Moving from a Permanent Position to Contract Work? 295
duncan bayne asks: "I'm sure many developers in salaried, permanent positions have been tempted by the self-management, flexibility and higher pay that are the perks of being a contractor, while at the same time looking nervously at the uncertainty and irregular income. So, to all those in the Slashdot crowd who've made the change - what was it like, was it worth it, and what advice can you share?"
Re:Funny you should ask (Score:2, Interesting)
Where do you work to get fit staff to hit on? The places I've ended up has been almost entirely wall-to-wall blokes. Not what you'd call a target-rich environment...
I went the other way (Score:3, Interesting)
Feh!! Good luck to you. You can have it!
Moving from a Permanent Position to Contract Work? (Score:5, Interesting)
The jump was scary as all hell. I hopped on a new contract about 48 hours after leaving my former employer and started getting setup. Unfortunately, the position was not exactly as my account rep had conveyed with me. Nor was it as clear cut as the contractee's interview/position description stated. Needless to say, the first few weeks were a bit bumpy. I was able to establish a fairly good rapport with the client and things have been more or less peachy since. There is the temptation in some cases that, as contract, you will get paid overtime. I have to warn you. This is a blessing and a curse. When you do this stuff and go the extra mile, it sometimes becomes expected of you. While the extra money is nice, the long hours tend to really eat in to you.
In early June, after a couple of internal management organization shifts, I was under the impression that my contract was stable through the end of the year. Well 1 week into June, I was informed that I would no longer be needed in my current role after 30 June. Needless to say I felt that I had just been screwed over, my contract firm was outraged, and I was really starting to freak out as my, then, girlfriend (now wife) had just moved in. Money coming in was VERY important. Luckily, my contract firm has feelers in all over this particular company, they were able to secure me a position quickly in C++ land, which I wasn't overly proficient at as having programmed in Java for the last 4 years, but it was work. The way the agreement was inked, I would be paid as a salaried employee up to 40 hours, get 2 weeks vacation time, 5 sick days, etc. Overtime was a bit of a sticker. I have to work something like 6% overtime or some such garbage before I get paid for it. Since my earlier experience put a real pinch on me, overtime was going to be minimal at most if I could help it.
Long and short of this is that you should really research your options and your current situation. If you can stick it out and look for a perm position, go for it. If you are willing to "eat shit" for a while, you may come up smelling like a rose. My experience may or may not be the same that many people have. If you are confident in your skills and are able to adapt quickly to fluid situations, then you may want to try your hand at it. Make sure though that you have enough banked up to cover shortages in hours (i.e. around christmas time where code freezes may be rampant and actual work may be scarce).
Hope my long winded telling of my last three years has not been over the top or wandering too much.
Worth it, but hard (Score:3, Interesting)
Sure, there's some flexibility in the fact that you don't have to ask a boss for anything, but as soon as you get enough customers, you're pretty soon going to have the same workhours as you would in a normal job, because that's when people expect to be able to get hold of you over the phone, also it's a lot more difficult to fit in a vacation if you have lots of work piled up.
And lastly, watch out, it's very easy to become a work-o-holic.
Unless you have made a name for yourself... (Score:3, Interesting)
-M
Mobility is key (Score:3, Interesting)
Two other comments:
-I could never have made this work if I was encumbered with a wife/offspring.
-I will never go back to being an employee. Well, if I get hungry enough I might, but if I'm not hungry, then I'm not interested in being an employee.
-AD
Re:It was worth it (Score:3, Interesting)
Re:I went the other way (Score:2, Interesting)
Re:It was worth it (Score:3, Interesting)
Still, on the whole it is worth it. You do have more independence.
I didn't find it worth it, but I never got established. I always had trouble finding work for appropriate pay, and never really did think I was getting paid enough.
Although I also did work for small businesses, which meant that they didn't know what they wanted and were pissed when they didn't get it or got what they didn't know they needed.
It could've been just me and my inability to tell them how it is, but dealing with stingy and computer illiterate mom-and-pop's was just a nightmare.
Web work was the worst:
Me: What kind of website do you want? What do you want it to do? I can do this, this and this.
Them: I want it bright green with a picture of me here, here, and here and some products here.. BIG pictures with bright colors and happy faces
Me: OK well you know half the world won't sit around for the 10 minutes it's going to take to load all that on dialup, not to mention you haven't told me if you want them to be able to order online
Them: Yes, I want them to order online and we'll calculate the shipping and process the credit cards on this computer over here
Me: You can't do that, --
Them: --LISTEN! I'M THE BOSS AND I'LL TELL YOU HOW IT IS
Me: Yes sir
(two weeks later)
Me: OK, all done. So just out of curiosity who are you going to hire to sit at the computer all day and process all the orders in real time?
Them: We thought you were going to do that.
Me: If you read the contract very carefully, I believe it states quite clearly that I'm not your bitch. Now where's my check?
It's a true enigma why I never got any referals from them. Last time I checked they had to take their site down and replace it with a simple list of products and a phone number.
Re:I went the other way (Score:3, Interesting)
The way around that is to "hire" your significant other (assuming you have one handy), and offer them family coverage insurance as a benefit. Then it is a wage expense instead of a self employed insurance deal.
Made my move 1y ago, wouldn't go back! (Score:2, Interesting)
1) 100% real independant: you find the client, you convince him, you do all the work from home.
2) being pimped: some firm calls you, you go work "in-house" for their client just like any other employee, but you're paid much more than if you were a "perm" since you're expendable, no insurance, no retirement, etc.
I've done both and I have to say being 100% independant is a lot tougher: you must spend a lot of time shopping the client, convincing him, making sure he's happy, negotiate a bit when things aren't as smooth as planned. It can pay big time, but it can also backfire BIG time if you mess up. Working for a firm relieves a bit of pressure since you don't have to find the contract yourself, just apply for the position, but you still have to negotiate your rate with someone working for that firm who's sole goal and main skill is to negotiate you down
But no matter which way you go, there are some very important skills you need to work on.
- Presenting yourself in an appropriate manner (dressing, talking)
- Be at ease and used to negotiate, deal, do an interview, etc.
- Build_your_network. Keep in touch with previous employers, senior employees, friends who know people who know people, etc.
- Know your stuff (whatever you do, C++, project management) from A to Z.
- Control your budget. Spend as much as you need to live well, but don't buy that cool new 5000$ gizmo unless you have 6+ months of savings in front of you
You need to EAT thru every book you can find on selling, consulting, having your own business (IRS, accounting) and get as much advice and backup from friends and family. You need to get over any shyness or insecurity in order to give the impression of someone in control, able to accomplish the task at hand.
From there it's up to you. Depending on your skills, you may very well end up having no security, not much more money. But if you really do your homework and identify and work on what you see as your weaknesses (eg: talking in public, negotiating your rate without the fear of "not getting the job") I can garantee you'll be happier than you were in your "perm" job.
I had some tough times and it wasn't easy all the way. Got to a point where my whole fortune was 800$ and I had no work in front of me, nothing. But then again when I look back, I don't regret one bit. The kind of money I'm making now is the salary I dreamt of making "in 10 or 15 years when I'm a VP or big manager here at company XYZ".
Re:Job security does not exist anymore (Score:3, Interesting)
The 401K is nice (as an employee) because it lets you save much more than what you normally could in an IRA or a Roth IRA each year.
As a contractor (that's self employed), there are other retirement options that let you stick away as much or more than an IRA - see your tax guy!
The short test (Score:5, Interesting)
If you'd work more because you get paid by the hour, enjoy what you do, have a desire to understand how businesses are run, and now have a vested ownership in the results, then you're on the right path to start contracting.
If you like having the business do the business part for you (legal, financial, insurance, management, etc), like knowing that you can leave work behind after your 40 hours a week, and you don't go home trying to figure out what else you could be doing (and not just because you signed an IP agreement) then you're probably better off as an employee.
It's a big leap, and everyone here is right when they say you take on more costs (but you already knew that I hope), that there's more work, taxes, risks, etc. But it really comes down to a personal desire, since if you have that desire (and hopefully some ability that people will pay for), then everything else will work itself out.
If you work by the hour, you are a temp. (Score:5, Interesting)
Re:It was worth it (Score:2, Interesting)
As I figure, there is really no employer->employee loyalty these days. I have friends who always ask me if I am nervous about finding work or paying bills, but you know, I seem to stay pretty stable while they fret about the next round of layoffs. After a while, you get somewhat used to seeing business opportunities here and there and it really keeps you going. Basically, I feel much more comfortable being personally in charge of my own destiny rather than the CTO of some big corporation deciding to downsize your position to improve headcount.
I work with big companies and small companies, and my take on it is that small companies really want someone who is willing to hold their hand and get them to a point where stuff just works. I find with some sensible recommendations that this is usually easy to accomplish, and if the company already has ideas of what they want, help them evaluate those ideas and change them to meet what they really want to get out of the overall system. Seems pretty simple, but you'd be surprised at how often other companies just want to book the revenue and sell them solutions that are either overkill or not practical.
Big companies like solutions that tie in well with what they already have, as they usually want to be able to maintain it on their own. I usually take pains to document and train employees on how to keep systems I setup running, as I find it builds good word of mouth marketing, plus it puts you first in line for new installs where you make your good money.
All that said, I am pretty much at the limit of amount of work one guy can do, but not quite willing to expand to more employees for fear of not having enough money for more than one person. However, I still have free time on weekends, the ability to just take a day off, and I typically don't get up before 9 or 10am most days, so no rush hour to mess with.
Also, bear in mind that you don't get paid like clockwork every 2 weeks. I get behind on invoices a lot, leading to living a poor month and then a huge payday. Annoying, but it actually works out pretty well, all said. I have a HSA health plan that seems to be working out, and I get to decide what directions I would like to expand in instead of being told what project I am going to work on next whether I like it or not.
All in all, a very worthwhile choice.
It's Champagne & Cake or Beer & Beans.... (Score:1, Interesting)
A few things to consider:
Insurance -- that magical health benefit that most employers pay a big chunk of -- you get to find out how much things really cost. Oh, and that year I didn't have insurance, my 14 year-old daughter flipped her quad out on some sand dunes at a beach and had to get air-lifted out by helicopter. That 15 min trip cost me 20 grand to find out she just had a slight concussion. (12 grand for the airlift, the rest in hospital bills, ouch!)
Free Time -- People think you have lots of it. Once I got a phone call in the middle of the day to change a flat tire on one of my wife's friends car. They might have said thanks, but geeze, they could have called AAA. Sometimes you do have time to do as you please. My family likes to take our motorhome camping at the beach and go surfing - great family memories. We also take two weeks off in the summer and rent a beach house. I also took a week off to go to my son's scout camp, BUT, if I'm not working, no cash is coming in, and no new jobs are getting lined up!
Distractions -- Sometimes I can think of a million things to do, except work. Like go to CostCo with my wife in the middle of the day. Anything that is unproductive and not producing billable hours, nets zero dollars at the end of the day. Sometimes you make up for wasted days at night, and come crawling in at 3 am -- only to have to roll out of the sack at 7 or 8 am to get a fresh start. Yup, my light seems to always be on.
Kids -- (see distractions above) You gotta love 'em. I'm home when they leave for school, and here when they get home. I proofread essays, make science projects, help with math worksheets, etc. I always have a few kids sneaking into my office area to hog my computers. It is kinda funny having techie kids though. My 17 year-old daughter was calling this kid a school a geek because he was bragging about his website. (free yahoo site) I asked her how many website's she had running on my servers. She thought a minute and sheepishly replied, "Three, I guess." It's also funny when your kids complain about how slow a download is taking, only to find out they are downloading a 600 meg demo game CD! My kids laugh a other kids slower DSL lines, and have never heard the crackle of a modem.
Loans -- When banks hear you are self employed, they want crawl up your posterior with a microscope before you can get a loan. They want to see bank statements, cash flow and tax returns. Don't skimp on the taxes and take too many deductions, in two years you might need to show that you actually MADE some money. After a few years and things stabilize, it gets a little easier. Or maybe I'm just used to the financial rubber glove with no lube.
You are your own boss -- That's right, nobody bossing you around, except the people you work and the guy signing the checks and every bossy secretary. Also, you are the janitor, the maid, bookkeeper, rain-maker, and pee-on. The buck starts and ends with you. If something goes wrong, it's your fault and you had better document each and every thing you do as if it's going to litigation. You will live or die on written memos and sign-offs.
That's it in a nutshell. If you got the nerve, cash in the 401K and get ready for a roller coaster ride. Is it worth it? You bet. I am healthier, happier and have time for the things that matter most -- my wife and four kids.
Newt-dog
Re:It was worth it (Score:4, Interesting)
Well, it seems to me that you lack the kind of skills to properly interface with the non-geek world. This unto itself limits your potential for acquiring and keeping new clients.
Stingy Mom and Pop's are exactly why I interview my clients... I never sign with anyone who haggles with me or is simply interested in doing things on the cheap. Blatant honesty helps also, during the first meeting with a potential new client I inform them that my prices are inflexible, my hourly rate is expensive, I don't do credit on material goods, I don't make any exceptions... and if they accept that they will receive a quality of work and service that they can't find elsewhere. I don't find it necessary to advertise, or even keep a website, all of my new clients are referrals.
Despite the fact that it costs quite a bit over $1,000 to employ me for a day, I have no shortage of business (and this is in a county with a median income of about $30,000) and little to no downtime between contracts, and because I'm picky about who I take as a client, I never have the slow/late pay problems that seem to plage the people who will take any contract.
Re:It was worth it (Score:2, Interesting)
S
Re:Funny you should ask (Score:3, Interesting)
Last I talked to someone there (two yrs ago), they were still where they were then. Sad.
Re:Funny you should ask (Score:2, Interesting)
In most states, any company can do that, whether you are contracted or not.
Re:If you work by the hour, you are a temp. (Score:3, Interesting)
Giving accurate estimates for how long work will take and then meeting those estimates is still an important part of the job, but this arrangement really cuts down on the non-paying and less interesting parts of my work. The downside is I don't get to rip anyone off by overcharging for my work. But I'm OK with that, I'm just here to solve peoples business problems and make them more productive.
Fixed bid contracts *do* work well when the work is very specifically defined, but I find that the customer that understands what they want that well is pretty rare. Kudos to you if you can find them.
Re:Health insurance (Score:2, Interesting)
I gave up many years ago and pay $100 a month myself for BlueCross/BlueShield HMO/PPO. I get a copay, they have agreements with other providers that lower my cost. I'm actually thinking about switching to just a catastrophic policy since I have a $1000 deductible anyway.
The costs are rising, whether you are a wage earner or becoming a contractor you REALLY NEED to look into this and make smart decisions. If you are not looking at it chances are you getting fleeced BIG TIME because their is so much cost pressure on health care right now. Do note I am a Bachelor so my burden is less. Everyone needs to decide for themselves but you really need to look into this whether you are independent or a wage earner. You might find your money is best spent elsewhere than on the group plan.
If you don't manage the cost yourself then insurance will charge you big money to do so. And even a catastrophic will allow you entry to other insurances later, rather than being "uninsured" taboo. Insurance system as we know is under pressure so the old thinking can be dangerous.