Part Two: Technical Self-Employment For All

MoNickels writes "I've posted part two of the article series encouraging the unemployed to take up freelance technical support, including advice on knowing if this work is right for you, marketing yourself, learning on the job, handling and educating clients, managing the business, the temperament required, and the negative aspects of the work." See part one if you missed it.

Comments

Eh, whatever you do...

[ambisinistral]

Don't print your business card in Elfin. Showing up to your first meeting with a potential client dressed as a Klingon is a bad idea too.

Re:Eh, whatever you do...

[Esion Modnar]

Showing up to your first meeting with a potential client dressed as a Klingon is a bad idea too.

Of course. Everybody knows that dressing up as a Romulan is a much better idea.

Only one question..

[kmak]

What do you do about health insurance?

Re:Only one question..

[pogle]

3 words: Don't get sick...

Re:Only one question..

[tbase]

Ummm, I don't know, maybe pay for it, like you do when you're working for someone else? Just because 100% of it isn't coming out of your check, doesn't mean you aren't paying for all of it. It's all part of the expense of employing you, along with unemployment insurance, worker's compensation, etc. That's why freelancer's generally charge a much higher rate per hour - they have to pay that stuff themselves, instead of having someone else do it for them.

Re:Only one question..

[confused one]

You charge enough to cover your expenses. Including insurance (not just life, business insurance covering liability, insurance on your equipment, etc.)

Re:Only one question..

[PCM2]

Ummm, I don't know, maybe pay for it, like you do when you're working for someone else?

Yes, yes, spoken very authoritatively and with the requisite amount of condescension for a Slashdot poster.

Fact is, however, insurance is a much better deal when you get it through an organization than if you get it as an individual. That's because health insurance is a numbers game. If they can sign up an entire company, it's a pretty safe bet that not everyone in that company is going to be hospitalized at once. If it's just you they're signing up -- who knows what your problem is?

So it isn't just a matter of whether you're employer is paying for it or if you're paying for it yourself. As an individual, you're typically going to pay a higher monthly rate and still get a higher deductible or fewer benefits. Coverage for your children or spouse is going to be still more.

So maybe the question shouldn't have been, "what do you do for insurance," but "how do you get good, quality, comprehensive healthcare in the United States as a self-employed person"?

Re:Only one question..

[bigman2003]

I had Blue Cross catastrophic insurance.

My wife (now ex) needed to have her appendix taken out. Cost me about $7,000 out of pocket. They don't pay for silly things like bandages, IV's, food, etc. They pay for the doctor, and the surgery.

Two years later, she had to have her gallbladder taken out (they shoulda just taken her brain out at the same time) that one cost me another 8-9 thousand. (Emergency room coverage is really, really bad)

Catastrophic insurance is pretty crappy, and after having these two episodes, I think that Blue Cross is one of the crappiest.

People may complain, and hate HMO's, but when your biggest priority is covering your ass (financially) they can't be beat. Those two surgeries combined would have cost me $10 with Kaiser.

Re:Only one question..

[arnie_apesacrappin]

Being a consultant, I carry my own insurance. I know it seems like a pain, but it is quite easy. I used ehealthinsurance to find a policy that fit my needs.

One thing to ask yourself is, "how much do I get sick?" If you're single and rarely visit a doctor, a very simple policy could be good for you.

The company that employs me as a consultant offers health insurance. For me being single, it would cost $65 a week, for a minimum expenditure of $3380/year. The policy I have costs $130 every three months, for a minimum expenditure of $520/year.

But, the coverage isn't that great. The policy covers zero percent of the first $2000, then eighty percent of the next $8000 and everything after that each calendar year. So if I became really ill, I'm looking to pay $2000 (1st $2000) + $1600 (20% of 2K to 10K) + $520 (yearly premium) for a grand total of $4120.

I've been working for this company for about a year and a half. I've been to the doctor once, with the visit + meds costing about $250. Add that to six premiums, and my total output comes to about $1030. If I had paid for my "employer provided" health care, I would have already spent over $5000 plus any co-payments.

Now there is the fact that the "employer provided" healthcare is paid for by pre-tax dollars and I'm paying after taxes, but the difference unless I become quite ill still doesn't matter.

Re:Only one question..

[bigman2003]

You are absolutely, positively nuts.

That has to be the worst advice you can give to anyone in the U.S.

Playing the odds like that might be okay if you are single, young, and don't have any responsibilities. But, what if we are playing the numbers like that, and get hurt in the first year. Tons of money goes out the window, and you will probably end up bankrupt.

What if you have a problem with lingering effects? Maybe you need to take medication, or continuing treatments? Shit outta luck.

I was a person who ran a lot, worked out at the gym, etc- I was in very good shape, and excellent health. Eventually, I developed a back problem that required two surgeries, and dozens (upon dozens) of trips to the doctors office for treatment. This entire situation would have probably cost me well over $100,000. And I was 'healthy'!

Do you know how much an MRI costs? A myleogram? CT Scan? One set of those would wipe out a years worth of your savings- easy. Surgeries, hospital stays, doctor visits, medication, physical therapy, etc. etc. This is big bucks.

Of course, you could be an indigent (which is exactly the way they would classify you WITHOUT INSURANCE) and be treated at the County hospital. But, just take a look at their staff/doctors/clientele, and you will pray for something- anything - better to come along.

Just my opinion, based on my experience.

Re:Only one question..

[pongo000]

Form a legal corporation (or LLC, or LLP, or whatever) with two or three other individuals. Then you're eligible to negotiate group rates. You don't even have to like the people you're organizing with; just find some like-minded individuals who need insurance but don't want to be bilked by individual policy rates (if you can even get an individual policy -- good luck).

Re:Only one question..

[tbase]

Yes, yes, spoken very authoritatively and with the requisite amount of condescension for a Slashdot poster.

Right back atcha :-)

Excellent points, especially for the clueless whom I'll reply to directly in a moment...

You clearly state the other side of the coin - I was addressing the comment from the standpoint that many people think that the $30 a paycheck that gets deducted is what their insurance is actually costing them. Not even close. First of all, it's pre-tax, so it's even less. Second, most employers pay a good chunk as a benefit.

Obviously a group plan will be cheaper per person, assuming that the groups mean health demographic is roughly the same as the individual's. But when you compare making say $15 or $30 an hour as an employee to say charging $60 to $120 as a freelancer, you should be able to afford good, quality comprehensive healthcare. It's simply a cost of doing business like anything else. And like many things, it's more expensive for a small business than a large one.

The same goes for comparing rates of a business with 30 employees to a business with 300. Are you going to turn down a better job with a smaller company because the health insurance is more expensive? The problem is that the 'one man operation' only has himself to consider, so he often considers health insurance as optional, or too expensive to afford.

Re:Only one question..

[kfstark]

If you are leaving an existing job, look at a COBRA plan to extend your existing insurance for 18 months. You will pay slightly more than the group rate, but it will guarantee you coverage. Do NOT let your coverage lapse!!!

The following is my personal experience and should not be taken as complete truth since I am still working through the process. Since my father-in-law is an accountant, I have been getting good advice to guide me through this process.

Until recently, I was able to keep insurance for my family through my wife's insurance. Since my wife no longer works we are looking for insurance for the four of us.

Surprise! my son's bout with pneumonia (sp?) more than 1 year ago has caused all sorts of problems with acquiring individual insurance. Not only will they not cover my 4 year old son, they want to increase the rates on the rest of us by 50%. This amounts to quite a sum of money.

We stopped the process of trying to get insurance online and contacted an agent. We still couldn't get reasonable insurance and no company wanted to cover my son. However, we have been informed that we cannot be refused insurance if we sign up as a group. This will also keep our rates lower than the quotes we had been getting.

How do you qualify as a group?

You need to have two people involved in your company. I formed a single member Limited Liability Company (LLC) in California about two years ago. I have since added my wife as a member of the LLC and we suddenly qualify as a group and can apply for group medical insurance. We are doing this now, so I don't have estimates on costs. However, I would like to mention some other steps I have taken because of this.

Normally, an LLC does not require you to be a W-2 employee of the LLC since the money passes through the LLC to you as an individual. This means that you don't have to file a corporate tax return or employer tax statements. I did not want the burden of managing all of the paperwork that comes with hiring employees and printing paychecks. Surprisingly, the payroll companies (ADP in this case) are very cheap and handle the paperwork for you. I will pay a total of $50/month for all of my payroll and tax reporting requirements.

Why would I spend $50/month on this?

When you have employees, you can set up an employee medical reimbursement plan on a pre-tax basis. Without an employee medical reimbursement plans, you can only deduct medical expenses in excess of 7% of your income (I think this number is changing). With a medical reimbursement plan, you can deduct 100% of your employees medical expenses (vision, dental, prescriptions, copays). However, you need to have employees for this. Since my wife is already doing the books and my billing, I hired her and gave her a salary (less than my salary of course).

What does all of this mean?

It means that you should consult an accountant. There are a number of ways to reduce your tax burden and get better insurance. Some of the things that seem expensive and a pain in the ass might not be. Learning the ins and outs of business practice can be time consuming and may not seem that important when deadlines loom. This is why you pay an accountant and follow their advice. If you are earning $100k/year and wasting $10k on insurance,taxes or other business expenses, you can afford to take some time to fix your expense structure or pay someone to fix it for you.

Good Luck,

--Keith

Re:Only one question..

[nitehorse]

...Then ask your employer how much it would cost to add your girlfriend to your policy, if you were to get married.

Heheheheheh.

Girlfriend? Wrong site, man. :)

Re:Only one question..

[ortholattice]

As a self-employed and reasonably healthy person, I get catastrphic-only insurance.

I used to think this, and in theory this is how it should be. The problem is that insurance companies have negotiated DEEP discounts with the doctors under their plans, and as an individual you can't do that. In other words, you will get raked through the coals (until your deductible is met).

I just went to my file cabinet and looked up the actual insurance company's bills (that normally are not sent to me, but were as part of a response to a payment issue I had). These are from the past year, in Massachusetts.

Physical exam - $256.00
Blue Shield payment - $104.53
Blue Shield "adjustment" - $136.47
My co-pay - $15.00

In other words, you would have had to pay $256, but the insurance co. only had to pay $104.53. From the doctor's point of view, still not a bad income for 15 minutes of actual work (plus scrawling a signature on a routine letter the secretary typed up about the blood test).

The blood test associated with the exam was billed at $474.00. The Blue Shield payment was $114.62, the "adjustment" was $359.38, and my co-pay was $0. So in addition, with your catastrophic insurance you would have paid $474, whereas the insurance co. paid $114.62.

Now, perhaps you still come out ahead - stuff like this quickly adds up to your $1500 deductible. I don't know how much my company pays for my insurance.

Great Checklist

[dlosey]

The personality checklist fits the bill of both a technician and an entrepenuer very well.

I'd also say it is a pretty decent description of the typical slashdot reader, IMHO

Re:Great Checklist

[edverb]

In conclusion, small businesses are ghetto. They're frequently late with payments, as well.

Not so, if you don't offer payments. I get paid upon completion of the job. (I'm not the author, but it's obvious he's insightful about being an ISV via his experience) If a small business can't agree in advance to pay upon completion, then I don't take the job. It's a simple matter of managing your receivables by not allowing them to accumulate.

I realize that critizisms like "how parochial his worldview is" sound impressive, they just happen to be wrong. The bit about ignoring the print magazines is spot on, you'll find exposure to 50x more useful (and interesting) concepts reading Slashdot than you ever will reading "Top 10 Mobile Devices for 2003!" in one of the many periodicals offered beside the checkout in Staples.

I imagine you're a tech too, and have experience of your own, but to encapulate that whole article into some "worldview" box of your creation is ridiculous. This article consists of practical advice, not a manifesto.

Lastly, can you think of a more never-ending source of revenue than repairing Winblows boxen when they crash (as they occassionally do ;-)...at $75-$120 an hour?!? Sure I use GNU/Linux myself personally (and I recommend it as often as possible to my Windows clientele), but I'm not above whipping a Windows machine into shape when I'm getting $75 an hour to do it. Heck, it's fun. Some of my clients are already getting used to Mozilla and OpenOffice.

Is that really what we set out to do?

[teutonic_leech]

I didn't study non-stop for the last 11 years just to join the ranks of technical support. The whole reason for me to get into technology and eventually into IT was to 'build cool sh...t' - not to listen to some technophobe bitching about why her/his system got corrupted after opening some suspicous email attachment. Seriously, is that all we'll be relegated to do? Hey, I rather start laying bricks then - at least I have something productive to look as the fruits of my work. Just my two cents, I bet many will disagree - but I'm not wired that way...

Re:Is that really what we set out to do?

[artemis67]

Everyone has different goals for their careers, though. Your goal is to build cool stuff; mine is to eventually build my own business. If I could walk out today and duplicate my current income by freelancing, I would absolutely do it.

But I take issue with the article's author that there is enough freelance tech support for everyone. A lot of programmers are going to naturally fall back on that as their jobs move overseas, and it will quickly become saturated.

Beware of anyone promising a "one size fits all" fix for this downturn...

Re:This is an easy one

[smitty45]

"2. Never admit that you don't know something - act like you know everything that has to do with computing" Terrible idea. Every dweeb out there has enough ego to support pretending that they know everything. I keep my clients by being able to admit I don't know, then find out. They appreciate the honesty, instead of the pseudo-consultants that talk up a storm.

charge money?

[thorgil]

You mean I can charge people for the work i do?!

Re:This is an easy one

[Zooka]

2. Never admit that you don't know something - act like you know everything that has to do with computing

2a. Never get caught in a lie. Admitting you don't know something might be a negative, but it's better than proving yourself to be deceitful.

Re:If you are unemployed...

[John Jorsett]

Really? Maybe you just can't prove you are good at what you do. I've been in that situation: No job, no job history, and no job prospects because you have no job history.

I once knew somebody in that position. He went to a company and offered to work free. They took him up on the offer, and after 3 months, he said, 'hire me or I'm going,' so they hired him. Not the easiest way to break in, but it showed real initiative.

It sucks...

[Ironpoint]

Damn, tech support sucks.

Tech support sucks because people don't want you touching their Porn Station 9000, aka company laptop. Thats sound like a good idea from a sanitary standpoint. Note to users: I will not sit on your lap to work on your computer. MOVE.

Employee: You guys gonna help me?

Nick Burns: Show me what you're doing..

Employee: Well, I'm trying to save it.. so I downloaded it..

Nick Burns: Uh-huh.

Employee: ..and then I pushed..

Nick Burns: Yeah.

Employee: ..this button, and I..

Nick Burns: Uh-huh. Yeah. MOVE! God, do you run the Internet on this thing? It looks like it's got a 28.8, or something! [ techies laugh ]

Jingle: "'Cause he's Nick Burns, your Company Computer Guy!"

Re:This is an easy one

[mao che minh]

I just landed a gig at a law firm (a rather large one) to install a bunch of imaging systems and "fix" their mail server. They decided not to use their usual guy because "he didn't always know everything that we needed, and would have to go look it up (sic)".

It depends on the client. Some don't mind. Some view incomplete mastery of a trade as laziness and/or ignorance.

Afterall, they all know that they could always find someone else.

Old lady...

[superpulpsicle]

I helped this old lady on some freelance work way back with Corel wordperfect. Was that a mistake. Here are some questions I got...

-Why didn't Corel wordperfect come with a pen?
-Where do I buy ink if the typewriter runs out of ink?
-If I press delete does that delete everything?
-I heard it comes with a dictionary. Can I upgrade to an encyclopedia set?
-Does this program open on sundays and saturdays?

Ok, but how much do I charge?

[scorp1us]

I've done side work for years. Never made much at it. My parents told me to never talk about money, and so I feel uncomforable at billing time doing something I enjoy.

I really need to know how much to bill grandma.

$30/hr for a not related grandma?
$45/hr for others?
$90/hr for PHBs?

Of course it'll vary depending on the work and the client, bit some pricing structure would be of great help to me!

Re:This is an easy one

[Zooka]

"I keep my clients by being able to admit I don't know, then find out. They appreciate the honesty, instead of the pseudo-consultants that talk up a storm."

Exactly. If you don't have the answers to simple questions, then you you're just doomed. But no reasonable person expects you to have all the answers to all the difficult problems. "Hmm, I don't have the answer to that one now, but I'll have it for you by this afternoon." - has always worked well for me. It shows you not only to be honest, but smart, confident, and able to work outside of a set boundry.

Re:This is an easy one

[Shant3030]

2. Never admit that you don't know something - act like you know everything that has to do with computing.

Interviewers can smell bullshit from a mile away.

Re:This is an easy one

[Shant3030]

Well since you are dealing with lawyers, you have to bullshit, because that's the only thing they know.

If you tell them that the flux capacitor on the intranode serial bus is broken, they'll just shake their head and pretend they know more about that subject than you.

Re:Glamour

[MoNickels]

The way this person writes tells me that he doesn't know much more about computers than his 'clients'.

I don't have to point it out to you that I am indeed technically qualified, but I will. How do you think I've run the tech for entire 65-person offices? My good looks? Do you want references, or what?

If it sounds like I'm writing about people who don't know what they're doing, that's because I'm talking about the beginning stages, where I was about ten years ago. I know plenty now.

Just what I want....

[gatkinso]

...an unemployed (God knows the real reason why), person off the street working on my network... while he is learning his job via OJT.

Wonderful.

I live in a SOCIALIST country...

[Malc]

... you insensitive clod!

Seriously though, I am so glad I no longer have to worry about health coverage. I moved to Canada a few years ago, and it was like a weight lifted off my shoulders. I'm happy to pay for it via my taxes. I think we get good value for money. I don't have to worry about not being given the best insurance deal because I'm an individual and not a huge corporation looking to cover thousands of people. I also know I won't see any of the doctors bills if I get hurt reminding me that I'm ultimately responsible even though my insurer has also received a copy. I don't have to worry about my or my family's health should I unexpectedly lose my job/contract.

Self-employment guidelines...

[bytesmythe]

A few of these caught my eye...

-- I almost always solve my own computer problems on my own, or as the result of my own research.

Sure. Google is an amazing resource.

-- My friends, coworkers and family often turn to me for help with their computers and peripherals.

... and I am in no hurry to exacerbate the situation by subjecting myself to it intentionally.

-- My own computer probably would work very well if I didn't keep installing alpha, beta, development and trial software on it all the time.

I love fdisk.

-- I can usually quickly find what I'm looking for on the Internet.

Oh god... no comment.

-- I read constantly, and just about everything.

Right now it's Slashdot.

-- I rarely have a problem explaining myself.

Well, you see, officer...

-- I am somewhat sociable, but I can work for long periods on my own, too.

Sociable? ME?? Hahahaha!

-- Although I hate the term "self-starter," that's what I am.

No, I'm not! Procrastination is the root of all goofing off.

-- I believe all computer peripherals and devices are hot-swappable unless someone else is around.

What, is this Schrodinger's Computer? Once, I closed my eyes and with no one else watching, I jammed an old PCI Voodoo card into the AGP slot with the machine still running. The damn thing worked until I opened my eyes and its wave function collapsed...

-- I only keep my AOL account so I can more easily get my email from any web browser anywhere.

What geek would pay money to AOL when it's cheaper to just sign up with a host that provides webmail?

-- I get a lot of spam, but I block or filter most of it, so it's not an issue for me anymore.

I don't give out my email address to everyone and their grandmother, so spam isn't a big problem to begin with.

-- Unix is like a lover to me: I don't understand it very well, and it makes me angry sometimes, but I am still in love with it.

This one is just too sad. Sure, unix has some kinky command names, but nothing like actually engaging in their real-life namesakes.

-- I have some computer books on the shelf, but I only use them as references, not as literature.

This should be just the opposite, I think. I bet a lot of computer geeks read computer literature, not just "manuals".

-- I see nothing wrong with strapping a wireless PDA with GPS to the dog so that we can log his roaming patterns through the neighborhood.

The gadgetry (and possibly the dog) would get stolen in my neighborhood!

So, do I qualify to be an entrepreneur?

Obligatory Simpsons Quote

[Nova Express]

Kang: Technical Self-Employment for all!

Crowd: BOOOO!

Kang: Technical Self-Employment for none!

Crowd: BOOOO!

Kang: Alright then, Technical Self-Employment For some, tiny American flags for all!

Crowd: YAAAAAAAAA!

Re:Glamour

[Jason Earl]

Glamour my @$$. There is nothing remotely glamorous about doing tech support for small businesses. It's all about showing up, getting things to work, and getting the heck out. He runs a one person consulting business. At the end of the day his stuff either works, or he doesn't get paid. Yes, talking to people is a requisite part of being in business for yourself, but that doesn't mean that he doesn't have to actually fix his clients problems.

$50 to $100 may sound "glamorous" to someone who has never been in business for themselves, but the fact of the matter it is that this fee is so low that larger consulting firms can't even pretend to compete. Those prices simply don't leave any room for overhead. Once you take into consideration that you only get paid for "billable" hours, and the fact that you get to do all the bookkeeping, billing, tax work, etc. it isn't nearly the deal that it appears to be. Being a plumber or an electrician is probably more lucrative.

It's definitely doable, and there really is plenty of work. However, it's hard work, without paid vacations (or respite of any kind :).

sounds like a flirt to me...

[syukton]

The client I mentioned earlier who is very sweet but not very bright was one of those clients who refused to learn, and a client I had to let go. She's very young, too, in her early twenties. I believe she was perfectly capable of learning what she needed to know, with a little bit of effort, but she constantly called on the same issues. And I constantly had to recite the same solutions over and over. She refused to be educated (see below for more about client- and self-education). She's one of those people who are used to relying too much on others, and are happy with being told there are no stupid questions.

Hmm. Sweet young lady calling every day about the same stupid issues. hmmmm. I'd like to venture a guess here that maybe she's turned on by your intellect and wanted to screw you eight ways from tuesday. Now that, my friend, is the kind of client you pass on to another reasonably intelligent tech, unless you're willing to take it yourself. ;)

non-for-profit companies as starters.

[KKBaSS]

Snag a local non-profit & help them, get them going with all the latest
slickest stuff from novell and what opensource has to offer as a show of what you can do.
http://www.giftsinkind.org/ has a great Novell product donation policy, &
http://www.techsoup.org/ has some other good stuff too (i want that 24port
cisco switch, can i be a nonprofit too? :))

Also check out www.computerclub.org/nonprofit.htm, that has some good links
on it also, & had good luck with members of www.cristina.org too like reboot
from Atlanta.

Plunk a couple of these very satisfied not-for-profit companies up as testimonials to your work & you may very well be off & running with your own consulting biz. Just dont forget about the nonprofits once you actually have paying clients.

Re:This is an easy one

[geekoid]

if that were true, I wouldn't be sitting next to a guy with '5 years' of .net experience.

Corny title, awful cover...

[pmorrison]

but 'From Serf to Surfer: Becoming a Network Consultant' by Matthew Strebe gives the same sort of advice on the same topic in great depth. Highly recommended if you want more information. Also recommended 'The Secrets of Consulting' by Gerald Weinberg, great for understanding pricing and the value of your time among many other things.

I was self-employeed for 1.5 years after the internet consultancy I worked for folded... I made as much money and had more free time (some of it spent biting my nails about when the next gig would start). In my experience the advice in the articles and these books is pretty solid.