Main image of article How to Become an Independent Contractor

Frustrated with the longer time it can take them to find new jobs, many older workers are thinking about setting themselves up as independent consultants. However, they don’t all realize that involves more than technical smarts: A lack of business and marketing acumen will doom even the most experienced technology experts. Contract NegotiationConsulting can be lucrative and many companies are quicker to hire for shorter, specific projects. However, it may not be a panacea, observes Carl Angotti, board member of Santa Clara-based Professional and Technical Consultants Association. “I usually talk to people and try to ascertain if they’re of the inclination of a business person,” he says. “If they’re not, they should contract through an agency.” PATCA holds monthly networking events in Santa Clara, has a free referral service and provides other programs to help consultants in all industries advance their businesses. Earlier this month, Angotti began co-leading a separate monthly roundtable for new consultants. Despite being over 70, he says he has never lacked for technical consulting work. Indeed, he’s recently curtailed his marketing so that he can work less.

Different Skills

Being a consultant requires a set of skills that are totally separate from technology, Angotti says. “A true consultant is someone who is doing their own business, and doing their own marketing and their own sales, completing the cycle,” he explains. That means consultants need to be willing and able to spend time on chores like bookkeeping, attending meetings and networking for the next job. And older consultants can face additional challenges. “The ones who got laid off, and they don’t realize that it’s hard to find work, ask ‘is there such a thing as job discrimination?’ You bet your sweet bippy there is,” says Angotti. “There is discrimination, but it’s not age. It’s how do you feel when people talk to you. If you come across as being old, you’re going to be treated as old.” In addition, laid off workers often lack perspective on the overall technology industry, which Angotti says can hold them back. They’re so used to working at one or two companies, they may not understand the unique value proposition that they can offer clients, assuming they’re ready for the marketplace. Those workers need to revive or rejuvenate their skills, he says. Angotti suggests that consultants spend 40 percent of their time working for clients, an equal amount of time networking and marketing themselves, and the rest updating their skills and staying abreast of new trends. “You’re going to be working a lot more -- especially at the beginning -- than 40 hours per week,” he warns. “It’s work like doing your books and setting up your website.”

Different Approaches

Angotti identifies three kinds of non-employee workers: consultants, independent contractors and “pure” contractors. In his mind:

  • Consultants solve specific problems for a few weeks up to two or three months. Their work usually involves analyzing a business problem rather than implementing the solution.
  • Independent contractors work for themselves, frequently on standardized contracts. Like consultants, they negotiate their own rates, but work on projects than can span six months or longer.
  • Pure contractors work through an agency, which promotes them to clients, negotiates their rates and handles taxes. Essentially, they’re employed by the agency rather than the client.

For tech workers who want to become consultants, Angotti suggests starting by contracting. Slowly scale back the commitment to the client and use the freed-up time to set up and market your own business. The most frequent questions PATCA members ask deal with setting rates. In particular, new consultants wonder whether they should offer lower rates as they’re building their business. Here’s where Angotti says it’s important to adopt a business mentality rather than the mindset of a salaried employee. “Most people aren’t suited for the sporadic income part, so they price their services dumbly,” he believes. “They start thinking of some multiple of their current salary. They need to determine whether they’re selling at the market, above the market or below the market.” Charging much below market can create a “perceived value problem” in which the customer views the consultant’s skills as being worth less than others’. In addition, Angotti notes, it can be difficult to raise rates down the road.