Thursday, April 30, 2009

Self Employed, W2 Contractor, 1099 Consultant vs. Employee

In the last few weeks I’ve been doing a lot of thinking around Plan B and career choices. I thought it might be a good idea to share those thoughts in this weeks post. In the past, and I’m talking about three years ago, I thought consultant was simply a term for someone who couldn’t find a full time job with a company. Now, mainly over the past year, I’ve come to realize that it might indeed be a well thought out choice. Let’s think about this.

Actually most of my friends are consultants now. Originally they may have gone that path as a means to land a full time job with an employer, but I think they’ve come to enjoy being their own boss. As most of you know, when you agree to work for an employer you not only agree to do the job assigned to you, but to also follow their rules, and work within their culture and belief system. Sometimes this is a good thing, and if it is a good match, oftentimes it is a good thing for a long time. I know one of my previous employers had this culture where you were encouraged to always speak up and definitely to call out if you saw a foul taking place. However, also within that culture, it was very difficult to get ahead, especially after a certain age. I flourished there for years and did get ahead until I hit that age barrier. Then I switched to the next employer. The culture there was very different. You were not encouraged to speak out, ever, which was very difficult for me. On the other hand, one was given tremendous freedom to do whatever you thought would be good for the business. So I flourished there too. Until, the culture changed. I am so sure that a lot of you reading this have gone through something similar. I stayed at the last company for a long time after it changed. There is a lot of comfort in being paid well, not having to do much for it, and have all the other support benefits like insurance. So, I’m not saying that going to work for an employer is a bad thing, not at all. What I am saying is why I am starting to think about the whole self employed thing.

A friend of mine told me he really wants to be a 1099. Of course at first I was thinking what the fudge is that? I believe what it represents is this surge in people wanting to be their own boss. To work out of your home, in your own time, according to your values is not such a bad thing. Being a 1099 consultant means that basically you bill for your services. It also means you can have a whole bunch of clients you are working with and the fees that you receive aren’t shared with any one you don’t want to. The 1099 refers to the tax statement you receive from your clients so you can pay income tax on these fees. As to the W2 contractor, that’s a little different I believe. Besides the fact that they actually give you a paycheck (hence the W2), you are actually employed by someone, just not getting other benefits and I guess it’s usually for a specified contracted term. You’re still your own boss to a great degree. I guess if your getting paid mainly by commission, it’s really only different from the 1099 because of tax status. Ultimately, if you have a service to offer and like a lot of freedom, and aren’t tied so much to the security of that check coming in whether you do much or not, then you might want to think about doing this type of thing. It can range from contacting old clients and partners to do work for them, to contacting an agency like Adecco or Olsten Temps to contract out your services. A lot of people are doing this quite successfully. Plus, there is the added benefit of keeping your skills up to date and adding something current to your resume, so that when you do find that job you’ve been looking for, you’re ready to go.

Now tell you something else I’ve run across recently. Oh please, I know some of you are going to think “where has she been?” That being said, it just caught my eye, thoughts or imagination recently. Reading different job adds for Business Development jobs I had come across the terminology, “hunter”. Now being somewhat analytical, I could kind of figure it out. Then I read about or heard a recruiter refer to a hunter vs. a farmer. OK, I guess that the difference between business development and account management. Business development goes out and cold calls and creates relationship and closes sales and account management nurtures those relationships and grows the business. Pretty good huh? Well, Monday a friend said something to me that really nailed it for me. She was talking about how in the investment world, or part of it, nowadays it’s all commission based with no base salary. She looked at me and said, “You know. You eat what you kill.” Oh my God! The concept finally landed. Then yesterday, I was speaking to a recruiter for a W2 contractor job. As she described the position and how it would be compensated, I knew it was a mighty hunter job. Privately thinking, I’d rather live out of my car, or as one of my friends calls it; my four door apartment. So I said to her, I’m not going to waste your time. I am much more of a farmer and would not do well in this position but I know and respect and actually and am in awe of people that do this well. It’s true. There are those of you out there who get a charge out of going out there and nailing the sale and want to be compensated for doing just that. Me, I’d rather eat what I grow.

On that note, I hope you all have found this somewhat helpful. It just brings out the fact that even though there doesn’t seem to be a whole lot out there right now, there are other options. It’s all about knowing that there are other options and keep exploring them. You just never know where they’ll lead.

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