Should I become a consultant?
September 12, 2010 6:51 PM
Should I become a consultant? Please help me decide! Please let me know where I can find more information. I am really clueless about legal aspects of consulting.
I am fortunate enough to work and have experience in a very specialized field. Will leave details out for privacy's sake, but let's say it has to do with software development. Fairly often I get people asking me to work for them in any capacity, part time, full time, contracting, etc. Right now I have a full time job in the aforementioned field.
However, it's not exactly what I want from life. It's not in the right industry. I cannot find jobs in the industry I want in the area I live, and moving is not an option right now.
I feel my career path is stagnating. I was thinking about slowly edging towards the industry I want to be in by doing consultant work from home instead of looking to move somewhere. I don't really like the corporate world anyway.
I would like to be able to continue to work for my current employer as a consultant, as well as for other companies in the area as needed. At the same time, I would try to find remote gigs in the industry I want in, leveraging my programming experience and work experience in said industry. I also feel that being independent is a necessary step to starting my own firm. And making the big bucks. Because I want to make the big bucks...and I'm not that young anymore.
Cost of living here is pretty high. No savings so to speak of right now. Single.
Has the Obama administration done anything to make health insurance cheaper for self-employed individuals? Are there government incentives, loans, I can take for starting a consulting business?
Should I even be thinking about this in the current economic climate?
I am fortunate enough to work and have experience in a very specialized field. Will leave details out for privacy's sake, but let's say it has to do with software development. Fairly often I get people asking me to work for them in any capacity, part time, full time, contracting, etc. Right now I have a full time job in the aforementioned field.
However, it's not exactly what I want from life. It's not in the right industry. I cannot find jobs in the industry I want in the area I live, and moving is not an option right now.
I feel my career path is stagnating. I was thinking about slowly edging towards the industry I want to be in by doing consultant work from home instead of looking to move somewhere. I don't really like the corporate world anyway.
I would like to be able to continue to work for my current employer as a consultant, as well as for other companies in the area as needed. At the same time, I would try to find remote gigs in the industry I want in, leveraging my programming experience and work experience in said industry. I also feel that being independent is a necessary step to starting my own firm. And making the big bucks. Because I want to make the big bucks...and I'm not that young anymore.
Cost of living here is pretty high. No savings so to speak of right now. Single.
Has the Obama administration done anything to make health insurance cheaper for self-employed individuals? Are there government incentives, loans, I can take for starting a consulting business?
Should I even be thinking about this in the current economic climate?
You will have to report quarterly taxes and pay your own FICA. You may not get paid for work you've done and recovering those losses may not always be practical. If you are a one-man shop you will be on call 24/7. Oh, and what happens if you're answering a call from one customer and another calls? And don't even get me started on health insurance.
Not saying it's not do-able but it's a hard row to hoe. I tried it when much younger and wouldn't again unless I had some savings and carefully researched both the tax ramifications and my rights on collections.
posted by localroger at 7:39 PM on September 12, 2010
Not saying it's not do-able but it's a hard row to hoe. I tried it when much younger and wouldn't again unless I had some savings and carefully researched both the tax ramifications and my rights on collections.
posted by localroger at 7:39 PM on September 12, 2010
My gut reaction was "heck yes, you should consult!" Then I saw some red flags in your post, so I'm changing my answer to "not yet."
"I don't really like the corporate world anyway." If anything, consulting will put you further into the "corporate world," not distance you from it. At all times, your job will be to convince the client that you are the best person for the job and you 'get it' so much better than the other schmucks who call themselves consultants. So you'll have to cater to their whims, listen to their red flag issues which are really nothing, and put up with as much red tape as you do today - except you're getting red tape from 5 different clients, not 1 employer.
"No savings so to speak of right now." As a consultant, you cannot be totally confident of your cash flow. It's more regular than freelancing, but if your industry takes a turn then you're in danger of having your income cut off. If you don't have cushion to fall back on, you'll be in danger of going into debt while you wait for work to come up. Right now you may have recruiters beating down your door, but that's what they're paid to do. Work may not be forthcoming if the environment changes. Also, I say this as nicely as possible but: if you've been in the workforce for several years and haven't managed to save at least 20k, I wonder if you're ready to deal with the burden of balancing a variable income, multiple "high priority" clients, and necessary business outlays (not as big as starting your own firm, but there will need to be some investments on your part). Maybe save a cushion + some startup money, then take the dive? (There's nothing magical about 20k, but I was trying to give you a concrete number. Basically, if you aren't managing your finances and saving, perhaps you should focus on that before taking on additional risk).
"Should I even be thinking about this in the current economic climate?" This is entirely dependent on your industry, and it concerns me that you don't know the answer to this question already. If you're programming accounting systems for construction firms, you're hosed for years. If you're programming integrations for healthcare enterprises, you'll make a killing. So ask yourself: "Has my industry been growing, and do reasonable sources (e.g., respected industry blogs which you should be reading daily) expect it to keep growing?" That answers your question better than vague references to "the current economic climate."
Some more positive advice:
If people are approaching you with gigs, you've done a good job so far. Congrats!
If you want to move out of your current industry, kudos for looking for jobs and for other ways (e.g., consulting) to move. Honestly, looking is better than many people do.
Try to find someone who is doing similar consulting to what you want to do. Ask them for tips. People who have forged their own paths are often very happy to share their story, so all you have to do is ask.
My advice is to start small. Take one gig, and set a high hourly rate. Complete it and get a feeling for a client's demands - when they call you, the pressure they try to exert, whether they can pay, and whether you're okay with the red tape/variable cash flow/changing expectations. Then take another step - another client or two. If things are working out, taking the plunge and quitting your day job will be a natural growth of your steps, though a potentially scary one.
Ramit at iwillteachyoutoberich.com has focused on earning money on the side for about a year now. While he doesn't necessarily deal with consulting, he has excellent thoughts on taking that first step and learning as you go, so you might want to do a little reading there to get ideas about taking the plunge from 9-5 to self-managed (which, in reality, is client-managed).
posted by Tehhund at 8:51 PM on September 12, 2010
"I don't really like the corporate world anyway." If anything, consulting will put you further into the "corporate world," not distance you from it. At all times, your job will be to convince the client that you are the best person for the job and you 'get it' so much better than the other schmucks who call themselves consultants. So you'll have to cater to their whims, listen to their red flag issues which are really nothing, and put up with as much red tape as you do today - except you're getting red tape from 5 different clients, not 1 employer.
"No savings so to speak of right now." As a consultant, you cannot be totally confident of your cash flow. It's more regular than freelancing, but if your industry takes a turn then you're in danger of having your income cut off. If you don't have cushion to fall back on, you'll be in danger of going into debt while you wait for work to come up. Right now you may have recruiters beating down your door, but that's what they're paid to do. Work may not be forthcoming if the environment changes. Also, I say this as nicely as possible but: if you've been in the workforce for several years and haven't managed to save at least 20k, I wonder if you're ready to deal with the burden of balancing a variable income, multiple "high priority" clients, and necessary business outlays (not as big as starting your own firm, but there will need to be some investments on your part). Maybe save a cushion + some startup money, then take the dive? (There's nothing magical about 20k, but I was trying to give you a concrete number. Basically, if you aren't managing your finances and saving, perhaps you should focus on that before taking on additional risk).
"Should I even be thinking about this in the current economic climate?" This is entirely dependent on your industry, and it concerns me that you don't know the answer to this question already. If you're programming accounting systems for construction firms, you're hosed for years. If you're programming integrations for healthcare enterprises, you'll make a killing. So ask yourself: "Has my industry been growing, and do reasonable sources (e.g., respected industry blogs which you should be reading daily) expect it to keep growing?" That answers your question better than vague references to "the current economic climate."
Some more positive advice:
If people are approaching you with gigs, you've done a good job so far. Congrats!
If you want to move out of your current industry, kudos for looking for jobs and for other ways (e.g., consulting) to move. Honestly, looking is better than many people do.
Try to find someone who is doing similar consulting to what you want to do. Ask them for tips. People who have forged their own paths are often very happy to share their story, so all you have to do is ask.
My advice is to start small. Take one gig, and set a high hourly rate. Complete it and get a feeling for a client's demands - when they call you, the pressure they try to exert, whether they can pay, and whether you're okay with the red tape/variable cash flow/changing expectations. Then take another step - another client or two. If things are working out, taking the plunge and quitting your day job will be a natural growth of your steps, though a potentially scary one.
Ramit at iwillteachyoutoberich.com has focused on earning money on the side for about a year now. While he doesn't necessarily deal with consulting, he has excellent thoughts on taking that first step and learning as you go, so you might want to do a little reading there to get ideas about taking the plunge from 9-5 to self-managed (which, in reality, is client-managed).
posted by Tehhund at 8:51 PM on September 12, 2010
How comfortable are you at marketing yourself? You didn't mention how solid your client list would be, but a typical consultant spends considerable time looking for and securing gigs. You did say that you have people asking you to work for them which is encouraging.
One option to consider is to keep your full time job and moonlight as a consultant on weekends. It's a good way to find out what the consulting life is like without going whole hog.
You will have extra overhead in keeping track of expenses, and tax matters etc.
posted by storybored at 9:00 PM on September 12, 2010
One option to consider is to keep your full time job and moonlight as a consultant on weekends. It's a good way to find out what the consulting life is like without going whole hog.
You will have extra overhead in keeping track of expenses, and tax matters etc.
posted by storybored at 9:00 PM on September 12, 2010
Self disclaimer: I run a website on starting and running independent consulting businesses.
Short answer? Yes, become a consultant, but only sort of. I encourage everyone to set up an emergency fund and come up with a plan before launching a business. I am a bit concerned that you have a steady job and no savings - evaluating your financial health now can really help you when you get into indie consulting. You might want to do a personal inventory and figure out what you really love. Then start looking for side jobs in consulting and work your way up to it. You can use the income from those jobs to increase your emergency fund, although it would be better if you were also using your current income to save too.
posted by acoutu at 10:31 PM on September 12, 2010
Short answer? Yes, become a consultant, but only sort of. I encourage everyone to set up an emergency fund and come up with a plan before launching a business. I am a bit concerned that you have a steady job and no savings - evaluating your financial health now can really help you when you get into indie consulting. You might want to do a personal inventory and figure out what you really love. Then start looking for side jobs in consulting and work your way up to it. You can use the income from those jobs to increase your emergency fund, although it would be better if you were also using your current income to save too.
posted by acoutu at 10:31 PM on September 12, 2010
You basically have to figure that you need to bill double your current income to break even, if you have a traditional job with standard benefits.
And incorporate in some manner. Not just for the liability, but for the financial separation. I know too many people who didn't, and have messed up finances because of it.
If you think you can do that, go for it.
posted by gjc at 2:04 AM on September 13, 2010
And incorporate in some manner. Not just for the liability, but for the financial separation. I know too many people who didn't, and have messed up finances because of it.
If you think you can do that, go for it.
posted by gjc at 2:04 AM on September 13, 2010
I don't think you need to bill double your current income. Or are you talking hourly rates? That's not the same as income.
posted by acoutu at 10:51 PM on September 14, 2010
posted by acoutu at 10:51 PM on September 14, 2010
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posted by furiousxgeorge at 7:15 PM on September 12, 2010