Today is my first day of full-time self-employment. Here are some of the questions people have been asking. Note that my answers are my answers as of today and subject to change.
Do you have health insurance?
Are you staying in Houston?
Will you be working from home?
I’ll be traveling more but commuting less. I’ll either walk to my study or fly out of town. No more spending 2-3 hours on freeways driving to work and back.
Will you come work for us as a salaried employee?
No thank you. Maybe we could discuss a retainer arrangement instead.
Will you be hiring other consultants?
I will be partnering with other consultants — trading favors, sharing leads, subcontracting, etc. — but I do not want to have employees at this time.
What kind of work will you be doing?
Anything I can do well that pays well.
Will you be doing mostly medical statistics?
I’m doing some medical statistics, but most of my consulting lately has been in other sectors: software, manufacturing, legal, etc. Applied math cuts across industry sectors.
19 thoughts on “Self-employment FAQ”
Best of luck and look forward to future posts sharing you self-employment experiences!
Will you be updating this FAQ as your answers change, or will it remain a snapshot of your thoughts today?
Jason: It’s a snapshot, but it’s one I expect will remain valid for a while.
I’ve been self employed for over six years now.
The best thing about it: When you do well, you get to take all the credit.
The worst thing about it: When you do poorly, you get to take all the credit.
John: If a genie turned you into a dog, and you had to choose one breed, which breed would you choose to be?
Do you fancy a talk about applied statisticus for Unix consultants in the Netherlands? Maybe combined with some lectures about statistics at one or more universities?
My current mentor at work spend some time as an independent consultant. He said the worst thing about it was getting the health insurance company to pay for things – because when you have an individual plan, they know you don’t have a team of a lawyers ready to back you up.
He spent a lot of time filing complaints with the state insurance board.
Question: Is it true that by self-employed you mean “Assassin for fire”?
Do you plan to give more conference talks now?
Ram: I never thought about that.
Joost: I’ve love to visit the Netherlands.
Canageek: Although I would assume being an assassin pays well, I don’t think I’d be very good at it, so it only meets one of my two criteria. It also raises moral questions, depending on the target. :)
Steven: I expect I will give more conference talks.
What is your favorite color?
Dr. Bubba: Are you Buddy the Elf? :)
I see what you are doing …… answer with a question to avoid the question. ;)
LOL, no I am the Keeper in the Holy Grail. :) Besides it seemed like a fun question with all the others ones be so on topic.
Maybe I should have written it…. colour. ;)
Next I suppose you’ll be asking me the air-speed velocity of an unladen swallow.
That begs a different question, “What is air-speed velocity?”
And we are still waiting on the colour? ;)
I have no asked any of these questions; but, had I done so, these would be the answers I wanted. Thank you!
Congratulations John, and best of luck in your new Endeavour!
“Anything I can do well that pays well.”
I’ve spent about half of my career as an independent contractor (not “consultant”) specializing in embedded real-time software (mainly instrumentation and control ssytems), and algorithm development & implementation (mainly for nasty sensors). I’d estimate a solid 1/3 of that time was spend doing work unrelated to my specialties.
The best advice I have is to “Always Be Useful”. Sometimes you’re not the right person for the job: Know who is right, and recommend them. Never let it be a waste of time for a potential client to contact you. Sometimes there is work that needs doing for which no one else is available, especially things that are blocking the work you should be doing: Just be useful, and help push the big picture forward. If there is noting you can do to move things forward, the most useful thing to do may be to offer to go off the clock.
I did lots of work for small companies and startups, where the “non-salary burn rate” was monitored like death. Be flexible about compensation. Offer to reduce your rate for an increase in guaranteed hours. Offer to accept equity as part (never all) of your compensation. Even consider barter and access to wholesale business pricing. Most folks are lousy negotiators: Become good at getting everything onto the table.
I never accepted work lasting more than 6 months (initially for IRS reasons). It always seemed the longer I spent with a client, the less I was challenged. Short 1-2 month contracts were my sweet spot.
Sometimes a prospective customer won’t know what they want or need: Offer to do a short fixed-term contract (2-10 days at a good rate) to help them investigate and organize. Then restart negotiations for the newly specified work.
I always charged by the hour. Never by the week or month, and never for a fixed fee. I billed every 1 or 2 weeks, never less often, on net-30 terms. I then offered a 5% discount for payment within 7 days, a 10% penalty after 30, and a 20% penalty after 90, with work halting when payment was 60 days in arrears. Tough terms, but they worked like magic: 90% of the time I was paid within 7 days, and any who didn’t do that were closely monitored.
The upside of charging by the hour is that I kept a standard of productivity as my definition of “an hour”. Sometimes it would take hours of wall-clock time to get an hour of billable work done. My invoices always represented a solid value.
Keep exhaustive notes. Log everything. Always over-deliver, especially on the documentation.
The worst part for me was marketing: Over a 14-year span, only about 10% of my work came from my own efforts to market myself to folks or businesses I didn’t know. The other 90% of my work came from referrals. A scary way to run a business! So be sure to always let your friends and associates know when you’re looking. Remind them of it frequently.
Contracting is stressful. Plan on having no more than 40 work-weeks per year. Take breaks when needed, even if just a long weekend. Plan to take a full month off at least every-other year.
Always keep a solid savings cushion, enough for at least a year of full living expenses. You won’t need it, but it gets scary when the cushion gets low: Always have abundant liquid assets available, not for need, but for psychology, to avoid that feeling of desperation that causes interviews to go south.
Allow clients to push you out of your comfort zone, not just in the technical sense, but also in terms of management, pressure, communications, whatever. Most of my personal and professional growth came through clients pushing me in new ways and into new places. Easy work is boring: Seek challenges.
The episodic nature of contracting eventually lead me to realize that each contract was actually a mini-career: The rate of new experiences is high, and so is the rate of growth. Again, it is stressful, so lock-in that time off!
Have plans for the inevitable unplanned down-time (never called “unemployment”, since you won’t have traditional unemployment “benefits”). Your amazing level of posting should pretty much cover that. But also have a list of research topics waiting to be pursued. Seek volunteering opportunities that force you into the community. Pursue your hobbies, and seek new ones!
Finally, it can sometimes all become just too much: Too many balls to juggle at once. Every 3-5 years or so I’d take a “real job” to regain stability and pace, especially when the job was “too good to refuse”. I’d stay at least 2 years, leaving only when the contracting bug bit again.
Contracting is a great life, and I can’t recommend it highly enough. But it can be a complex and stressful life. Learn where your limits are, and know when to back off.
PS: Always let them buy lunch.
NEVER bill by the hour! I implore you to read Value-Based Fees by Alan Weiss. Best of luck!