Elaine Biech, then a trainer of teachers of disabled children, reached the proverbial fork in her career path some 20 years ago and abandoned the security of payroll employment for the potentially rewarding yet equally risky life of an independent contractor. When Biech made the move, she guessed she could earn enough income by charging clients $300 a day and working half-days.
She now readily admits that she, like many beginning entrepreneurs, guessed wrong. Biech failed to book even half of her days. And once business did increase, she realized that if she had booked all the time she had planned toward her actual consulting, she could not have done the work because of the time-consuming marketing duties of being self-employed.
Two months into the job, Biech doubled her prices. Now she does not hesitate to charge her executive-level clients $1,000 a day or thousands of dollars per project if the circumstances warrant. Years of experience, in other words, have taught Biech how to think like an independent contractor.
Life of the Entrepreneur
The creative and ambitious souls who forsake the comforts of secure, full-time employment to fly solo in the wilds of the entrepreneurial jungle often do not realize how much their mindset will have to change to succeed. But change it must.
"They are definitely going to have to be more self-disciplined," says Tom McGrath, president of the National Association of Independent Contractors (NICA). "You eat what you kill, if you will, and if you're not out there killing, you're going to starve. ... You can't be in your pajamas watching cartoons at 10 o'clock in the morning."
"Free agents" more often than not are just that--on their own in every aspect of their business. "You're your own bookkeeper; you're your own marketing expert; you're your own janitor; you're your own typist and secretary," says Biech, a speaker at Linkage Inc.'s "Consulting Skills Institute" in December 1999 and author of "The Business of Consulting: The Basics and Beyond." "You do everything."
Many independent contractors leave what they see as the constraints of the corporate world because they want to make a difference. They want to solve problems, help numerous organizations, do a variety of work and pursue exciting projects rather than necessarily make money. They are, in a word, altruistic.
"All that is true [about the consulting life]," Biech says. "That will happen. But you can't dedicate 90 percent of your time to that part and 10 percent to running your business."
Many Hats of the Self-employed
So how exactly does the independent contractor have to think? What mindset must you have to excel in what Michael Gill and Sheila Paterson, authors of "Fired Up! What It really Takes to Move from a Frustrated Employee to a Successful Entrepreneur," call "the E-Zone"? Here are some tips from those who have lived the life:
- Think like an entrepreneur. First and foremost, you must accept the fact that you are in business now -- and that your business will soar or sink in large part because of decisions you make. "It takes a lot of discipline. ... You are the boss," says Ginny Beauchamp, vice president for the National Association of the Self-employed (NASE). "You're going to make it or break it based on your practices and routines."
To succeed on your own, you must learn to distinguish between sound and foolish risks. You must see the big picture but also be able to manage the small business details. You must know which projects are profitable and which are not. You must be willing to work long hours -- probably an average of 55 hours a week, Beauchamp says, but as many as 60 to 80, Biech adds.
And don't forget the business plan, "the step most people want to skip," Biech says. Decide what type of business you will pursue, what size your business will be and where you will locate. That includes thinking about the future -- whether you want to be a sole proprietor, have employees, form a partnership or even incorporate. "I didn't put a business plan together," Biech says, "and all of a sudden, I found myself doing everything, everywhere, and I didn't have a lot of time."
- Think like a bean counter. The accountants obsessed over cash flow while you slaved away in your corporate cubicle, but the independent contractor often is his own accountant. And even those who hire accountants still have to know the basics of business financing.
Set monthly business goals, Beauchamp says, and remember that "everything you do each week is a challenge to make sure you meet those goals." Know how much you need to charge, Biech adds, and overcome the innate fear of talking about money. Crunch the numbers at least monthly and perhaps weekly. "If you lose track of your finances," Beauchamp warns, "that is a sure cause for your business not continuing. ... The only way to know if you're making a profit is if you have a handle on the money."
Remember, too, that steady cash flow is not the norm for the entrepreneur. The difference between life as an employee and as a free agent, Pink says, "is the difference between getting your income on a conveyor belt and getting it in waves." Revenue comes in high and low tides, and you must prepare for the down times when business is booming.
- Think like a salesman. Business life on your own is not for the timid, says Peter Block, founder of Designed Learning Inc. and author of "Flawless Consulting: A Guide to Getting Your Expertise Used." If you are in the consulting, you must think of yourself as the product you are trying to sell. "It's a lousy field for real serious introverts," Block says. "You've got like one meeting to become friends and get connected [with potential clients]."
Thinking like a salesman also means thinking like a writer and a public speaker, Block says, because "the best selling strategy is to give talks and write." It means thinking like a specialist because it is much easier to make a sale when you are focused. And it is important to think of the selling and actual consulting separately. "It is very hard to sell and deliver at the same time," Block says.
- Think like a marketer. While Block prefers the "selling orientation" to the "marketing orientation" because he believes more sales naturally come from good salesmanship than marketing, marketing nonetheless is essential in self-employment.
You must learn how to create a brand, whether the brand is you or the product you are trying to sell. You must know which methods (direct mail, cold calls, print/online/broadcast advertising, etc.) work best. And you absolutely must reserve time to market. "Marketing," says the NASE's Beauchamp, "is your conduit to grow the business. Spend at least one-quarter of each week finding new business."
- Think like a student. In the corporate world, the bosses may fly you to a conference now and then, and you may or may not learn something useful in your job. You do not have that luxury as an independent contractor. You must be learning all the time -- and you probably will not be learning at two-day seminars in exotic locations because you will be on your own dime, not the company's.
"The border between what is work and what is learning is a little murkier," says Dan Pink, publisher of Free Agent Nation and a soon-to-be-published book of the same name. "Every encounter is an opportunity for learning."
An Attitude of Flexibility is the Key
And that list is but the tip of the contracting iceberg. All the tasks that your corporate co-workers handled -- managing your retirement money, finding the best health insurance, fixing the computer, negotiating contracts, billing the clients who used the company's products and cajoling the deadbeat clients who fail to pay on time-- now are your responsibility.
What's more, in some ways, you have to think just like you did when you were an employee. Just as in the corporate world, networking is essential. In their book, Gill and Paterson warn that networking can become the consultant's "biggest enemy" and highlight the need to distinguish between "a potential prospect or a possible networking nightmare." But other experts generally agree that networking is even more valuable to the self-employed than the employee.
Biech offers one last bit of advice to the independent contractor: You may be a free agent, but you must be able to work with, and often lead, teams. "You have to bend over backward to open the door to communication. ... You're not going to get away from the [office] politics. Instead of dealing with the politics in one company, you'll be dealing with the politics in five companies or 10 companies."
In the end, the independent contractor must be flexible. "[D]espite all your precautions and growing experience," Gill and Paterson write in their book, "you will still be surprised by the bumps and turns of the roller coaster of the entrepreneur. It is the nature of entrepreneurial life itself. It is the difference between the corporate zoo and life in the wild."