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Stop Freelancing

339 pointsby robertnealanover 11 years ago

43 comments

bdunnover 11 years ago
It really all boils down to risk management.<p>If you&#x27;re a self-identified say, &quot;Ruby freelancer&quot;, the value proposition is &quot;I am an independent Ruby developer for hire&quot;. For staff augmentation gigs or applying for a FT position, this is all well and good, because whoever&#x27;s hiring is looking for warm bodies with specific technical capabilities.<p>However, many companies are looking to solve specific business problems and might not know how. Simply hiring a developer who happens to know Ruby doesn&#x27;t guarantee that the problem will be solved — it&#x27;s a huge risk. It&#x27;s sort of like saying, &quot;all I need is someone who knows how to swing hammers if I want to build my wife and I&#x27;s dream home.&quot;<p>Mitigating that risk means stepping away from the &quot;&lt;technology&gt; freelancer&quot; title and becoming a business consultant <i>who happens to use e.g. Ruby</i> to solve business problems. On your end, this is going to require less time spent thinking about the technology, and more about the path to solving the underlying problem at hand. From the perspective of a client, this is a much safer bet. And when there&#x27;s less risk involved, clients are willing to spend more. And treat you more as a consultant. And you&#x27;ll be happier, your closing rates will go up, etc.
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jonnathansonover 11 years ago
It really depends on what types of clients and gigs you want to take on, and what sort of ambitions you have for yourself as a one-man shop. Do you <i>want</i> to remain a one-man shop? If so, biting off more than you chew can be hazardous to your health (literally). You don&#x27;t want to land the Pepsi account if you&#x27;re not ready to handle Pepsi volume.<p>By presenting yourself as an agency, you might signal a higher degree of professionalism and (theoretical) resources. You&#x27;re more likely to get into serious contention for those Pepsi contracts. At the same time, you might be signaling yourself as being too big or too expensive for the thousands of smaller, more easily attainable, ad hoc gigs that really do want an individual freelancer.<p>And BTW - you really don&#x27;t want large-scale engagements, the kind that routinely go to actual agencies, if you&#x27;re not running an agency. Those gigs are designed for agencies with staffs and resources to deploy. There will be more volume than you can handle as an individual contributor -- including all the work involved in client management, reporting, schmoozing at the corporate HQ, etc.
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leknarfover 11 years ago
In general, presenting yourself as a professional is essential, but it’d be disadvantageous to act like a dev shop if you’re an individual.<p>In technology, there&#x27;s a general distrust of &quot;general contractor&quot; style operations. No one wants to hire a developer for $200&#x2F;hr, only to have him turn around and send the work to an off-shore developer for $20&#x2F;hr. In fact, most freelance contracts have &quot;no sub-contractor&quot; clauses that explicitly disallow this.<p>Because of this mistrust, some clients don’t even consider working with out-sourcing firms and instead actively seek out individual contractors. They want professional contractors (you should have a LLC, a tax ID number, real legal contracts, etc.), but want that professionalism to come with a human face. Any individuals that are trying to compete with the dev shops are missing out a big market that’s a more natural fit.<p>We’re actually running a startup (<a href="http://getlambda.com/" rel="nofollow">http:&#x2F;&#x2F;getlambda.com&#x2F;</a>) that represents professional freelance developers and helps them find precisely these sorts of hiring companies. If anyone is looking for help starting or expanding a freelance business, we’d be happy to chat about what we’ve learned.
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johnkpushover 11 years ago
We prefer hiring consultants who bill us as a business rather than as an individual. It&#x27;s risky and more costly hiring and paying an individual consultant:<p>* If an individual consultant gets injured, we&#x27;d have to pay the individual&#x27;s worker&#x27;s comp&#x2F;unemployment benefits.<p>* When it&#x27;s B2B, we don&#x27;t have to worry about &#x27;tax nexus&#x27;. If we&#x27;re based in NY and hire an individual in California, we now have to register and pay some tax in state of California. Hiring a business erases that responsibility.<p>* The consultants who have a business are usually more serious and mature. Invoices are cleaner and the experience is more professional all around. Sounds cliche but it&#x27;s true.<p>Edit: formatting
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skrebbelover 11 years ago
This feels very culture-specific.<p>Purely anecdotally, I started freelancing a few months ago, and my experiences are very different. I live in the Netherlands. Here, relatively few programmers decide to freelance, and most who do clearly present themselves as a one-man company, not just as &quot;a guy&quot;. It&#x27;s also impractical to freelance without being registered as a business, so maybe the registration process helps some starting freelancers &quot;flip the switch&quot;.<p>Also, I&#x27;ve never experienced anything like pity, as the OP describes. Much rather, people appreciate that I dare taking the comparatively high risk involved (I don&#x27;t think it&#x27;s a high risk at all, but many people used to a European-style safe job contract feel differently).
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jsonneover 11 years ago
I think it&#x27;s an issue of signalling. In Econ they call it information asymmetry. When one party knows more than the other they try to give us &quot;signals&quot; to show their quality. It seems as though as packaging yourself as a company you&#x27;ve managed to signal that it&#x27;s a serious endeavor as opposed to a passing freelance gig.
brennenHNover 11 years ago
This is the kind of positive practical advice I wish there was more of on Hacker News.
martininmelbover 11 years ago
For what it&#x27;s worth, if you do decide on a company, call it something modest - and don&#x27;t try to pretend that you&#x27;re something that you&#x27;re not or pretend that you&#x27;re bigger than you are. Seeing a business card that reads:<p><pre><code> John Smith CEO and President John Smith Global Design Enterprises </code></pre> just does not cut it.
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marknadalover 11 years ago
While I haven&#x27;t gotten a business license, I have found that regularly increasing my hourly rate for new clients has done wonders, and moving from hourly to then daily to weekly rates. I now position myself as a data and code synchronization specialist, I guarantee my clients a seamless use of their data and code no matter where it is, and this is enough value that people are eagerly willing to pay. Be the specific solution for a company, then you&#x27;ll be in charge - not the other way around.
ndcrandallover 11 years ago
The main differences between being an individual vs a company are the intentions for which a client hires you.<p>Being &#x27;Designer John Smith&#x27; attracts companies hoping to lure you in as a full time employee eventually. This can be good for finding work when you don&#x27;t decline the possibility of full time work, but can burn bridges when you decide to leave the client.<p>Being &#x27;John Smith Design Studio&#x27; attracts clients looking to offload development to another company in order to meet deadlines and get stuff done.
pvnickover 11 years ago
This seems like a great idea, one that I&#x27;ve been tossing around in my head for a while now. To the skeptics (of which HN has in droves), has anybody ever gone in the reverse direction, ie, from having their own client-funded business to being &quot;freelance&quot;?
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Nursieover 11 years ago
Meh. In the UK this line is non-existant. To be a freelancer you set yourself up as a company (it&#x27;s the most tax efficient way) so exactly whether you position yourself as a body for hire or a solutions company is up to you.<p>If you want to be a solutions company then be prepared to be a salesperson as well as engineer. If you want to be a body for hire then there are hundreds of agencies that will do that part for you.<p>They&#x27;re all assholes, but that&#x27;s their job.
jakejakeover 11 years ago
I&#x27;ve never really thought that much about having a company just for branding purposes. But, I&#x27;ve run my business as an official corporation for about 10 years now, even though I haven&#x27;t been 100% freelance for all of that time. There&#x27;s some running costs for the corporation itself, but but it has a lot of benefits, tax deductions being an obvious one.<p>Also if you don&#x27;t have a corporate tax ID and bank account, then some clients may insist on withholding taxes and pay you as regular employee, so that they don&#x27;t look like they&#x27;re trying to dodge payroll tax. Again this affects your ability to control your own salary and tax filing and you can avoid it by billing them as an officially registered corporation with checks written out to your company, not your personal name.<p>The corporation also helps if you bring on more people to help because you can pay them properly with tax withholding and everything is legit. It&#x27;s not really that much work using an online Payroll service.<p>I definitely recommend it if you are earning more than a few thousand dollars per year.
fencepostover 11 years ago
I&#x27;m hoping to do this by the end of the year or soon thereafter, just so I can start working on being an employee (W-2) of my own company.<p>My motivation was listening to Gina Trapani (of Lifehacker, etc.) talk on the In Beta podcast (<a href="http://5by5.tv/inbeta/73" rel="nofollow">http:&#x2F;&#x2F;5by5.tv&#x2F;inbeta&#x2F;73</a>) about how she and her partner in applying for a mortgage basically were having to leave out Gina&#x27;s income because as a self-employed and 1099 contractor with multiple revenue streams her &quot;career&quot; is too complicated in ways that banks are just going to ignore&#x2F;reject anyway.<p>I consider myself lucky in that I bought my home (and signed my mortgage) in the waning days of my time at a midsize company, but I don&#x27;t expect to live here forever and with the way banking changed after 2008 I&#x27;m sure I&#x27;d have a very hard time getting a mortgage now even if I was putting down 50% of the purchase price up front.
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krmmalikover 11 years ago
Hmm. I have mixed feelings about this. I do agree with the sentiment but my experience has been different. I think it depends on your target audience. I&#x27;ve found when working with Start-Ups they prefer the personal touch and want to deal with me as an individual. I can email from my gmail account, conduct consultation over skype and even put smileys in my email.<p>I&#x27;ve found it very easy to attract and nurture leads.<p>When dealing with a conventional business however, everything changes. I need a corporate email address, a limited company name, VAT reg and everything has to be done in person. Even just getting a reply to my email is hard work.<p>Not to mention, even if I do get my foot in the door with an initial consultation, convering that into paid work is seriously hard work because i have to deal with things like being on an approved supplier list etc.<p>So yes, if your target audience is B2B (traditional) I&#x27;d agree, but if it&#x27;s consumer or start-up - not so much.
ChristopherMover 11 years ago
Tl;Dr &quot;Perception is 9&#x2F;10 of reality&quot;<p>This was a good example of how it can yield results when selling your services. It&#x27;s also very valuable if applied correctly to many areas of life. As an employee, customer, a defendant in a legal case, when you are trying to attract a mate, etc...<p>The important thing to remember is &quot;how do others perceive me?&quot;. Based on that &quot;what can I do to change their perception?&quot; Of course you need to figure out what image you want to project; that image is also situation dependent.
bluedinoover 11 years ago
From the other side of the table - I might be much more likely to work with &quot;John Smith, Designer&quot;, than I would with &quot;John Smith Design Studio&quot;.<p>Why&#x27;s that? When I work with &quot;John Smith, Designer&quot;, I&#x27;m getting John. When I work with his design studio, he might be billing me for work done by his intern or the guy he hires that isn&#x27;t as good as John.
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dreamdu5tover 11 years ago
I did the same thing. I freelanced under a company name, with most people not realizing it was just me.<p>There&#x27;s no reason not you really, the benefits are so numerious in how people perceive you.<p>Honestly, I thought a lot of people did this. I&#x27;m shocked that this is a novel idea to many freelancers in the comments. Branding <i>is everything</i> as a freelancer.
josh_rosenblumover 11 years ago
One of the signaling effects this may have is that your corporate identity has built up re-usable processes, code libraries, infrastructure, and other IP. This itself can be useful both as a signal and practically. If you can talk about the corporate identity having processes in place -- even something as simple as a repeatable process for escrowing code -- this can be something that a potential client can lock onto versus a &quot;freelancer&quot; with no repeatable process. It may be an irrational bias, but I&#x27;d be willing to bet that most prospects would be more willing to ascribe repeatability and predictability (a key point in evaluating service providers, no matter the scale of the job) to a corporate identity than to a personal identity.
wojt_euover 11 years ago
Disclaimer: below opinions based solely on personal experience<p>As a &quot;freelancer who knows how to deliver and maintain software&quot; I easily find clients who understand prototyping, prioritization, shipping features incrementally.<p>As soon as I try to market myself as &quot;software company&quot;, every conversation seems to start with – excuse my language – <i>estimating</i> and <i>budgets</i>. What&#x27;s more, they ask to estimate something vague, &quot;oh and here we do some reports, maybe with charts&quot;.<p>I prefer estimating only small bits to inform decision at hand: do we refine the design so that it looks less &quot;Bootstrapy&quot; (2 days) or add referrals feature (3 days). And in my experience clients who embrace this style of work seek &quot;freelancers&quot;.
j45over 11 years ago
There is a big mindset shift between freelancer, to contractor, to consultant and beyond. All, however, can be relevant and it&#x27;s important to know which one you can provide and what a customer is looking for.<p>I have a post somewhere here on HN outlining it if I can find it.. :)
krrishdover 11 years ago
In my case, it really worked the opposite way. When I was an &#x27;agency&#x27;, I barely had any clients because they didn&#x27;t feel personal. When I used my name, they were more comfortable and were able to relate more, thus feeling more inclined to hire.
karnajaniover 11 years ago
I thought we were calling ourselves consultants now.
joriswover 11 years ago
I freelance by my name and only my name because I think pretending to me more than yourself is selling people BS.<p>The clients who hire me and have hired me are able to make the distinction between a &#x27;cute&#x27; freelancer and a professional who will deliver.
lscover 11 years ago
huh. Interesting.<p>The thing is? I have no trouble at all getting freelancing or &quot;contract&quot; work where I&#x27;m paid by the hour, and where I&#x27;m expected to pretend like I want to be a full time employee.<p>I mean, other than the pretending, I have no objections; usually the work is easy and the pay is good.<p>The thing is, I like mercenary work, and I&#x27;m good at it (Most of the gigs I&#x27;ve gotten, well, they seem to be looking for someone who wants full-time work but can&#x27;t get it without contracting for a while first. Generally speaking? I am better than most people who can&#x27;t get full-time work, and <i>way</i> better than most people who can&#x27;t get full-time work, but who can pass the contracting interview process.)<p>I have a business (and a business licence, and a corporation, and employees, and health +workers compensation insurance, and actually rather more revenue from hosting&#x2F;VPS customers than I could reasonably expect to make from consulting) - but I still don&#x27;t have whatever it takes to get larger or more monied companies to hire me as a company, rather than as a freelancer.<p>It&#x27;s... odd, &#x27;cause generally speaking? I don&#x27;t hire people who aren&#x27;t better than me. If you can hire my company, rather than me? even if you are paying rather more, you are getting a significantly better product.<p>Now, you could say, the primary difference is that when freelancing, often I use a body shop. Which could be the case; but more than once, I&#x27;ve had a manager call me back after I&#x27;ve left and negotiate a new deal (that he then takes to the body shop) so I guess I&#x27;m a little unclear on what value the body shop is bringing the client, so I have no idea how to go about replacing them for my corporation. (the body shop is bringing me value in the form of giving me access to clients who won&#x27;t do business with my small company.)<p>Edit: note, I &#x2F;can&#x2F; get gigs without a body shop, and flat-rate gigs, too... but... the people I can sell to directly? Generally speaking, they have... much smaller budgets. To the point where I end up making less money. A whole lot less money.<p>So, that&#x27;s my problem; it seems that the body shops are only set up to deal with hourly work, and it seems that I lack something that companies with money need in order to do business.<p>I have been called unprofessional, and eh, I have a hard time arguing... but like I said, I do just fine; generally far above expectations when going through a body shop, and I &#x2F;do&#x2F; have an infrastructure for outsourcing more of the professional bullshit.<p>To be clear, I&#x27;m not saying the body shop isn&#x27;t bringing value to the customer... just that I don&#x27;t know what that value is.
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anovikovover 11 years ago
I had a completely opposite experience. Nobody wants a company because everyone thinks a company with simply hire a few Indians, make a 3x profit, and add no value. Freelancer gets way better reception.<p>I even know a lot of consulting companies who pretend to be a bunch of individual people, hiding the fact they are linked, and don&#x27;t know any examples of the ooposite - an individual pretending to be a company - and i see no reason from a customer&#x27;s perspective to prefer a company to an individual unless they have a job so big&#x2F;diverse that an individual can&#x27;t do it.
rbreveover 11 years ago
My experience us the other way around, I have been working for my web dev company for around 10 years, we had a lot of projects, but we also had a lot of expenses, at the end I was working 12+ hours per day and not making that much money. We had to close the company, now I am a freelancer, working less hours from home and making more per hour. It is less stressful and I get to pick the projects I like more. At the end it all depends, you can&#x27;t generalize for everyone.
StefanPatelskiover 11 years ago
I used to be one of those kid webmasters working from the basement of my parents. Though I did technically have a company. So having a company doesn&#x27;t really mean anything.
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kristofferRover 11 years ago
I&#x27;m struggling with this, since it feels slightly like lying to call just myself &quot;we&quot;.<p>What should I answer when the clients ask who &quot;we&quot; are?
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manismkuover 11 years ago
That&#x27;s quite true. During past couple of months I have seen real talent is not sitting in front of your desk and do coding. This way you can walk but can&#x27;t run. Everything depends how well you sell yourself and make good picture in others mind. Ultimately your goal is presence outside your desk &#x2F; room. I will say what you have experienced is ground reality about how business works.
mpratover 11 years ago
I get the marketing &#x2F; branding aspect. From a contractor&#x27;s point of view, though, there still isn&#x27;t any guarantee that the firm that is you that is doing contract work will do quality work - there is no audit system other than referrals anyway. I wonder why people are more inclined to refer companies than individuals. Do companies incur more overhead for the client?
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mikkomover 11 years ago
&gt; Behind the scenes barely anything has truly changed<p>This might be is different from country to country but legislation is usually <i>very</i> different when you are freelancing vs contracting as a company. So even if the author doesn&#x27;t understand it yet, when shit hits the fan he will (and I don&#x27;t want to sound too harsh but eventually with companies it always will).
mehmehshoeover 11 years ago
This reminds me of a PandoMonthly talk with Chris Sacca:<p><a href="https://www.youtube.com/watch?v=iqUG2_cmZ6I" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=iqUG2_cmZ6I</a><p>He talks about his &quot;aha!&quot; moment when he was broke and then realizes the people he meets would rather see him as a part&#x2F;leader of a team, and not an individual.<p>The moments I refer to are between 32-36 minutes.
PilateDeGuerreover 11 years ago
Hey Robert,<p>Thanks the article and the debate it inspired.<p>Tell me, was picking a company name that Google attempts to auto-correct a conscious choice? I couldn&#x27;t get to your website just by searching for your company&#x27;s name on my first try.<p>Follow up: About how long do you think it will take Google to recognize I am not making a spelling error and I am looking for your services?
yaelwritesover 11 years ago
I like this. It&#x27;s all about positioning. I&#x27;m technically a freelance writer&#x2F;editor, but I&#x27;ve found that when I call myself a &quot;content strategist,&quot; I can command much higher wages doing the exact same work (since I have to do social, deep analytics, etc. as a writer anyway).
etanazirover 11 years ago
note in related post &#x27;Investors don’t want to meet you. They wanted to be introduced to you (42floors.com)&#x27; ...human beings have a default filter on self promotion. If you are promoting a 3rd entity; even the shell &#x27;myCo&#x27; you can apparently circumvent the first layer of this defense.
tobinharrisover 11 years ago
Love this story.<p>Robert has just re-marketed himself by simply switching his workspace and by using a legal entity to represent himself.<p>These tweaks have had a positive impact on how he&#x27;s perceived by clients, and how he perceives himself. And now we can sell more confidently, earn more money and have more fun. Win.
christiangencoover 11 years ago
Interesting. I&#x27;ve been toying around with this idea for a while, but inexperience with starting a company is prohibitive enough to prevent action.<p>How is your current freelance shell company marketed? I&#x27;d love to see what that website looks like, and how you advertise it differently.
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throwmeaway2525over 11 years ago
Cheating a bit since I didn&#x27;t read the article, but having been in and out of that world for a number of years, there were always certain types of clients who didn&#x27;t want to hire a company--they only wanted to deal with individuals, for reasons stated or unstated.
mcvover 11 years ago
I did this right away when I became a freelancer. Registered my own company, which I understood to be necessary to send invoices. Got an office to work from. But I&#x27;m still a freelancer. Or an independent contractor, but what&#x27;s the difference?
thibaut_barrereover 11 years ago
Funnily, around me the opposite is true: clients I know are actively avoiding consultancies&#x2F;companies in favor of freelancers, because some of those consultancies have the bad reputation of selling gradually more low profiles for expensive prices.
damon_cover 11 years ago
I don&#x27;t have time for all that marketing stuff... I&#x27;m too busy freelancing!
sciguy77over 11 years ago
That is a fantastic point. Where would IDEO be if David Kelley didn&#x27;t first make the leap to David Kelley Design?