been going for over a decade since then. Alas
| not much actionable advice for others. Welp. Good luck!
| sidpuri wrote:
| i found a job in a different country.
|
| with deel.com and remote.com it's pretty easy to do self
| employment
| dlnovell wrote:
| I held my nose and jumped in feet first. Actually, I spent 3
| months backpacking around Europe first, then went home and just
| didn't get a new job. It took 6 months to land a client, then 2
| to land another, then 1 to land a third and then I was off to the
| races.
|
| I would not do that approach again.
|
| You've already got some consulting revenue, that's a great start.
| Do you have a solid 6 months of living expenses saved up? If not,
| do that. Do you have a portfolio of different projects you've
| done and a good way to communicate them? If not, do that.
|
| In the small amount of free time you currently have, I'd look
| very selectively for a large contract. Once you land it, put in
| your two weeks and make the jump.
|
| Once you're on your own, never stop prospecting. Even when you
| have too much to do to take on a new client, you have to keep the
| pipeline full - it's the only way to make it work because you'll
| invariably have some contracts end abruptly. I was real bad at
| that part of it, and that's why I stopped after ~4 years.
| rootsudo wrote:
| Same story as me, backpacked Asia for a year, went back home,
| landed a client, then another and another.
|
| Time management became my biggest issue, fired one client and
| now balance two.
|
| And been stuck in USA since covid, sigh.
| dominotw wrote:
| > It took 6 months to land a client
|
| How does one go about finding a client.
| tomlagier wrote:
| Advertise.
|
| * Tap your network. Post on social, bug old coworkers, ask
| friends and family. Know what skills you are selling and at
| what price.
|
| * Build your brand. Create a website, LinkedIn, and social
| media accounts. Start blogging or posting regularly
| somewhere. Even if you don't get clients this way, it will
| increase your credibility.
|
| * Reach out. Look through job postings and hiring sites. Cold
| email companies that you're interested in working with.
| Refine your elevator pitch. Join networking communities.
| achenatx wrote:
| I think the easiest way is this:
|
| 1) Start as a contractor.
|
| 2) Look to join teams that are set to grow.
|
| 3) Get paid hourly to a company entity instead of to yourself.
|
| 4) Make sure your rate has a 40-50% margin above a salary
|
| 5) Pay attention to staffing needs at your client.
|
| 6) When you see a possible need, be proactive about getting
| someone in that you have vetted or trust under your company
| umbrella.
|
| 7) Rinse and repeat.
|
| At about 4-8 people you will be making less money as you wont
| have time to work, you will be managing people but they might not
| be making you as much as you made when you were billing as an
| individual.
|
| You will just have to tough it out. you will likely make mistakes
| in hiring, lose customers and reset down to 1-3 where you are
| doing the work again.
|
| Eventually you will have two simultaneous customers. Sometimes
| you will drop back to one, but eventually you will get 3 etc.
|
| Most of your growth will come from existing customers, for us it
| is still 80% from existing customers, 20% from new customers. We
| are at about 60 people
|
| The very first thing I outsourced was accounting (in the first
| week). The very next was an admin who could also manage a
| recruiting process. I happened to get a big first deal from a
| former employer and jumped to 10 people in the first year. But
| dropped back down during the 2001 recession and had to start
| over.
|
| I hate networking and have never (rarely) found clients except
| the first. Therefore I dont think an ability to network is
| important. Im an introvert and try to minimize my contact with
| other people. I tend to hide in my office...
|
| As soon as I could I started with a salesperson who could start
| to prospect.
| miles wrote:
| Start by reading Steve Friedl's excellent "So you want to be a
| consultant...?" http://unixwiz.net/techtips/be-consultant.html .
| jimmyvalmer wrote:
| 11,438 words of "business" platitudes. Then again a lot of
| consulting is couching everything in mba-speak.
| beckingz wrote:
| This was really good! Lots of useful advice.
| whytaka wrote:
| In my own humble way, I've found that a minimally sustainable way
| is to find small companies that are making good money but their
| technical needs are not vast but want flexible and reliable
| custom implementation. If you can find a few of these companies
| and can furnish them with all their technical wants you are
| likely to be able negotiate small retainers quickly in order to
| be available on demand. These companies have ideas they work on
| and want to try out and you will be there to execute it.
|
| You become a natural and trusted partner in this relationship,
| provided you do give them the degree of commitment the retainer
| demands. With the retainers, you are given bare financial
| security. With security, you are free to try ideas of your own
| and that could be the best part.
| kingsuper20 wrote:
| Most people I know who are successful contractors got their start
| by being ex-coworkers with middle/senior management at the
| company who hires them for their first gig. It's a kind of mafia.
|
| Good luck. There's a lot of surprises. More complex taxes, issues
| with liability, marketing (not an engineer's strong suit
| typically), extracting cash from clients, the cost of health
| insurance/SS, the need to appear to be self-employed from a tax
| standpoint. Small companies don't know why it's so expensive,
| large ones push the payment out in time, entrepreneurs will trade
| you .1% of the company for a ton of work because their idea is so
| darn good.
|
| OTOH, self-employed IRAs are pretty sweet.
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