Becoming Your Own Boss (BYOB, 7.4)

This series of articles covers topics that will hopefully not be needed for you and your independent contracting business, namely what to do "If Things Go Wrong". This fifth article of the "If Things Go Wrong" series tries to anticipate the main things that might go wrong for you in your independent contracting business, and start addressing potential problems.

Addressing The Problem

In many cases, just recognizing a problem and determining its cause are all that is necessary to solve a problem. Much of the text in the prior sections dealt not only with identification of problems, but also some possible solutions to those problems. The procedures in this section deal more with problems for which there are no immediate, easy solutions. We deal with only more general classes of problems in this section, so if your problem is unique and specialized, you will need advice from experts or friends, or you will have to come up with your own solution.

There are four basic ways of dealing with problems:

1. You can head things off or divert incipient problems before those become insurmountable problems.

2. You can deal with a current problem in any way that is necessary to solve it, and then learn from the experience so you will never face the same problem again.

3. If the problem truly is insurmountable, you can do whatever is necessary to minimize the damage so you and your business can survive.

4. If the problem forces the demise of your business, you can learn from the experience so your future endeavors will meet with better success.

Heading Off A Problem: Most problems are similar to the majority of automobile accidents: if you can see it coming, your actions and choices have a direct bearing on the amount of damage you will suffer. A slight change in direction changes a head-on collision into a survivable glancing blow. In the same way, if you see a problem in the making, a few minutes spent on damage control might change a major problem into a recoverable mistake.

When you sign a contract, you must live up to the terms of that contract. There are a number of people whom you must satisfy in order to live up to the terms of the contract, and the identities of these people are not always obvious. The following people must be satisfied with your performance:

• Client - This is the person who approves your invoices for payment, and probably also the person who selected you for the contract. Above all, you want this person to be satisfied with your performance, and, if at all possible, you want this person to be impressed with your performance.

• Client's Boss - Everyone has a boss, or some person to whom he or she must report. Your client is no different. Try to make sure that your client often has little progress tidbits that he/she can give to the boss. It makes the client look good to the boss and it makes the boss feel that value is being received for an expensive contract. It is quite normal for the client and the client's boss to get uncomfortable if they have to wait for a long time without any tangible results.

• Project Leader - This person and the client might be one and the same person. If not, you must ensure that the project leader is satisfied with your contributions to the project, and reports that satisfaction to the client. If the project leader has problems with your performance, the client will likely have the same problems in a very short time.

• Project Team Members - Whenever possible, you should have cordial relations will all members of the project team. It is important, though not essential, that all team members be satisfied with your contributions to the project. Remember that your standing with the project leader is probably no better than that of any other member of the project team, so if more than one team member is unhappy with you, you have a problem.

• Accounting/Finance/Legal People - Never forget that you are not a member of the company with which you have the contract. You are an outsider, no matter how well you get along with the members of the project team. The accounting, finance, and legal personnel in the company are able to cause problems that directly affect your checkbook balance and your viability as an independent contractor. If the legal department thinks your contract will attract the attention of the IRS, your contract will be cancelled. If accounting department personnel view you as a certain type of materials supplier, they might try to delay payment on your invoice for 30, 60, or even 90 days. If finance department personnel run into budget problems, they might force your client's division to curtail or cancel all contracts. While the problems that these people cause are often beyond your control, you can do some things to head off problems here.

Ensure that you meet all of the IRS requirements for independent contractors, and that you also satisfy any additional company/client requirements. If you suspect problems, check with the legal department and determine what you must do to make them satisfied with your status as an independent contractor, and with your performance on the contract.

If possible, get acquainted with the personnel in the accounts payable department, and do everything necessary to ensure that they never have problems processing your invoices. This might include changes to your invoice form, changes in the dates of submittal, and even personal delivery of the signed invoice to the accounts payable department. Do whatever is necessary, and do it with a smile. These people determine when you get paid.

The people working on the company budget are concerned with the total cost of your contract, and perhaps the monthly or quarterly expenses associated with the contract. While you cannot change their decision to cancel all contracts, you might be able to offer a compromise that will allow them to keep the contract active. If budget problems appear to be imminent, you can offer to switch to a part-time basis or put your part of the project in "mothballs" to help the company meet a short-term budgetary problem. This is not to suggest that you lower your rate in order to keep a contract, but the other options might allow you to keep a contract that would otherwise be cancelled.

This is the final series in the Becoming Your Own Boss set of articles. If you have been following the set in the numbered sequence, you have been familiarized with today's employment situation and then examined your own situation in the BYOB, 1.x and BYOB, 2.x series. The BYOB, 3.x and BYOB, 4.x series took you through first preparing for business and then actually establishing your business. The last two series (BYOB, 5.x and BYOB, 6.x) taught you many of the aspects of marketing your services and the accounting topics you need to be aware of as an independent contractor.

The next article (BYOB, 7.5) continues the discussion of how you can address the problems that you might encounter as an independent contractor.

To read the rest of the series click here