While randomly surfing the Internet, I came across a blog post entitled, Quit My Job for Consulting: Two Months Later and it made me smile. It was late September in 1999 that I left my full time job. That led to the formation of DotComIt; and I am entering into my thirteenth year of being on my own. Steve Klein's post inspired me to share some of my thoughts on the experience; hopefully from a more experienced perspective.
I wrote up this post for the monthly Flextras newsletter and thought I'd repost it here.
How Do You Define Yourself?
A favorite game in my family is Scrabble. I have siblings scattered throughout the US and it is rare that the whole group of us end up in the same room together. Some of my fondest memories are sitting around the coffee table in my parent’s living room on Christmas playing Scrabble. The games can become lovingly cutthroat and it is rare I am on the winning end. My elder brother once pointed out to me that I lost because I always looked to create cool words, without devoting thought to the point value of said words. That sentiment has become a defining factor in my life and career. I often look for cool work even though they are not always the most profitable.
Part of the life outside of a traditional paycheck is to figure out what you want to do, and then figuring out to get a way for people to pay you to do it. (That’s probably not a bad approach even if you’re after a traditional paycheck, either). The process isn’t easy, though. I think the hardest part is figuring out what you want to do.
I am a Technical Entrepreneur! To me, that means I want to create products and services that use technology to solve problems. I get high on process automation and love it when I can do things to help make my clients more efficient and effective in their respective profession.
Over the years I’ve been given many different roles. I’ve been called a small business owner, a consultant, a contractor, a subject-matter expert, and someone who will shovel shit for money. The work associated with some of those labels isn’t always satisfying. I strongly suggest you take your own time to define your identity before someone else does it for you. Then search out clients—or employers--that fit the identity you want to create for yourself; and you’ll find projects that will make you happier and more productive.
Don’t Ignore the Business!
When you’re not employed by a company, then you’re running a business. It may not feel like, especially if a recruiter had placed you as a full time consultant working on-site with a client, but even then you’re still a business. I’ve seen a lot of great programmers start consulting, only to quickly go back to being full time workers at the first opportunity. I always got the impression that they do not treat their activities as running a business; and are shocked at the amount of time the “business stuff” is taking. This extra responsibility is one of the key tenants of Steve Klein’s post. In this newsletter, I’m going to share some of my thoughts on two areas of the Business stuff: including Finance and Marketing.
Let’s Talk about Money
You’ll have to be careful when it comes to money. You will have clients that don’t pay on time. You will have clients that don’t pay at all. I made a lot of money mistakes in the early days and eventually had to institute policies to address non-paying clients. When a client is late; I stop all work for that client immediately. That may sound simple and logical, but the programmer in me finds it hard. Incomplete tasks bug me. Stopping work in the middle of a task is like trying to stop a run while in mid-stride.
The client will often assure you there are no problems and the check is in the mail, but do you want to bank on that? I don’t recommend it. More often than not; the client interprets a 30 day payment term to mean that they can start processing your payment whenever they feel like it. It is not a happy feeling to discover that it’s time to invoice a client, and you haven’t received the previous payment yet. Did you just provide the client with a full month of time you'll never see a cent for? I have, and it’s an expensive lesson to learn.
Sometimes the client will not respond to a late payment inquiry. I know people get busy and have many priorities; but I figure three calls within the span of a week or two is a good way to follow up; and it gives them plenty of time to get back to you. The fourth follow up call never goes to the client; it goes to the lawyer. For some reason, clients seem to find time to respond to a lawyer, even if they don’t have time to respond to you.
Taxes can be another issue. In the US you want to be sure to put away 40% of your income (after expenses) for taxes. Yes, it really is that much. Because you don’t have an employer to take it out of every paycheck, you’ll probably have to pay quarterly taxes to the state and federal governments. If you work full time for a company, or used to, check out one of your pay stubs. You’ll find that roughly 30% of your pay is being taken right off the top before you ever see it. The employer is paying another 7.5% to social security. When you’re on your own, you have to pay that extra yourself. Sometimes it is a shocking realization, especially if you didn’t plan for it.
Beyond the income taxes, you may also have to deal with local sales tax on the services you provide and property taxes on your business property. The sales tax will most likely vary from state to state, so you’ll want to talk to an accountant knowledgeable about local laws.
What is Marketing?
When starting out, I never had an explicit marketing plan. My first clients were achieved by a little bit of networking and little bit of luck. If your plan is to wait until the phone rings, then you’ll probably have a lot of spare time. If you do nothing to actively search for the right clients, then you’ll often be stuck with the low-hanging fruit. I’ve found that these projects are neither profitable nor satisfying.
In the beginning, I was doing a lot of marketing work without realizing it. I was writing books, blog posts, and articles. I was presenting at conferences. Later I added podcasting to my repertoire, both with The Flex Show and the Flextras Friday Lunch. Project clients often have no way to judge your ability. When they can see your name in print, or as a conference speaker it gives them confidence in you. That confidence can help you land the project. It can lead to more opportunities, and sometimes higher rates.
I’ve often been troubled over my lack of a formal marketing plan. Over the years I’ve tried other marketing avenues including ads in the phone book, joining the local Chamber of Commerce, using Google Ads, and sponsoring conferences None of those things have paid off as much as the more grass roots elements, such as writing this newsletter has, though.
Be a Subject Matter Expert
One of the interesting points that Steve makes in his post is that you must become a “Full stack” developer. He is suggesting you must be able to do everything. My route has been the exact opposite. I have inadvertently marketed myself as a subject matter expert. In the earlier days it was as a ColdFusion developer. The past few years it has been as a Flex Developer. Being a subject matter expert brings lots of benefits.
- People have already decided on the technology before contacting me. I’m rarely put in a position where I have to make a case for using one technology over the other.
- The more specialized you are, the easier it is to be found. This can lead to higher rates, longer commitments, and more freedom. If you look for a mobile developer, you’ll find thousands of people and it may be hard to choose one. If you look for an ActionScript Developer who specializes in Stage3D on iOS, then you’re going to find a smaller pool to choose from and it will be eaiser to find a suitable candidate .
Of course, being a specialist is not without its’ own limitations. Anyone looking for a Flash developer will never find the ColdFusion guy, for example. Often clients will segment you into what they hire you for and not to think to ask you for the other things which you can do perfectly fine. Being a specialist is a double sided sword. I assume the same is true for being a full stack generalist.
The Work-Life Balance
One of the challenges of being your own boss is that you can set your own hours and work when you want. It is up to you to enforce this balance. It is easy to have “five more minutes” turn into 6 hours only to find out you skipped dinner, missed seeing the sun today, and your significant other has been asleep for hours.
When I started out, I was budgeting 25-30% percent of my time for actual billable work. The rest of the time was for my business management; such as paying bills, bringing on new clients, negotiating contracts, and doing my marketing activities. This means, out of every four weeks, only one of them was billable. If I were to work 60 hours; it’d be a great month. If I were to work 80 hours; then I know next month will be devoid of billable work.
Remember it is okay to say no to projects. This is hard and not what the common logic says. You may be too busy. You may have other commitments; whether work related or not. You may not be interested in the work. I find it is always better to say no, then to say yes and the not deliver. Sometimes you may be able to negotiate deadlines and the schedule to accommodate your other commitments.
Every Sunday night I make a schedule for my week. This includes time for current clients, business stuff, social activities, and whatever else I want to do. This makes me sure that every week I'm saving some time for the important aspects of my life, both within and outside of the business. Getting a new project on my schedule often takes a few weeks; even after the contract is inked.
Overall, I recommend managing your career the same way that public companies manage their stock price. Make your commitments and stick to them. Public companies make their commitments in terms of revenues and profits. As a business owner, your commitments are probably around deliverables, timelines, and budgets. If you can, exceed expectations. Prepare your deliverables early. Come in under budget. Address issues head on, as they arise, and be prepared to offer a solution or two.
One thing I have come to learn is that there is no secret sauce to being a success in business. I've been lucky. My best advice, is to figure out what you want to do and then find a way to make it happen.