Working for yourself as an independent consultant or contractor, is a lot like standing on a precipice. Your heart is pumping fast, you’re a little short of breath, but the view from your solo vantage point is exhilarating, and you can’t wait to see where the wind takes you as you maneuver through the environment defining your unique journey.
Consulting has its own set of unique risks and advantages. You balance the freedom and rewards of controlling your own destiny with shouldering a number of responsibilities and liabilities you wouldn’t experience working for someone else.
Consulting offers a wide variety of tempting advantages. The benefits of working for yourself include:
1. You are the boss.
Clients and customers can request that you perform certain services, but you decide if you want to do the work. As an independent consultant, you work where, when and how much you want, and you can take a day off or vacation whenever you please.
2. You drive your own economic destiny.
As the boss, you make money for yourself rather than someone else, and you decide how much you charge clients and what you pay yourself. You also make all decisions regarding investing and expenses.
3. You have the ability to make more money.
Your experience and skills in the area in which you are consulting result in commanding a high hourly rate for your services. For time worked, consultants often make substantially more than employees.
4. You can have greater flexibility and diversity.
When you work for yourself, no two days are the same, so boredom is unlikely. As the wearer of all hats, you can find yourself dealing with marketing, distribution, finances and customer service all in one morning. The flexibility of being able to work whenever you want is also attractive if you’re balancing other responsibilities or interests.
Of course, consulting and contracting have their drawbacks and risks, and it’s important to consider them before becoming your own boss.
1. Lack of job security and financial security.
As an employee, your employer is responsible by law to pay you. When you work as a consultant, there are no such guarantees. You only get paid for work you’ve completed, and if you haven’t drummed up sufficient work, you experience a budget shortfall. In addition, you are also on the hook for any business debts you incur.
2. DIY benefits.
In addition to health insurance and retirement 401(k) plans, employment also entitles you to unemployment insurance benefits, should you lose your job, and workers’ compensation, should you become injured. As your own boss, you are responsible for obtaining your Business Owner’s Policy and other coverages to safeguard yourself and your finances. And it’s up to you to set up a retirement fund and pay into it.
3. You may not always get paid, or it could take a long time.
Since you’re not an employee, you aren’t likely to be the first on the list to get paid, which can mean slow pay. Even worse, you risk some clients not paying you at all. (Here are some tips for mitigating cash flow problems).
4. Change is inevitable.
Remember the humdrum routines you were so eager to avoid? As a consultant, the only constant in your life is that change is inevitable. That means responding to uncertainty and being comfortable with ambiguity.
For the adventurous and free-spirited willing to work extra hard, being a consultant brings exhilarating changes to your professional life. Strap on the necessary protective gear, step off the self-employed precipice, and see how far you can fly.