In between a contractor and an employee

May 9, 2011 9:50 AM

Company wants to hire me not as an employee, but as an independent contractor. Can I ask for something in between?

I approached them for an employee role, they countered with "Get a first contract for us, and we'll bring you on board."

My background and skills match very well to the technical services the company offers. I am Ok with non-employee status to start (it is not uncommon in my industry). However, is there a structure I can request that will pay me some money while I look a for a 1st deal for them?

FYU, it will take me at least 45 days to get them a customer. The reason why they are pursuing me is because I have a good network of potential clients and solid experience with their services. If it matters, they are based in India and their management is known in the industry. They have no U.S. presence currently.

They have asked me to propose my terms of contract to them by tonight. What options can I present them with?

posted by Kruger5 to Work & Money (5 answers total)

So you take on all the risk and they get the customer, eh?

There are a few options here.

The first is to make your commission as an independent contractor un-pallatable.

"If there is no money up front, I will take a 20% commission on the gross value of the deal. Or you can give me $5k up front and 5% on the gross value. Either one."

The second is to have them pay you in advance for expenses and a small salary and then take that out of the final deal.

"Give me $5k up front to cover my costs during deal generation and you can take that out of my 10% commission."

Think in terms of risk and return. Regardless of the future arrangement -- when they bring you on board -- the current arrangement is as an independent contractor. Thus, you can either charge a flat rate or a success fee.

Typically, if they think there is a good potential (low-risk), they will want to pay you a flat rate. If they are skeptical, they will pay you a success fee (high-risk).

You can work in the middle somewhere, just ensure you are pricing your risk correctly and be sure to explain that to them in these terms.
posted by nickrussell at 9:59 AM on May 9, 2011

I have a general rule - never sell somebody else's product or service on straight commission. If you are going to absorb 100% of the risk you are better off starting your own company and selling your services as a consultant. Go find the clients on your own, and then bring them to the company, where you can dictate the terms of the deal. If the company wants you working exclusively for them, make them pay for that right.
posted by COD at 10:17 AM on May 9, 2011 [1 favorite]

>If you are going to absorb 100% of the risk you are better off starting your own company and selling your services as a consultant.

This. And they're pursuing you, so tell them to go stuff their "due tonight" spiel...
posted by circular at 11:52 AM on May 9, 2011

Response by poster: nickrussell - COD - circular -- All helpful, eye-opening comments, thank you. I'm now putting together some terms that I will propose (and most certainly not by their demands of tonight!).
posted by Kruger5 at 7:17 PM on May 9, 2011

It would also behoove you to brush up on some cultural knowledge when doing business with other countries. I have experience in working for India-based companies and if you are trying to negotiate business, keep in mind that there will be differences in they way you do things vs. their way. Be prepared for negotiation, get everything in writing and keep a handle on your workload.

The "due tonight" request should give you an idea of what you will be dealing with. COD's comment is spot on - keep the playing field level. I cannot stress this enough.
posted by sundrop at 4:47 AM on May 10, 2011