Consulting for your Current Employer: Make Your Boss Your First Client
Alright, like last week, this week’s reader question Monday occurs on Tuesday, but this time because I was traveling all weekend until getting home Monday morning at 3 AM. So I basically just walked in the house, laid down and went to sleep, rather than logging in to publish.
Today, I’m going to talk about consulting for your current employer. Er, well, consulting for your current-but-soon-to-be-former employer. How do you flip your current salaried gig into a consulting arrangement?
Here’s the actual reader question.
You mentioned in a post that when you started freelancing full time, you negotiated a contract arrangement with the employer you were leaving. I was wondering if you could go into how you framed that conversation and if there were any special circumstances that allowed you to do that. Thanks!
First of all, it’s now been a pretty long time since I did that. My recollection is thus rather hazy, but I think my specific situation will not prove overly helpful to most reading.
That position was an executive leadership role. Leaving one of those voluntarily, with an offer to consult, tends to have a high chance of success compared to leaving an individual contributor role. They needed my help with things like hiring my replacement, transitioning responsibilities for my direct reports, and that sort of thing. And, I doubt most of you reading this advice (or the reader asking) are leaving CIO/CTO roles. So I won’t focus on that.
Instead, I’ll draw on my career experience and lengthy organizational consulting history here. How can a software developer convert an employer into a client?
Before you set your master plan in motion, however, stop to consider something. What do you want your freelancing to look like?
In Developer Hegemony, I talk about how corporate opportunists should view themselves not as employees, but as companies of one. For instance, most people don’t think anything of volunteering to work 45 or 50 hour weeks for no extra money. They assume it’ll all take care of itself come annual review time. (It won’t.) But if you regard yourself as a company of one, then this behavior looks like you agreeing to give a client a 25% discount on your services for no reason.
If you’re a corporate employee and not in the habit of viewing yourself this way, I suggest you start. It’ll help you avoid sucker culture. And it’ll give you interesting perspective, such as the fact that you’re really a service provider with exactly one client — namely your boss. And that client exerts total control over your financial well being. This makes you a so-called captive shop — you’re a captive of an 800 pound gorilla client that can crush you on a whim.
The question to ask yourself when you contemplate going freelance is whether or not you want to stay that way. Seriously. Because this will determine how you approach making your transition.
The Tom Hagen Strategy
In the movie The Godfather, Tom Hagen is a lawyer that represents the Corleone crime family. In one scene, he explains his livelihood to another character’s dismissive challenge of “who the hell are you?”
I have a special practice. I handle one client. Now you have my number. I’ll wait for your call.
As lawyers go, Tom Hagen is a captive shop. He puts his fate entirely in the hands of the Corleone family, who treats him as a de facto employee. If you want to go this route (at least to start), then you have a specific strategy for converting your employer to your client. It has two core components:
- Make yourself indispensable.
- Offer your resignation, but with a budget-neutral pitch to stay on indefinitely as a contractor.
Pitching Yourself as Tom Hagen
Figuring out how to make yourself indispensable to this team is beyond the scope of this post. Suffice it to say that you do this by acquiring unique responsibilities and lots of domain knowledge. (You could just work really, really hard, I suppose, but that’s an idealist’s approach to impressing fellow idealists, so it might or might not work, depending on whether you make this pitch to an idealist.)
Once you’re pretty sure that your boss would be loathe to lose you, plan your pitch. First, find a calculator like this one to determine a fair hourly rate to propose. Then, sniff around a bit to see if there are policies about using contractors or not. Even if there are, you can probably get around them, but you should be prepared to address any objections that may come up, in whatever form.
Then, resign, but don’t miss a beat proposing that you continue working indefinitely. Cite your reasons for going on your own and hold firm, but make clear that you want to continue doing what you’ve been doing. The boss will flip from viewing this as a normal resignation to an obstacle that you can work together to overcome, like if you told her you had a family situation that required you to flex your hours.
Of course, you should be prepared for them to pass on the offer for you to contract. This is a relatively high risk endeavor, even if the Tom Hagen path is the lowest risk version of it.
The Software Contractor Strategy
Alright, let’s move out of captive shop territory. Planning to work indefinitely for your former boss is comfortable. And it lets you get used to the mechanics of self-employment without much of the risk. You can learn all about form 1099, estimated taxes and such without also worrying about finding gigs. But sooner or later, you’re probably going to spread your wings and stumble awkwardly toward some semblance of flight. Else, why not just continue in salaried fashion?
This means that you’re planning for a stay of some relatively fixed duration once you leave. Now, you could use the Tom Hagen pitch, look for other contracts, and then leap when a better offer came along. But I don’t recommend that. When you’re new to the hustle, you have a pretty limited set of recommendations and clients. Screwing over your first and biggest client isn’t sustainable (nor is it really respectable).
For this foray into consulting for your employer, you’ll take a different tack.
- Make yourself indispensable.
- Identify discrete, timeboxed ways your employer needs your help.
- Offer your resignation, but with a non-budget-neutral pitch stay on, helping toward the ends you’ve identified. For example, “I’ve long wanted to go off on my own, and I’m doing that, but why don’t I help you with the Prometheus Project until you wrap the initial release?”
Here, you’re proposing a split with terms that benefit both of you. It ups your compensation, but they probably won’t balk because (1) it’s fixed duration and (2) it defers their need to scramble to replace you.
The Consultant Strategy
Lastly, I’ll cover the consultant strategy. The contractor strategy of the previous section lets you increase your rate via an expiration date, lighting a fire under you to get out of your comfort zone and find other clients. But it’s still a comfortable punt of sorts. Instead of “I’ll be a pseudo-employee for as long as you want,” it’s “I’ll be a pseudo-employee for a while.” Continuing in this vein still has you looking and acting like a grunt, and it still occupies 40 hours of your week, making it hard to find and serve other clients.
So your highest risk option is to go the consultant route. And, I mean actual consultant rather than “hourly code slinger that calls himself consultant.” Here’s what that looks like.
- Don’t make yourself indispensable (at least, don’t go out of your way to).
- Identify some expensive problems that your group or company faces that other companies probably also face.
- Put together a pitch for solving those problems that’s professional enough for you also to present elsewhere.
- Offer your resignation, and make your pitch(es) for specific ways to help as part of your new consulting practice.
Make no mistake, the odds of a “yes” here are not super high. They’ll probably do this with a mind toward keeping you around to answer questions for a while. But they’re better than organizations you’ll be cold-pitching on your consulting. And you can also increase your odds in general if you start pitching and moonlighting before you actually leave. But if you’re successful with that, it probably won’t matter terribly whether your former employer says yes or not.
The preceding sections define three basic strategies, oriented around what you want the relationship to look like. But, as you’ll notice, some commonalities do exist. I’ll close by offering you some generalized advice for making your pitch, whatever the specifics.
Understand that what you’re really doing, in subtext, is looking to ‘correct’ your boss’s mental model of your prospects. As a wage employee, particularly of the pragmatist variety, you have basically no prospects. I mean, sure, you can interview, but all you’re really doing there is looking to trade one benefactor for another. The Tom Hagen approach tells your boss that you’re okay being alone for a while if need be. The contractor approach establishes you as self-reliant, and the consultant approach establishes you as an in-demand expert (or a person with a significant nest egg).
So your pitch’s success comes down to how successfully you persuade your boss to adjust her mental model. You can do this in the moment (laying out a savvy pitch or presenting a book of business you’ve established), but also in the lead-up (taking some of the advice in Developer Hegemony and posts like this to send signals that you don’t necessarily need your job).
This play isn’t for the faint of heart. However you play it, I would suggest having a solid plan that doesn’t include your soon-to-be-former employer. Then, on your way out, make an offer, and consider it gravy if they accept.
Fire Away with More Questions!
If you have a question, please feel free to ask:
And, by the way…
If you like the wisdom here, such as it is, you can get a whole lot of that more in my recently released book, Developer Hegemony. If you want a sample of that, you can sign up to download some chapters below.
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Part of your plan should include saving enough money to sustain the transition. In any solid business plan, you will need cash on hand to cover operating expenses – this is no different. In reality you are starting a business. If you’re going to start your business this way – by quitting your job without another lined up – best you have a significant financial buffer in place. A year or two of personal and business expenses saved up. Seems like a lot, but if you really want to get off the ground (and you’re motivated intrinsically), that buffer will… Read more »
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