15
Self-Employment and Contract Work
By now, you’ve learned how to identify your skills and talents, how to create and follow-through on a job search plan, how to craft the perfect resume that gets noticed, and how to get through the interview that will get you the job. Perhaps you’ve been in your career for quite a while. What’s next? You may be questioning if you should continue on your current career path. Perhaps retirement is on the horizon, or you may be undecided about your next step. This chapter offers some alternatives to consider as you continue to plan your career and career development. Self-employment and alternate work arrangements enable you to use and monetize your identified skills and talents.
The Current World of Work
The world of work has changed drastically in the last decade, and there are lingering elements that will continue to affect the way people seek and perform work. Today, self-employment is also called on-demand work, gig, contract, or freelance work. What is leading to these alternate ways of doing work and earning an income? There are four major influences:.
First, during the recent Great Recession, millions of people lost jobs and many remained unemployed as the economy inched toward recovery. Workers who survived a layoff now had to learn to do more with less: less time, fewer resources, and fewer people. While these workers may have been thankful to have a job, they soon started to feel the effects of this overload. The labor market shifted from employee driven to employer driven. With so many job candidates, employers now could be selective in who they kept and who they hired. Those who were ready to retire saw their retirement accounts shrink, leaving many Baby Boomers in the workforce or looking for work. With increased pressure and few benefits, workplace disengagement levels reached 70 percent, and have only recently dropped, merely to 67.3 percent (Gallup 2016).
Work roles are also being defined by the second influence: the continued presence of Baby Boomers in the workforce, amid the arrival of Millennials and Generation Z to the job market, which is the third influence. Some research suggests that younger workers are attracted less to a corporate ladder and more to a “lattice,” which is less hierarchical and can offer more alignment between life and work (Benko 2010).
The fourth influence on the definition of work is the revolutionary effects of technology on systems and processes, both public and private. Mobile devices allow people to connect and work how they choose as never before. Globalization has become the way of the workforce and technology is the bridge between them. On the one hand, it is now easier than ever to have people from all over the world working for the same company; at the same time, technological advances have led to economic dislocations in some industries. This has all led to a new world of opportunities, possibilities, and challenges for those seeking work.
Alternate Work Arrangements
Alternate work arrangements are often thought of as workplace based; these include flextime, job sharing, and telecommuting (Robbins and Judge 2016). But alternate work arrangements can also be worker-focused, such as self-employment (or entrepreneurship), contract or part-time work, and leveraging skills and experiences with multiple streams of income.
These are all viable options and have pros and cons for consideration. Be open to each option before you make any type of decision. Take notes in your job journal, which will allow you to capture any related ideas.
Self-Employment
You are working for yourself. Starting your own business can involve employing others or employing only yourself (sometimes known as a “solopreneur”). There are two main tracks your business can take:
• product based
• service based.
A product-based business involves having an actual product to sell with a physical location, such as a restaurant or store for goods and wares, where people pay for the products you sell. Money is involved in starting one of these types of ventures, as well as heavy marketing and hiring employees. We don’t focus on this area in this book, but know it is a viable option.
The easiest and fastest way to leave your regular job is by creating a service-based business, which provides a service to consumers (such as a dog walker) or businesses (for example, consulting or marketing services). A service-based business can be based in your home, have a separate office location, or share space with other small businesses.
Service-based businesses involve trading a service for a fee; a talent, knowledge, or past experience that can be translated into a service people need or want and are willing to pay money to have. Some of the most common services provided are consulting, coaching, training, speaking, and writing for a living.
Consulting
One of the main ways people become self-employed is by leaving a corporate job and becoming a consultant; someone with subject matter expertise who comes into a business to act as the third eye to detect problems or issues. The consultant helps the company overcome issues to increase performance and profitability. There have probably been many times when you’ve looked at a work situation and thought, “I’d change or improve things if I were in charge.” This is one reason why individuals leave the workforce and go out on their own.
Consultants work independently, helping organizations of all sizes with whatever problems are identified. To succeed as an independent consultant, you need to have expertise that is in demand and enough experience to give you the credibility to advise potential clients.
Here are some examples:
• John was a project manager but now consults with industrial firms to ensure their projects are completed on time.
• Lisa was a human resources director who now helps other HR departments with their policies, procedures, and systems to ensure compliance and provide oversight for any issues that arise.
• Luke worked in quality improvement (QI) and now helps small companies develop their QI programs.
• Jack, whose focus is on change management and organization development activities, advises nonprofits to manage change more effectively.
• Jennifer, who started her own consulting firm, now focuses on helping new consultants and business owners to build their firms.
When working in this capacity, you have the option to make recommendations and then leave the work up to the organization to complete, or you can be directly involved as the work is being done. This will depend on the needs and requests of the organization and how involved you want to be.
If you decide to go this route, there are a number of professional associations that cater to consultants who may have useful resources for you:
• Institute of Management Consultants USA (www.imcusa.org)
• Society of Professional Consultants (www.spconsultants.org)
• Professional Consultants Association (www.professionalconsultantsassociation.org).
Coaching
Another route to self-employment is to set up a coaching practice to work one-on–one with individuals. There are many niche areas to consider when forming this type of business, such as:
• business coaching; helping individuals start and build a business, or advising small businesses
• executive coaching; working with individual performers, teams, and leadership development
• life coaching
• health and wellness coaching; enhancing the physical and emotional wellness of employees through stress reduction, healthy eating, and personal development.
To gain credibility in the marketplace and ensure you have the requisite skills to become a successful coach, you may want to consider earning a coaching credential before striking out on your own. There are many types of coaching credentials, but an excellent place to start is the International Coach Federation (ICF). The ICF sets standards in the coaching field and approves the coaching programs provided by a wide range of organizations.
Training
Training is another self-employment option, which can include going into an organization and providing seminars and workshops on a variety of topics, including communication, conflict management and time management. You can also hold your own seminars and workshops in which you invite others to come to a location and then provide the training. Typically, those who provide training as a service have a niche in which they specialize, which gives them credibility when training others on the topic.
Training can also be done online, such as through Skype, or teleseminars and webinars. This allows more attendees to participate and gives you a broader, more global reach. Developing training programs and packages are two ways to enhance your reach and income.
Speaking
Speaking may include giving keynotes or presentations at corporations, universities, conferences, and conventions. This can be a very lucrative career path because you can command high fees for your services if you have a good reputation and respect in your field. If you are a well-versed speaker, you could coach others to become more effective speakers as a way to grow your business. Some resources to learn more include Speak for a Living by Anne Bruce (ASTD Press, 2008), Heroic Public Speaking (www.heroicpublicspeaking.com), Red Elephant (www.redelephantinc.com), and the National Speakers Association.
Writing
Freelance writers contribute to online and print publications, professional associations, and online directories, as well as books, e-books, whitepapers, and their own blogs. Another way to use your writing skills is writing for others, such as ghost writing or creating training programs that you are paid for. Editing the work of others, such as books or journal articles, also falls under this category. For more information, visit The Writer’s Circle (www.writerscircle.com), Freelance Writing (www.freelancewriting.com), or UVOcorp (www.uvocorp.com).
Contract Work
Another way to move from a full-time job to a more flexible option is to do contract work. This could entail working directly for a company or several companies, or by working as an independent contractor.
When you do contract work for a company you are not considered a full-time employee, although you may work full-time hours, and you don’t get the same benefits. This type of arrangement should be spelled out prior to accepting a position. Normally, the hourly pay is much higher than a regular employee’s, because you will be paying for your own benefits. When considering contract work, be sure that the proposed wage is high enough to cover your expenses, including health insurance and self-employment taxes. The rule of thumb is that to break even you should be paid twice what you are paid as a full-time W-2 employee. Review the monthly expenses worksheet in Appendix I to help determine a rate that will cover all your expenses.
There are also companies you can work through; ones that pay you to essentially become a subcontractor. The company obtains and negotiates the contract, and then hires workers to complete the contracted work. Employment length is dependent upon the length of the contract, which can vary from a month to a year (or more). But, if you do good work and get good reviews, you can make this a full-time job. If you decide to work through an agency, one good source of local companies is the American Staffing Association’s member directory.
Companies that do federal contracting often offer great opportunities to become a subcontractor. The Small Business Administration, the Federal Business Opportunities, and Supplier Connection (www.supplier-connection.net) are three good resources. Another way to pursue contract work is to do so on your own. You can market yourself as an independent contractor, meaning that you are responsible for your own taxes and reporting. The difference between marketing yourself as an independent contractor rather than a consultant is that independent contractors typically perform a function that is needed on an ongoing basis, as opposed to consultant work of solving a specific problem or advising clients on how to improve their business. Finding contract opportunities involves less marketing than consulting, which is typically a shorter-term proposition. Building a portfolio of your work, along with solid testimonials, will go a long way to staying “employed.” Some websites that advertise contract opportunities include FlexJobs (www.flexjobs.com), Freelance.com, Guru (www.guru.com), Upwork (www.upwork.com), Sologig.com, Mindbench (www.mindbench.com), and JobCrank.com.
A final way to pursue contract work is by becoming an affiliate or partner with a company that sells products or programs, such as software programs, assessments, or training packages. With this model, you market and sell these programs to organizations and receive compensation, typically in commissions. Depending on the company, you may also provide the initial training for implementation, and then return to check up and be the go-to person when problems arise. Most companies offer affiliate programs; look at current programs or applications you are using (such as Microsoft Office, Kapersky, AWeber, Amazon, or eBay) or look at people you follow or have taken classes from (for example, Tony Robbins or Everything DiSC). These companies want to spread the word about their services and are happy to pay others to do so.
Several Part-Time Jobs
If you don’t want to go out on your own to full self-employment, you can also choose to work at several part-time jobs, which can replace or exceed your full-time salary. The difference between this type of arrangement and independent contracting is that you receive a W-2. Depending on the company, you may also receive benefits on a prorated basis. Working for two or more companies, which can be complementary or in different industries or topics, can give your career a nice skill variety while you continue to gain experience and contribute to the success of several organizations. Some resources to peruse part-time positions include FlexJobs (www.flexjobs.com), Indeed (www.indeed.com), Snagajob (www.snagajob.com), and Craigslist.
The Portfolio Career
You can also use your skills and talents in alternate ways to create multiple streams of income. This is sometimes called a portfolio career. Some examples of this option include:
• working in an HR role while consulting on the side
• working a full- or part-time job while teaching in the evening
• working a full- or part-time job while contracting or freelancing on the side
• using your writing skills to create programs for a speaker, coach, or consultant
• using your curriculum design experience to edit and provide feedback for a scholastic or book publisher.
Franchising
A fifth path to independent employment is to buy and operate a franchise business. As a franchisee, you purchase the rights to open and run a local location of a larger organization. Some examples of well-known franchise businesses include McDonald’s, Starbucks, Allstate Insurance, and CrossFit. Lesser-known business franchises include Action Coach, the Growth Coach, Transworld Business Advisors, or Renaissance Executive Forums. Buying into a franchise has some advantages in that you are getting:
• an established business with systems and processes in place
• a known brand with name recognition
• extensive training and support from the parent company.
However, there are also some disadvantages to the franchise option, including:
• high investment to start: in addition to the rights, there may also be royalty and other fees (some cost as low as several thousand dollars to buy in, while others can cost up to $500,000)
• ongoing costs to maintain the business
• strict compliance to the parent organization’s policies and procedures, which can lead to a termination of your contract if not followed
• possible lack of communication and support.
You could also start your own franchise. For instance, if you have a training program and established system around it, you could then recruit others to buy into and sell your system to others.
If you are thinking about whether franchising is the right option for you, these resources are great for more information: The Franchise Handbook (Atlantic Publishing, 2006), The Franchise MBA (Neonakis and Rambhia, 2013), Franchise Your Business (Mark Siebert, 2016), and entrepreneur.com/franchise. There are also companies that advise people on how to select a franchise, such as www.frannet.com and www.fransource.com.
Motivation, Temperament, and Timing
Before you can decide if you are ready to become self-employed, it is important to assess your motivation. Two questions to ask:
• Am I running away from a bad situation that I don’t know how to change?
• Am I running toward a compelling idea?
Many factors can lead you to consider self-employment—stress, boredom, family obligations, and personal needs can all factor in to feelings of dissatisfaction and the need to do something different. However, the decision to walk away from a job and start your own business should not be based on job unhappiness or because you are running away from a bad situation.
If you answered “yes” to question 1, ask yourself a follow-up question: “Have I done everything I can to make the situation better?” Review chapter 12 for guidance on improving your current situation. Starting your own venture is stressful and will occasionally take priority over your personal needs, so ensuring that job dissatisfaction is not the main reason you are pursuing self-employment will help you make a good, informed decision.
If you answered “yes” to question 2, ask yourself a follow-up question: “Have I done the research to determine if this idea can succeed?” Creating a credible plan, even a simple one, will help you to think through the various steps you will need to take to make your business a success.
Temperament
Being on your own is not for the faint of heart. There will be work and sacrifice involved, so you need to be sure you have what it takes and are willing to do what you need to do. Successful entrepreneurs possess five essential traits: passion, resilience, a strong sense of self, flexibility, and vision (Rampton 2014). Other helpful attributes include risk-taking, creativity, personal sacrifice, the ability to market and sell, and independence (Greenhaus, Callanan, and Godshalk 2010). If you think you possess these attributes, you may have the temperament to go out on your own.
Moving to self-employment may be harder for some generations than others. Millennials—who are just leaving college or not finding fulfillment in the workplace—seem to be starting their own businesses at faster rates (Miller 2016). In fact, a study by Bentley University found that 67 percent plan to start their own businesses, leading the generation to be nicknamed “Millennipreneurs” (Petrilla 2016). As fewer older workers view retirement as a time for rest, many Baby Boomers and Gen Xers who have left the workforce are starting their “second or encore careers” (AARP 2016). But they may have difficulty due to the impact of the recent economic downturn, which can affect all groups. This does not preclude anyone from starting an alternate work arrangement; it’s just important to assess and do the proper research to determine whether an entrepreneurial venture is for you.
Timing
How do you know when it’s time to leave your job and start your own venture? Making a quick jump is not advisable, so it’s important to do your research and plan before making such a move. However, you may find yourself in a situation that will “force” such a decision; for example, if your company is downsizing. Sometimes a life event acts as a catalyst, such as the death of a loved one, a divorce, or retirement. Whatever your reason for starting your own business, taking the time to be prepared for the day you walk away and begin anew will pay dividends down the road.
Planning for Making the Leap
If, after doing a self-assessment and pre-planning, you decide to move forward and begin your own venture, the following sections show how you can safely make the leap.
Create a Business Plan
The best way to determine if your business has a chance to succeed is to develop a business plan or road map. If your business is going to be self-funded, your plan doesn’t need to be fancy, but creating one will still force you to answer key questions about how to proceed. If you’re thinking of starting a business, you most likely already have an idea or niche area on which your business will focus. Your plan will help you spell it out by including a vision, mission, target market, what you are offering, your marketing plan, your financial plan, and other considerations. Let’s look more closely at each item.
Vision and Mission
The vision and mission answer the big “why”—what is leading you to go out on your own, and why do you want to help people? The vision is the idea you have and how you will help people. The mission defines the direction you want your business to go.
Your Niche and Target Market
In this section, you identify the focus of your business, as well as further clarify whom you want to help. You may have a lot of great ideas and the experience to back it up, but you can’t be all things to all people. Focusing on a specific area and identifying the people who need and want your services will help you get started and grow in a bigger and faster way. Your niche area is the specific topic (leadership development, team building, or change management) or industry (healthcare, information technology, or human resources) in which you will offer your product or service.
Your target market is the group of people who need and will buy your products or services. Who would be an ideal client? It could be someone you worked with in the past that led to great results or whom you resonated with. Identifying one area and the ideal client will help you find and attract them faster and grow your business and income quickly.
Your Offering
Identify exactly what you are offering, or selling, to the market you’ve identified. As discussed, there are many ways to put your knowledge and experience into an offering:
Consultants act as the subject matter experts and come into an organization to be the outside eyes. Consultants either solve a problem or enhance the skills and performance of a company’s employees. As a consultant it’s important to identify a niche in which you can become a recognized expert.
Coaches help all levels of workers with performance and productivity (or whatever quality your niche is focused on). You can work individually or in groups at all levels, such as lower-level workers, executives, or teams. You can deliver hourly sessions or offer a package for a set amount, such as 12 sessions for a set dollar amount.
You can offer training programs—either delivering a program you designed (or are an affiliate of) or creating one that an individual or a company buys. It is easier than ever with technology to put one together, and programs can be conveyed through video, audio, manuals, or a combination. You can also develop a train-the-trainer program to expand your reach and income.
There are many products that you could develop to help others and get your message across. Some examples include:
• developing a game around a particular topic
• filming videos and packaging them
• writing a book or e-book
• recording a training program to create a CD or an iTunes download.
Writing is one of the best ways to get started and get your message out to the masses. The Ezine Directory, Hub Pages, Info Barrel, Freelance Writers, and The Write Life are some great resources. You could incorporate writing using:
• blogging (for yourself or others)
• articles or newsletters (for publications, professional associations, or magazines)
• whitepapers
• editing or proofreading
• developing programs that you sell to others.
Masterminds, groups, and retreats allow a group of people to develop greater inclusion and ideas to grow their business. Based on Napoleon Hill’s Think and Grow Rich (1937), masterminds bring a group of people together to share best business practices, problem solve, and get feedback on ideas. Groups bring together like-minded people to share their experiences around a specific topic and get some type of education. Retreats offer people the opportunity to get together at an off-site location to focus on a topic or training idea; this is ideal for busy executives to unwind and decompress.
One of the best ways to grow a business and gain a broader, more global reach is by holding a webinar, teleseminar, or workshop around your topic. A webinar is conducted on the Internet, and you usually provide the training while the audience looks at a PowerPoint slide. In a teleseminar you provide the same training, but you are on the phone with a group of people, so the interaction is live and people can ask questions. You can record the webinar or teleseminar and offer it again, post it on your website or as a podcast, or package the presentation with a product. Resources include www.livemeeting.com, www.gotomeeting.com, www.zoom.com, and www.freeconferencecall.com. Workshops are live, in-person meetings during which you offer a specific program to a group of people; you can be the featured speaker or bring in other speakers to offer more variety.
Marketing
In the marketing section, you identify all the ways you plan to promote the programs and services you will offer. Where do your potential clients “hang out,” both physically and online? Are they members of a local association or community group? Think about all the ways in which you could reach potential clients, and don’t forget that the power of technology gives you the ability to reach global markets. For example, on-ground marketing could include business cards, networking events at professional associations, cold calls, flyers and brochures, follow-up calls, meetings, workshops, speaking engagements, and interviews in print, television, or radio. Online marketing could include a website, logo, blog posts, newsletters, search engine optimization (SEO), email marketing, e-books, videos, webinars, a membership site, educational series, or online learning programs.
The National Federation of Independent Business has some excellent resources for small business marketing.
Budget and Finances
Include all aspects of the money you will need to spend on the business, as well as how you will make money, such as through fees for your products and services.
One of the first things you need to determine is the type of business you’re setting up:
• Individual or solo-practice: This type of structure blends your personal and professional assets, so you are taxed on all income at the personal income tax rates after your business expenses are deducted. This is the simplest structure to use. However, if you are sued or need to declare bankruptcy, your personal assets will be at risk.
• Limited Liability Company (LLC): This type of structure protects your personal assets from the business. In most states, you can file a fairly simple form to create an LLC. Your income is still reported through your personal tax return and taxed at personal income tax rates, but you also file a separate informational return.
• Corporation: This type of structure is more involved and requires paperwork and a quarterly tax report. There are two main types of corporations:
– S-corporations are “pass-through” entities, in that the profits and losses of the business are passed through to the owner’s personal tax return as with an LLC. S-corporations provide limited liability but can sell stock.
– C-corporations are the most complex to create, but the income earned is taxed at corporate rates. There is also the possibility of double taxation if corporate income is distributed to business owners as dividends or salary.
It is important to review your model with either a business attorney or an accountant to ensure compliance with tax laws and reporting; good record keeping is essential. Most states have a department that provides information on how to start a business. You can always get free help with your local Small Business Administration or SCORE, and Edward Alexander’s book 10 Common and Costly Business Killing Legal Mistakes and How to Avoid Them is another great resource.
You should identify how you are funding your business, which can include personal funding, bank loans, grants, credit cards, or a loan from family. You may also be able to get funding from investors, such as an angel investor (see Angel Capital Association for a list), or from a crowdfunding site, such as Kickstarter or Indiegogo.
Identify any future needs or projections as the business grows. You will want to determine how you will set aside money to live on while you are growing your business, or for any unforeseen circumstances, such as taxes or if equipment breaks down. This is an individual determination for what is “acceptable”; but you do need to have resources and a back-up plan in case any adverse situations arise.
Other Financial Considerations
Last, you need to consider how you will set up your business and what start-up needs you’ll have to pay for. Some examples include:
• office space: space in your home or a physical location elsewhere
• office equipment: phone, Internet, computer, printer, fax machine, desk, filing cabinet, whiteboard, decorations
• office supplies: pens, copy paper, stationery, printer ink, file folders, expense log, mileage book, brochures, business cards
• forms: office policies, checklists, and assessments
• personal services: bookkeeper, CPA, Internet help (website design or SEO), virtual assistant, business coach
• personal and professional development: health insurance, attending conferences, workshops, and business meetings.
You need to identify how you will price your products or services to ensure your business is profitable. If you are offering consulting services, remember that you will need to build in time to sell and administer your business. A rule of thumb for consultants is that you should charge at least three times the hourly rate you would earn as an employee. Identify if you will offer one-on-one or individual services, group rates, different price points, a package of your services, or a contracted rate. Some helpful resources include The Irresistible Offer (Joyner 2005), What Should I Charge (Price 2015), Pricing Consulting Services (Shays 2008), and The $100,000 Entrepreneur (Enelow 2007).
Depending on your state, you will need to get a business license (through your county government) and register the name of your company (check with your state’s department of labor or your local small business development center for rules and regulations, as well as assistance). Both are minimal in cost. You also may want to have business cards or a flyer advertising your services, but they are not necessary to start.
Then, set a date and take the leap!
Moving Past Fear and Indecision to Freedom
Now that you’re set up with your business model, have written your business plan, and identified your ideal client and market, you’re ready to become a business owner on the target date. However, at this point you may be feeling hesitant or questioning your decision. This is perfectly natural, but you should address it before moving forward.
What you’re experiencing is fear—the worry about a perceived outcome. Fear can present itself in many ways: fear of failure, fear of success, or fear of rejection or not being good enough. You may compare yourself with others already out there and worry you won’t be as good or that no one will buy your services, or you might worry that you won’t have the money to sustain your business. Again, these are all natural feelings, but they can get out of control if they’re not dealt with and resolved.
In moving past any fear it is important to recognize the source. The basic fear is the fear of not being good enough, which offshoots to failure, rejection, and the like. Fear creates anxiety, which is worry about a future outcome that can’t be known or controlled. When you are in business for yourself, fear can creep up and delay you from fulfilling your dream and why you went into business in the first place.
To overcome any fear, you must first acknowledge and then challenge these thoughts. “Do I know this to be absolutely true?” is a great question that will help you dispel any fears. Having confidence in yourself and what you can offer others is the key to putting yourself out there (Katie 2002).
Keep your focus on “why” and not “how.” It might be helpful at this point to seek out the services of a consultant or coach. But remember, feeling fear is not bad because it can spur you on to greatness. “Feel the fear but do it anyway,” psychologist Susan Jeffers (2006) once wrote. “What matters is that you begin now to develop your trust in yourself, until you reach the point where you will be able to say: Whatever happens to me, given any situation, I can handle it!”
Summary
Self-employment and contract work opportunities are widely available in today’s digitally driven economy. It is important for those interested in independent work to understand the steps to setting up a business, of whatever size, and their rights and legal protections in the marketplace. Self-employment isn’t for everyone; review the common personality traits of the self-employed and what is required to be personally successful. Understand your motivations so that you can identify any roadblocks and how to work to resolve them. Take time to be as fully informed as you can, and make sure you do the proper planning and have a determined mindset—these will all help you make the leap and be successful in your own business or in leveraging your knowledge and skills in alternate ways.