How can I transition my employer to being a consulting client?


4

I'm thinking about different options for my startup. Currently I'm a full time employee at a company where I love to work, but I would also like to have something of my own. The idea is to have something running in a 5 year time frame.

I understand that having a stable customer history and referrals will be key for the new business in the future, and I also enjoy working at the current company, so I would like to combine the two.

What do you think my employer will think/say if I tell them that I would like to leave the company as an employee and would like to be hired as a consultant/company, in other words tell them that I would like to give them the same service at the same cost as a consultant. I guess that it will benefit them to have me working on their projects at the same cost or maybe less because they won't even need to pay me for any benefits. I know it is not the best option for me right now and that I will be getting less because I'll need to take care of all the benefits by myself, but at the end of the day I'll be working for my own company and creating a good record to be used in the future.

Please give me some advice.

Employees

asked Mar 13 '11 at 07:51
Blank
Tivo
35 points
  • Excuse me? You want to run your own business that consists of you being basically a 2-3 times as expensive contractor for your current employee? What would you do in this case? I Tell you what I would do: fire the idiot and tell everyone I know about it. What other business do you plan in your company to NOT make this an attempt in extraction? Expect to be fired. – Net Tecture 8 years ago
  • @NetTecture Did you read the post properly before commenting? I can't see where in the original post (at the time of writing this there are no edits) that they said they would charge 2 - 3 times more. In fact, they said they would be willing to work for the same cost. Granted, it's not clear, but I understand what he means and he clarifies it in the next sentence. – Smart Company Software 8 years ago
  • BUt this already is very bad business. Stupid so to say. He has, as a business, a lot of assocaited costs. He basically is reducing his own payments voluntarily, turning an employee into a low cost external soruce without loyalty. Any sensible employer will tell him to move on. – Net Tecture 8 years ago
  • If you are UK based permie -> contract is 100% IR35 caught (http://www.hmrc.gov.uk/ir35/) if you are looking at going contracting find another place to work, IR35 caught contracting is not worth it, you'll end up with less pay for the same job even if you get a raise. – Ardesco 8 years ago

7 Answers


4

It almost sounds like you're asking permission. You need to come at it from a different angle.

First off, like many have said, start something in your off hours and find customers/clients. When you're willing to leave your job tell (don't ask ) your employer that you are resigning to pursue this business and you would like to continue providing the same service through your company. Of course your hours will need to be flexible and your rate will increase slightly, but not much more than your current total compensation package. But anyway you slice it, you're no longer an employee.

You need to be willing to leave. If not, you may be seriously jeopardizing your job. But also phrasing it in this manner may come as a relief since you're still able to service them, and are doing them a favor, instead of them changing their entire employment arrangement to do you a favor.

Your employer will go for this if:

  1. You are full time and your responsibilities can be done in less than 40hrs per week.
  2. And/or you are a key player. Meaning you're awesome (preferred to be making this transition) or just work for a small company.

A few obvious rules:

  1. Never work on your business at your employers office or on their equipment
  2. Don't create competing products or consult for competitors, not even remote competitors

Good luck.

answered Mar 13 '11 at 14:34
Blank
John Mac Intyre
1,086 points

3

One possible issue is the "independent contractor" rules for both the IRS and your state's revenue service.

Basically, your employer gets screwed if they treat you as a contractor but the IRS decides that you're really an employee. Having your own company, by itself, is not enough to avoid the issue.

Here are some more details:

http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

answered Mar 13 '11 at 08:23
Blank
Nsanders
251 points

3

Sorry to be harsh, but what you describe is not 'starting your own company', its just changing the logo on your paycheck, and taking a pay cut to do it.

If I was your employer and you proposed this to me, I would find it highly strange, and probably look at you as a flight risk after that.

A desire to start your own company is a great ambition and something you should pursue. But for it to be genuine you have to do it without 'cheating', which is what your plan really is.

Find an idea that you can build a business around. Start to prototype it in your spare time and build a business model. When it looks like it could take off, close your eyes and take the leap.

Good luck.

answered Mar 13 '11 at 08:41
Blank
Brian Karas
3,407 points
  • +1. This is ridiculous. Wannabe extortion attempt? What is the benefit for the employer? What is your benefit? This is as far from a real business as you can get. – Net Tecture 8 years ago

2

I empathize with you @tivo. I would love to move to a consultant position within my current employer, as it would give me more flexibility to other things that I want. A contractor isn't necessarily held to the same hours/administrivia that employees are. If you're wanting to go full independent, doing so with a "cash-cow" client that knows you and your capabilities can make it a lot easier.

In over two decades of experience, though, I've only seen this happen a handful of times (maybe three, and that's stretching it).

If you work for a relatively small organization, I would say your chances of doing this are probably better than if you work for a corporate machine. The reason I say this is that your two biggest hurdles are going to be HR and Legal. The third biggest is going to by your management.

If you can, make the case a purely financial one. Show them why letting you become a consultant makes good financial sense:

  • They're no longer paying your vacation / sick time.
  • They are (ostensibly) paying you for only the work you perform. Administrative tasks like training, HR presentations, company meetings are no longer billable.
  • They no longer need to foot the cost of your benefits (things like life, health insurance, etc.)

Another option is to "find a pimp." In our technical community, there are dozens of "pimps" (recruiters that find consultants for organizations). Many times, they'll allow a "corp-to-corp," where the work you perform is as your own company-- you aren't an employee of them.

This won't help you transition to your current company, but if you've got marketable skills and can interview well, this is probably the best bet for hanging out a shingle and starting your new business. Honestly, the only thing that would be holding you back from this is fear of the unknown.

answered Mar 14 '11 at 02:46
Blank
Robaticus
188 points

1

Sounds odd. First, I'd have my existing company up and running- and financially viable. Second, I'd make sure that my employer really, really likes me.

Then I'd have the discussion with my employer.

answered Mar 13 '11 at 12:03
Blank
User6492
1,747 points

0

You're willing to give up benefits and cause your employer concern just because you'd like to say you work for yourself?

!

Why not have the scenario that when you build up the side company that you hire over the people you like (or hire ones you like) and earn 5x what you're making now.

answered Mar 13 '11 at 14:58
Blank
Randy
249 points

0

And now for the positive side... :) As pointed out by others there are risks and other ways to approach it, but if you want to know how to approach this particular way, I would look at what else you can provide besides a lower cost. Will you be learning new skills that the employer could use but doesn't want to train you for right now, at your own cost? Will you be hiring more people if the workload is more than you can handle, at your own risk? Value sells more than price.

Without knowing what business you want to get into, what business you're in now, and your manager there are no good answers. It may be something you can discuss with your manager before making a move, or you might need to work a lot harder until you've shown that the new way can work and you present the options to everyone involved.

The safest way to bring it up without fully committing might be to simply tell your manager that eventually you would like to be in a certain role or learn a certain skills, without specifying how you'll do that. You can then see if they think it's valuable to the company. But as pointed out by others, if it's far enough from what you do now it might be taken as a sign that you're no longer interested in your job.

answered May 23 '11 at 06:59
Blank
Richardg
474 points

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Employees