Going Independent or Not: Aggregating the Wisdom of Crowds

This is the follow-up to an article I wrote in August 2010 asking, “When Is It Time To Go Independent?”  I received several lengthy, considered responses both from people that work as independent contractors, and those who do not.  What follows is my summary of what folks had to say.

The Detractors

The folks who express apprehension about going it alone were in the same boat as me:  they were tempted by the idea, but had not taken the plunge.  It’s easy for those of us who haven’t done it to stand back and throw stones.

• Safety. Working for someone else feels “safe”.  For the risk-averse, it’s more comfortable to let some other business owner be the one with exposure.
• Predictability. There’s uncertainty about where the work would come from, and how steady that work would be.  Again, it’s the distinction of being risk-averse.  A steady paycheck is just that: steady.  To have a surfeit of income follows by an indeterminate period of little or no income could drive someone a little batty.
• Epic Fail. Most small businesses fail, often catastrophically.  Some of us have witnessed good businesses go bad due to economic or competitive circumstances.  In other cases, the business owner just lost sight of the business.  However it happens, a small business can disappear very quickly.  There’s not enough inertia to keep things alive if the cash flow slows like with a mid or large enterprise.
• Health Care. The astonishing cost of health insurance in the United States saddles independent contractors with significant overhead right out of the gate.  Particularly burdened are those with families.  This gets easier to deal with as a single person with no dependents, or with a working spouse that can cover the family health care.  Europeans living in socialized nations (some of whom responded) tend to have fewer concerns about health care.
• Overhead. Going independent brings about administrative challenges that are time-consuming and their own stress points: billing, taxes, legal concerns, sales, and marketing.

A Compromise Option

A friend of mine offered up an interesting compromise, which isn’t exactly working for yourself, but offers some of same freedom and self-determination the independent contractor enjoys.

• Sales engineering is an interesting balance between being on your own and working for an enterprise.  You have the backing of your enterprise, but have to be driven to find opportunities and maintain relationships with your customers.

The Supporters

The enthusiasm expressed by those who work for themselves is infectious.  These folks love their independence, and would not live their lives any other way.  Reading some of their responses made me feel like a bit of a wuss for not (yet) taking on the challenge.  One responder even offered to give me a kick in the tush if I needed it!  :)

• Balance. While I tend to contemplate the worst case scenario, I noticed a mindset that was more balanced on the part of entrepreneurs.  They logically understand that there’s work to be had.  Yes, building those first few relationships will take time, and therefore income could suffer during the first year or so.  If you’re financially prepared for that scenario, some of the stress of the early days can be removed.
• Networking. The work comes as a result of knowing people.  Getting your name out there through networking with folks is a big part of the equation.  No one else can do that part of the job for you.
• Commitment. Running your own business can be all-consuming.  You might not have time left for other things, just depending on your goals.
• Reward. Sure, working for yourself means there is a potential for greater income.  One respondent mentioned that he’d never go back to working for someone else unless the compensation package approached what he makes on his own – and he didn’t think that was very likely.  On the other hand, a smart business isn’t going to pay radically more to an independent contractor to get the job done than they would an internal employee.  Therefore, the impetus is upon the independent contractor to control costs and net a higher reward.  Yet another mentioned that he wasn’t making any more money than when he was working for someone else; his income work working out about evenly.
• Do You Matter? The point came up that businesses in the 21st century tend to view employees as skillsets and not people.  Certainly there are exceptions to that, and in my experience it’s the largest companies that have no personal interest in their employees.  That said, there’s a larger point to keep in mind that it’s your skills that are employable as much as you.  What you can do is marketable more than who you are, which arguably favors the independent contractor.
• Why? One respondent made the point that you don’t take on the challenge of being independent because you’re likely to get rich doing it.  You do it because you’re no longer challenged where you are at (bored), you have a point to prove, or you want more flexibility in your life.

So What About It?

The jury is still out for me.  Right now I am laying the groundwork for a potential independent bid, but I’m still sorting out exactly what I want to get out of it. I don’t see it happening soon.  I see a huge advantage in owning my home first, and I’m quite a long way off from that.

Maybe the biggest thing I got out of all of the great responses I received was that I don’t exactly know *why* I am interested in the independent route.  I have to think it all through quite a lot more.