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Working Solo vs. Working for The Man
Q: I'm in a real quandary. I have a tough decision to make and I hope that you can help me. I've been running a desktop publishing company from my home for three years. I love the work, and I love working from home. Half of my business comes from one client who has given me steady work since I began. This client is my favorite -- great to work with, pays on time, interesting projects. Well, he just made me a job offer. He wants me to close down my business and come to work for him full-time. And here's the kicker: he's willing to let me work from home as a virtual employee. Would I be nuts to turn it down? I'm so confused. What do you say?
-- Wanted woman
A: Here's the bad news. I'm not going to tell you what to do -- because if I tell you to take the gig and it becomes the job from hell, you'll probably send me a nasty email. Something like: "Remember when you told me to give up my business to take a job? Well, this job sucks, I miss working for myself, and I'm very unhappy. Quit giving advice and get yourself a job." And what if I tell you to pass up the offer and concentrate on marketing yourself instead? If you can't pay the rent one month, you might send me the bill.
But you came to me for some sage advice, so rest assured, I do have something to say. Listen up. Before you -- yes, you -- can make a decision, you need to focus on a few critical issues.
Critical Issue One: If this client hires a full-timer to do the work and you lose his business, can you survive? Do you have the motivation and sales skills to go after more business? Do you have a batch of client leads sitting in a desk drawer or plans for a promotional Web site? Well, you'd better. If you're going to lose this business, you'll need to find new work to replace it.
It's time to get honest. Have you relied too heavily on this one client? Have you gotten so fat and lazy -- or, okay, maybe just lazy -- that you've forgotten how to get new business? Perhaps you'd prefer not having to worry about the dirty business of finding new clients. If so, don't worry: you wouldn't be the first, or the last, freelancer to milk a relationship with The Big Client. The question is: will you be able to change your ways? Factor the truthful answer to this question into your decision.
Critical Issue Two: Would this client allow you to work full-time for him and moonlight for a few other clients? That would allow you to keep a small business going in case the job doesn't work out. That kind of protection would be quite valuable. It would let you experience the best of both worlds, so that you could see which you really prefer. Maybe you'll love working for someone else, without some of the headaches of being an IP. Maybe after three months, you'll be climbing the walls and hankering to be back on your own. If the client will let you do both, for a time at least, you may want to give it a shot. Beware of one tiny little detail, though -- you won't have any life outside of work, because you'll always be working.
Critical Issue Three: How will the job pay? I mean, how will your salary as an employee compare to the income you enjoyed as an IP? Let's say that right now you charge an hourly rate of $50.00/hour. Your client might very well expect you to work for the same rate, or less, because he'll be giving you employee benefits, which can often account for about 35% of a paycheck. (In an employer's mind, paying you $32.00/hour plus benefits might be equivalent to paying you $50.00/hour as an IP).
As you surely know, IPs need to make up the income they lose during those non-billable hours in which they market themselves, do administrative duties, and perform all the tasks that "normal" employees either don't have to worry about or which are done for them by a corporate support staff. (Many IPs calculate their hourly rate by assuming that they'll spend 60% of their time working and 40% of their time on other duties.)
There's also a tax component here. On the one hand, if you work for a salary, you'll pay less in taxes than you do as an IP. Remember that self-employment (social security) tax we IPs have to pay all by ourselves? If you go to work for someone else, he'll split the cost with you. On the other hand, once you become an employee, you might lose the benefit of IP tax write-offs, and this might lower your overall income. Then again, think optimistically -- maybe he'll keep paying you your hourly IP rate, pay your social security tax, and give you employee benefits. Now that would be cool!
In any case, you should consult an accountant for advice. If you work from home, your accountant could help you hold on to some of your precious tax breaks.
Critical Issue Four: Since you love the independence of working from home, your decision will probably center on how much freedom your new employer/former client will continue to allow you to have. If he's going to treat you like a full-time IP, well, lucky you, you just picked up a whole bunch more work, for a client you like, and you can rely on the steady income (as much as you can rely on any job these days). On the other hand, it's possible that as soon as you have the title "employee," the whole game will change and the client will want to control your every move and bring you into the office three times a week. Then you'll have to decide: "Can I really be an employee again? Is it worth what I'll have to give up?" Find out the client's expectations as soon as possible.
You got all that? Great. Now with these issues in mind, write down your idea of the dream scenario. You are in a bargaining position -- your client has already test-driven you and he likes your work. He doesn't want to lose you. Figure out what you don't want to give up, and then go to him with an offer. You'll give him X, as long as he gives you Y. If you don't feel good about the way he responds to your negotiations, that's a clue that perhaps you don't want to work for him after all. On the other hand, if he respects your concerns and honors your requests, congratulations -- you might get exactly what you want.
So your client wants to be your boss. That speaks highly of your work -- nice job. Sit back, relax, take a deep breath. You've a big decision to make. And even though it's confusing for you right now, you'll soon learn to relish the choice.
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