[james4beach]

My question is for those of you who are salaried employees at a company [that you don't own]. Maybe for people who work as engineers, IT experts, project managers, lawyers, sales reps, anything really.

You currently have a steady paycheque. But you could quit, which would give you more freedom. You wouldn't have to answer to a boss, you wouldn't have to drag yourself into work every day, and you'd have freedom to structure your work (and schedules) as you want. This is assuming you could find work to do on a contract or freelancing basis, which is usually the case for experienced engineers, IT people, lawyers, etc.

Working independently, you might even be able to develop a continuous revenue source of some kind which could make you rich and let you retire earlier. There are more opportunities when you aren't tied down to a specific employer.

If you've ever thought about this, I am curious why you DON'T quit and go independent.

There are many good reasons by the way! Finding and dealing with the contracts is kind of hard. Also, the lack of a steady paycheque is a show-stopper for some people. But I am curious what reasons are important to you... and I ask this because I'm starting to get comfortable as a self-employed engineer, and I'm wondering if I'm missing something. Maybe there are good reasons I shouldn't be doing this, and should go back to being an employee.

 

[james4beach]

I listed engineers, IT etc but you can ignore this list. I think the question applies to just about everyone.

For example, the property manager who I rent from has a superintendent for my building. The guy is an employee of the property management company, and they make him work insane hours (I think he's exhausted). He's a very friendly guy, completely honest, and very sharp ... seems very skilled as a plumber.

I think that people would kill to have a plumber or contractor like this guy. Given how many condos there are in this city, I think he'd have endless work if he were self-employed. Me alone, I could refer him to 3 of my friends with condos.

He'd need considerable savings of course. But let's say he did have savings. Wouldn't a guy like this be better off, going independent and being self employed?

 

[cainvest]

If you've ever thought about this, I am curious why you DON'T quit and go independent.

I'll give my answer to this in the reverse direction to the above. I started my own company doing tech work for a number of places. I really didn't enjoy the busniess or the sales side of things, I was totally interested in learning new technical skills. So a few years down the road I hooked into a really great contract job with a university which took all my time. Eventually I "had to" become an employee due to their contract rules or leave and look for other contract work again. I took the job as the work was really great. A number of years later, NRC and other funds dried up so my work there was winding down.

So I was looking at the beginning again, go back to finding contact work (which really wasn't difficult to find then) or get another job. As luck would have it, I stumbled into a job (really funny story) and haven't looked at contract work (other than really small jobs for people I know) again.

In the end it really comes down to what drives you. If I was solely driven by money I likely could have ramped up my business and hired more people to work for me. However, I found I was happiest just doing the tech work that I like and not being a manager, salesman or businessman.

 

[james4beach]

I'll give my answer to this in the reverse direction to the above. I started my own company doing tech work for a number of places. I really didn't enjoy the busniess or the sales side of things, I was totally interested in learning new technical skills.

It's interesting you mention this. As the months go by, I see that I'm spending a lot more time than I expected doing the business activities ... things to do with money, project management, sales and relationships.

It does make me a bit concerned that I won't get to do enough technical work. So I can really see this concern that you talk about.

So you hopped over to a "regular" job, thanks to the contract you had landed at the time? That's interesting. I wonder if that happens often.

 

[cainvest]

It's interesting you mention this. As the months go by, I see that I'm spending a lot more time than I expected doing the business activities ... things to do with money, project management, sales and relationships.

It does make me a bit concerned that I won't get to do enough technical work. So I can really see this concern that you talk about.

I found it a real pain wearing "multiple hats" so to speak. It gets tiresome constantly dropping one thing to do another, especially in the middle of complex technical work. Now if you can find a business partner to handle the non-techie stuff so you can focus on the fun work, that would be good.

So you hopped over to a "regular" job, thanks to the contract you had landed at the time? That's interesting. I wonder if that happens often.

Yes, my first employee job came about from contract work with them. For my second employee job, I dropped by a friend's work to go out for lunch and we ran into the CEO on the way out. That turned into a 15 minute discussion in the CEO's office, I was wearing a t-shirt and ripped up jeans at the time and he offered me a job.

Going from contract work to employment does happen ... a few my friends did it as well.

 

[Ponderling]

For me most of my design work is involving public road infrastructure in some way. So I would need to get a consulting engineering designation to wing it on my own.
Shell out a ton for liability insurance, software licenses, be slower doing my own CAD that my draftsman, slower and more expensive compiling specifications and quantities. Insurance going to be even more exensive if there is no one else in the office to audit my design deliverables and vice versa.

We do have from time to time senior guys in pools of 2 and 3 leave and set up a smaller consultancy, and sometimes contract back with us . There are also designers who are over 70, and still love to design, and are great mentors who come back on contract, but we usually try to limit them to 35 hours a week, so they can do other things in their life as well . The 35 hours is more an annual average. Get a big design builld job going and in the early days 55-65 hours weeks are 'easy' to fill. Then get the design ticking, and head off on a month of vacation break.

 

[MrMatt]

Most people suck at sales.

I know of a few small businesses/partnerships in the tech world.
1 Guy was the technical brains, the other guy was a "professional hand shaker", together they were unstoppable.

 

[Just a Guy]

Funny, you assume you have no “boss”. The reality is, you have multiple bosses now, each client is your “boss”. You also need excellent sales skills, as you’re constantly selling yourself, your skills, etc. Also, you know the slow periods you have as an employee? No? well that’s because the company covers it up. Like doing accounting, taxes, cleaning, janitorial, hiring, ordering supplies, management, invoicing, etc...you’re now chief cook and bottle washer.

do you have the brains of a businessman, the skill set and thought process is different. There’s a reason more people are employees than business owners...though, I know many employees cocky enough to think they can do it, most businesses fail within 3-5 years for a reason.

 

[cainvest]

Funny, you assume you have no “boss”. The reality is, you have multiple bosses now, each client is your “boss”. You also need excellent sales skills, as you’re constantly selling yourself, your skills, etc. Also, you know the slow periods you have as an employee? No? well that’s because the company covers it up. Like doing accounting, taxes, cleaning, janitorial, hiring, ordering supplies, management, invoicing, etc...you’re now chief cook and bottle washer.

do you have the brains of a businessman, the skill set and thought process is different. There’s a reason more people are employees than business owners...though, I know many employees cocky enough to think they can do it, most businesses fail within 3-5 years for a reason.

^^ Good points.

There are some things you can possibly do to mitigate many things on the list above but that really depends on your clients. If you have enough work around to choose clients wisely this can greatly reduce your overhead.

 

[Rusty O'Toole]

I got into business because I couldn't find a decent job, or for that matter any job. This was when they threw the working class overboard in the 70s and 80s. It turned out I wasn't smart enough to be an employee. I was only smart enough to be the boss.

 

[kcowan]

I enjoyed contract work. I always left 20% of every day for networking to line up the next job and I never contracted for more than 9 months scope. It worked well for many years with the inevitable managing needed around contract transitions.

Many of the assignments lead to follow on contracts with broader scope.

Finally E&Y head hunted me for an executive position at substantial higher benefits. So I rejoined the ranks of the employed. At the executive level, I was given the degrees of freedom I desired.

 

[MrBlackhill]

I currently work in consulting, but I'm a permanent employee. That means I get a steady pay, all the advantages of being an employee, I have lots of colleagues, I have access to a huge knowledge base, to lots of training for free, etc. And I have new challenges every 12 months or so, so I don't get bored.

Meanwhile, I'm building an another source of income where I truely have no boss, but an audience. As long as the audience likes the content, I'll get an income.

My spouse is an employee and an independent at the same time. And she's also working at creating content as a third source of revenue. She ended up having better opportunities from being an employee than being an independent.

She's pregnant and she'll have 93% of her salary. She wouldn't have the same luck as an independent.

Though maybe at some point our sideline income streams will outpace our jobs as employees, so we'll be able to be truely free, without any boss, just an audience and some passive income.

 

[Plugging Along]

My spouse and I have our own consulting business for over 20 years. He goes back and forth between consulting/contracting and full time employment depending on the opportunities and environment. He really sucks at sales and he knows it, fortunately, he is really skilled and specialized and tends to find things quickly. Hopefully that's true as he last gig was done in Jan and it's a different market.

There are definite pros and cons. It very much feast or famine, so you have to be able to weather out the famine times. At the worst of it, my spouse was laid off two weeks after our second was born (2009/2009) and me on mat leave. He looked for both contract and employment ops and ended up having to move and live in NY (we are in the west). That's one of thing with the contract work he was required to travel alot. Now, with more things on line, there may be more options.

A lot of the decision to go contract or not has to do with if you weather the downs. When you have kids or dependents, it's a different ball game. My spouse and I made the decision that he would go out on his own because he never had a desire to climb the ladder and gets bored easily, so likes to jump to new ops. I on the other hand, enjoy the relationships and the stable work. I like building those longer term relationships. We agreed that I would be the 'stable' one so my spouse could go and try to make it big without the stress of feeding the family (That's on me). I was planning to go out on my own when my kids where a little older, and the year I had in the plan, everything tanked here. So now, I have decided I will continue with what I am doing,and if the opportunity arises, I will consider switching. On side note, I get a lot of teaching contracts at the college and at business. I have found doing the part time consulting for me is good enough.

It also helps that I work in a consulting role as an employee. So the only I am missing the bigger bucks, but have the company behind me. I don't care about money as much.

 

[Forebiz]

Many reasons not to do it. For me there was a fear of failing.

I've worked with a lot of engineers over 25 years and I think very few are cut out to be self employed. It could be a lack of skill, drive, personality, self presentation, or communication skills. On top of that income stability, benefits, and being able to handle the business and sales aspects of being self employed isn't for everyone.

That being said I am mediocre at many of the things above but combined with better then average technical skills things have worked out but I stayed a one person show, If I tried to grow I may have failed. I've now been doing Engineering Consulting for almost 10 years and I don't want to ever go back to being an employee.

ps. I consider every client and every employee of the client my boss now.

 

[Just a Guy]

Personally I’ve never really had a job, nor would I ever want one. That being said, having a marketing company, I worked with a lot of “exploited“ employees tried to strike out on their own to get their “fair share” of the money being made by their former employer.

can you guess what happened to the vast majority of these people?

those who can, do. Those who can’t, feel sorry for themselves and complain a lot.

 

[james4beach]

Very interesting reading all these replies, thanks for sharing @Ponderling @MrMatt @Just a Guy @Rusty O'Toole @kcowan @Plugging Along @Forebiz

This is giving me a lot to think about. The liability concern is something I have worried about a bit.

@MrBlackhill I previously had a job like yours, where I was a consultant but with corporate employment. Lots of changes and different projects but with stability of employment. I liked that setup too, it was a good job and it's something I could go back to perhaps.

 

[milhouse]

For me, it's a bit of imposter syndrome. I'm not a perfectionist but rather I overanalyze all the flaws in my work and beat myself up over it, even though most of the time no one gives a damn. I feel if I'm specifically contracted that psychologically, the spotlight would be higher and I'd feel more stressed.

As others have mentioned, there's a sales aspect of selling your skill that I don't think I'd be good at.
In my current position, I've built up enough of a brand/reputation that I know what I'm doing (little do they know ) so that I don't have to market and re-prove myself frequently.

I've also been able to work on a quite a few international projects that have allowed me to travel the world on the company's dime with some additional perks and compensation. Not sure how well I'd be able to secure similar international work on my own.

do you have the brains of a businessman, the skill set and thought process is different. There’s a reason more people are employees than business owners...though, I know many employees cocky enough to think they can do it, most businesses fail within 3-5 years for a reason.

This makes me think of so many great chefs that make amazing food but they end up losing their restaurants because they aren't skilled on the business side of things.

 

[Just a Guy]

Another thing to consider, especially if you’ve been an employee for a long time is the selfless attitude you need. Employees tend to think of themselves first...they are working too hard, aren’t being paid/appreciated enough, need a vacation, etc.

when you run a business you need to worry about the business and the employees first. Something needs to get done, you have to do it. Deadline approaches, you work overtime, bills piling up, you need to qualify for a loan to keep the doors open and payroll gets met. Need a vacation? What the heck is a vacation? Employees want a raise, feeling appreciated? You’re the Rich exploiter of the poor...

dont forget what happens if you land a big distribution contract with, say, target...who declares bankruptcy with your unpaid inventory in their warehouses being auctioned off to pay target’s debts, not yours...

if you’re selfish, the company will probably die.

 

[MrBlackhill]

I've also been able to work on a quite a few international projects that have allowed me to travel the world on the company's dime with some additional perks and compensation. Not sure how well I'd be able to secure similar international work on my own.

True! That's another thing I've really enjoyed.

 

[Juggernaut92]

This is a very interesting thread.

I work in IT and I would say in about 5 years I would be at the place to strike out on my own if I wanted to. I know relatives and others who work exclusively through contracts. They can be quite lucrative and there are plenty of opportunities (to the point where I have heard of some people doing 2 contracts at the same time) available especially considering that most if not all of the work can be done remotely.

That being said I am not sure if I would go the contract route in 5 years. One thing that stops me is the constant need to reapply and sell yourself. If I found a way to some how automate it a bit like just having a really good linked in and recruiters just contacting me then that would take care of this problem.

I have been a lone wolf for a big chunk of my life. That being said I do not necessarily enjoy it. I do like the place where I work right now a lot because of the social aspect of it(talking to coworkers/people i help and physically going to the office). If that was not present right now then my mental health would take a bit of a nose dive. Especially right now with covid going on. If I was in a relationship/married then maybe I would feel different about this and would be more inclined to contract work. A lot of consultant work in IT is remote which would mean I would be home all the time.

Another drawback to consultancy work for me would be constantly learning on my own. IT is super fast paced and things can change very quickly. I am good at self learning/being adaptable but what I noticed at my current company is that if you have coworkers who do the same thing as you then you can leverage the information they have and vice versa. You can learn together and learn a lot more. Also, you can learn on the job and get experience as opposed to just studying the theory. If we deploy a new application at work then I will get trained on it and get acquainted with it pretty quickly.

That being said I am still open to consultancy work and maybe in 5 years I will feel different about the things above.

I am also interested in investing so I can have a nest egg and leverage that later in life to have more free time on my hands. I was also thinking of doing some kind of side hustle (youtube, rental property, dropshipping, etc) to increase my income and diversify it. I am currently reading an excellent book called "Make sure its deductible". Its a book on all the tax write-offs you can access when you are incorporated or are a sole proprietorship. I really like it because its specifically for the Canadian tax system.