Independent Contractor

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Independent Contractor - Transition From Employee to Consultant.

Independent Contractor:

Transition from Employee to Consultant.

Sociologists say we are in the Fourth Industrial Revolution. It is earmarked by increasing number of workers hired as independent contractor instead of employee. Sometimes negatively referred to as the Gig Economy, this trend is only just getting started. Statistics Canada estimates over 20% of Canadians work as freelancers. By 2020, predictions place 40% of the US workforce in this category.

So let’s just get used to this. Have you been laid off recently?  Depending on your circumstances, you may see it as a threat to your financial well being. Or you might welcome it as an opportunity to introduce flexibility and variety into your career.  In reality, many of our clients find themselves inadvertently taking on part time jobs as independent contractors just to make ends meet. Permanent jobs are simply not available.

Regardless of how you get there, we believe the process needs to be managed. Making the transition from employee to consultant requires strategic planning and careful thought. If this Gig Economy is here to stay, then you might as well turn the opportunity on its head and get it working for you.  Consider starting a business to pursue an interest, opening up a formal consulting practice in a specialized field or offering up your services as an independent contractor.

Reflection and Goals.

We recently had the pleasure of helping Steve, a 56 year old Senior Project Manager who required help with career planning after a layoff. He had a 25 year track record of leading complex multi-billion dollar initiatives spanning several industry sectors, including energy and banking.

Our first order of business was to reflect on his past and compile an inventory of his work experience. After that, we had a detailed conversation about his goals going forward.

Steve had a wealth of valuable and transferable project management skills. He was looking to retire within 10 years and at a stage where he was seeking a flexible lifestyle. We found him quite suited for a consulting role in engineering, banking or the energy sectors.

But where should he start?

Health of the Marketplace.

It started with a thorough investigation of the marketplace he was stepping into. Steve needed to understand how large the segment was, who his customers would be and whether there were regulatory compliance issues he needed to meet as an independent consultant. In addition, we helped him identify current and long term trends that could affect his marketplace.

The point of this exercise was to ensure that as an independent contractor, he stepped into a segment that was healthy and viable enough to provide him with a steady stream of customers for the next decade. We helped him build a list of potential customers, placing his previous employer and contacts at the top of the list. He also created a list of his main competitors.

The Independent Contractor Value Proposition.

Next, we worked with Steve to concisely identify the suite of services he would provide along with his fee structure. In order to do this properly, he had to eyeball his competitors to ensure he had a marketable edge.

Furthermore, Steve was offering the same services as an independent contractor as the job he performed as an employee.  Costing out his fee was crucially important. While it had to meet industry norms, he had to charge more than what he earned as an employee. This is because he now incurred additional expenses previously carried by his employer. These included use of his home office, internet & phone services, medical/dental insurance coverage, bookkeeping etc. It is not unreasonable at all for employers to hire former employees as higher paid consultants.

Marketing Materials.

Once all of this was clearly outlined, Steve officially registered his business.  He had all the information in place to develop marketing materials, such as business cards and brochures.

All consultants require an on-line presence. Depending on your circumstances, you may simply need to polish up your LinkedIn profile, set up a Facebook page, or develop a fully search engine optimized website. You will want references and testimonials prominently featured on this digital platform.

This is the first place your clients will go to assess you.

Indepenent Contractor Legal Contracts.

An important step for Steve, before stepping out to meet potential clients, involved a meeting with a business lawyer. Steve required a contract form that outlined the conditions for engaging his services, payment schedules, terms for breaking the contract as well as the limitations of his services.

All too often, employees making the transition into consulting undermine the value of their time and expertise. As an independent consultant your client must always understand the connection between your fees and your services. The more the client wants, the more they should pay. A formal contract can provide a solid framework for such negotiations.

Selling Yourself as an Independent Contractor.

Independent Contractor - Selling YourselfNetworking is the life blood for funneling potential clients into your pipeline, especially in the early days. Just like job interviews, you need to prepare and practice your elevator pitch and become very sharp at networking. Not everyone is good at it.

We used targeted outplacement coaching to work closely with Steve to ensure he had the art of networking down pat. In addition to practicing what to say, we also ensured Steve became intimately familiar with the contact manager and calendar functions on his phone and computer. And we helped him set up a proper system for tracking his progress and following up with prospects.

Steve felt confident to begin networking as soon as his marketing materials were ready. It started out with a phone call to former colleagues and employers. We also reminded him to tap into his valuable social network to help get the word out.

Financial Planning.

Transitioning from employee to consultant comes with one big hurdle: the absence of a secure biweekly paycheck!  The last part of your transition must include a session in financial planning. Financial stress is the main reason why some clients stray from the solid career transition plan we put in place for them.

Our financial planning coaches will not only help you set up a system to budget and plan your cash flow, we will also help you with strategies to manage the highs and lows of fluctuating income, typical for early stage independent consultants.

Equity’s team offers a very unique service supporting individuals transitioning to careers as independent consultants.  If you are considering taking this leap or find yourself constantly employed in temporary contract jobs, contact us. Equity can help you maneuver through the Forth Industrial Age so you do not end up overworked, underpaid and exploited.

Independent Contractor – Transition from Employee to Consultant | Author: Susan Heim
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