ASK SARA
No one’s nimbler than freelancers. Fearless wranglers of unruly projects, lean but not mean, ever mindful of where the buck stops, they’re ingenious at finding the quickest way to get it the job done. They have to be.
But as your projects get bigger and your pipeline fuller, you might need help. Maybe you bag a super-size Blue Chip. Or a family emergency strikes and you need to be sixteen places at once—your desk not being one of them. Or subcontracting and hiring are written into your growth plan. (You’ve got a plan? Impressive.)
Thanks to the freelance population explosion, there’s a ton of talent to tap into. You can turn on a dime and assemble a team to win a big project, enlist a buddy to help you push to the finish on a gargantuan gig, or engage a fellow freelancer to cover your work so you can untangle a problem at home. When the crunch is over, the team might disband until the next opportunity (or calamity) comes along.
As informal as a “Yikes!” phone call or as structured as a partnership agreement, these relationships spread the marketplace goodies around so when one freelancer wins, so do others. As John F. Kennedy famously said: “A rising tide lifts all boats.”
Staying nimble in this context means knowing how to get the right help and set things up to run smoothly. In this chapter, we’ll talk about bartering as one way to tap into skills or services you need. Then we’ll lay the groundwork for subcontracting and team building. Finally, we’ll look at some issues to consider when hiring staff.
ASK SARA
Q Dear Sara, What’s the difference between a freelancer and a small business owner?
A Good question, and interesting that there’s no definitive answer. Some people use the term microentrepreneur to describe very small business enterprises. Even if it’s just you slogging away in your sweats, don’t you still consider yourself to be running a business?
But there are differences in how freelancers and small businesses are viewed and treated—by society and by organizations that assist, represent, and finance small business. And yup, once again freelancers tend to drop out of the net.
My own quick and dirty definition? If you sometimes engage help or even have up to a couple of employees, you’re more freelancer than small business owner. But once you have four or more people working with or for you on any kind of regular basis, then you start moving into the small business realm.
Bartering efficiently puts two humans together who each have something the other needs or wants.
When I was young, my parents and several other families formed a babysitting co-op. A family would babysit someone else’s child, logging hours to “buy” babysitting time for their kids from other parents in the co-op. This system is formally known as Time Dollars.
Time Dollars systems can be scaled to different communities and extended across professions. A wedding videographer might earn, say, five Time Dollars filming another community member’s wedding and can use those units to buy services from anyone in the group, from dental cleaning to window cleaning.
Pretty much anything can be bartered. You can barter services to help each other grow (“I write your brochure; you design my website.”). Or exchange client services (“I, contractor, put up your shelves; you, massage therapist, give me a massage.”). Or personal tasks (“I babysit your kids, you mow my lawn.”). Or mentoring: (“I, social media wunderkind, teach you the basics of online marketing; you, former corporate account exec, coach me through a client relations crisis.”). It’s another way for freelancers to de-isolate and build strength.
Bartering is definitely up in a down economy, when cash is tight. People can barter directly, post ads online (Craigslist is one example), or join a barter exchange.
Make sure you trust anyone you barter with. Do your homework (look them up online; get references; ask questions). Be businesslike—that means a signed agreement and keeping detailed accounting records, because you need documentation for tax reporting. For selected resources on bartering, see the Appendix.
In barter exchanges or clubs, you pay to become a member and pay the club a percentage of each transaction. Members’ accounts are credited or debited for exchanges (typically as units called barter or trade dollars) based on a service’s fair market value. Members can spend their units anytime, for anything they need. What you receive needs to be reported as taxable income, as if you’d been paid cash.
Using trade dollars helps prevent inequities where one party gets a far more valuable good or service than the other. Barter exchanges also aid in IRS reporting, since in most cases they have to file Form 1099-B, so the IRS receives a record of all transactions, as do exchange members for tax reporting purposes.
The IRS defines bartering as the exchange or trade of goods or services, generally without the exchange of money. Taxes are due on bartered goods and services. You must report on your taxes the fair market value of any goods or services exchanged. There may be state taxes, too. For more information, see Chapter 15.
The day when federal and state governments all have plans in place for economic security for freelancers, the day when we win all the freelancers’ safety net rights we’re lobbying for—on that day, you can turn down work.
Until that day, don’t turn down work. That’s just a rule of being a freelancer.
OK, let me amend that. Turn down crappy work and work that doesn’t fit your Freelance Portfolio, assuming you’ve got plenty to do and dough to live on. But you shouldn’t have to turn down good work just because the job’s too big to do alone, you don’t have some of the needed skills, you’ll be on vacation, your life is nuts, or you promised your mate you’d stop working until midnight every night.
Good managers set things up so work can continue whether they’re there or not. Whether it’s an ad-hoc thing or a formal contract where you partner on projects or tasks, share the work with someone else—or several someone elses—and all of you can bank the rewards.
Think of your work like a doctor’s practice: You need at least one other excellent, trusted person who can be on call, and for whom you’d do the same. Developing those relationships means getting to know people over time.
It starts with networking. Go to meet-ups, strike up conversations with people sitting next to you at professional meetings, trade business cards, participate in professional discussion groups online, and keep your contact list in shining order. Ask people in your network who they call in a pinch or who they think is excellent. Choose some people you get a good vibe from who you’d like to know better. Email back and forth, have a few coffees or beers, swap war stories and advice, and generally keep up with one another. By the time you need that person on speed-dial, you should have a sense of what he can do, how good he is, how fast he is, how nice he is, and how he might be able to help you in your hour of need—and he should have the same sense about you. You might already have done favors for each other and have good Love Bank accounts between you. You might have even done a few small gigs for each other to test-drive the relationship. You’re smart to do that before trusting someone with a big subcontracting job.
You can do this even as a new freelancer working on a shoestring. Get to know others who are starting out, too. Share knowledge and skills. For example, if someone else has figured out the new software, pay her for a tutorial or barter a skill in return. That’s the start of a speed-dial relationship.
A veteran freelancer can subcontract to new freelancers. It’s a win for the veteran (new freelancers won’t be as expensive as peers), and a win for new freelancers (who get connected with a pro who can mentor and recommend them). Subcontracting to new freelancers can invigorate your work with novel ideas and perceptions.
1 What do I really need to subcontract? What parts of projects could you spin off to someone else who could do them better, faster, or more patiently than you, freeing you to do the work you are best at doing (and prospect for it, too)?
2 How much record keeping do I want to do? If you’re paying anyone with any degree of frequency, you may have to do tax-related paperwork. (Read on and see Chapter 15.)
3 How much formality do I want? Is this an ad-hoc, as-needed deal, or something more formal where there’s a contract setting out your obligations? Do you want to try one small venture as an experiment and go from there? A referral network of people you call on when needed is the least structured. A subcontracting relationship would be medium-structured. You might want a contract or confirming emails.
ASK SARA
Q Dear Sara, If I’m paying someone else to work, how could I be making more money than if I do the work myself?
A Paying someone else to do work allows you to make money by extracting surplus value. It’s why Karl Marx didn’t like capitalists. Example: Capitalist Freelancer (that would be you) engages a worker to produce a product and pays that person, say, $10. Capitalist Freelancer then sells that product to a customer for $20. Capitalist Freelancer has extracted $10 of surplus value.
Couldn’t Capitalist Freelancer just make the product herself, sell it for $10, and get her value that way? Yes, but if she subcontracts that work, she frees herself up to do other profitable work: Maybe perform a service she wouldn’t have had time to do . . . develop a new product to sell at a higher price . . . prospect for new business . . . or sleep so she can be bright-eyed for the Blue Chip pitch the next morning. That’s how you can make more money paying someone else to work rather than doing it yourself.
Was the worker who got paid $10 a loser? Not if she’s fairly paid. Actually, she might have paid another worker $5 to help her assemble the product, so she got $5 of surplus value. Or if not, she’s got $10 she wouldn’t otherwise have had. The process breaks down only if the system gets exploitative on the production side (abysmal rates for sweatshop work), the selling side (gouge-level prices), or both—which Comrade Marx thought was pretty much all the time.
What to subcontract? Think delegate. And for some—OK, maybe a lot—of us, that’s not easy: “I’m a hands-on worker, but sometimes I do busywork to avoid doing the career-advancing stuff that comes harder for me, like marketing and prospecting. I realized there was a surprisingly short list of things I really had to do myself: networking, prospecting, negotiating, tax and legal stuff, and the high-skill aspects of my project work. Anything else could be delegated if I chose to.” One way to figure this out: Break tasks down into their component parts. You’ll see a sequence or routine emerge. Letting others perform parts of the routine lets you produce more (earn more, too), just the way a nurse practitioner in a doctor’s office allows the practice to assist more patients because the doctor can be performing more specialized tasks while the nurse practitioner is performing multiple others.
If you’ve never looked at your work this way before, you might be surprised at just how much you’re doing—and how much you might be able to let someone else do so you can concentrate on things that only you can do.
What could you subcontract? Make your list.
1 Figure out the skill level you really need. A big part of subcontracting success is breaking the job down correctly to match tasks to skills. An overqualified subcontractor might be a bored and overpaid subcontractor. An underqualified one might spell disaster.
2 Be clear about the task. What exactly are their duties or deliverables? The deadline? “Engaging other freelancers raises money issues. This is a negotiation. I always took the other person’s point of view too much into account. As a result, part-time assistants, designers, and others took advantage of me.”
3 Check in, but don’t hover. You want to make sure your instructions are understood, work’s progressing, and that your subcontractor feels you are available to answer questions. But a subcontractor is a freelancer, just like you, and you’re a client, not their employer. Remember from reading about misclassification in Chapter 6: Employers can exercise specific controls over employees, including behavioral control, in exchange for meeting certain financial obligations. You don’t want to appear to be dictating or controlling how your subcontractors do the work. So set the objectives and let them get on with it. If there are problems, it’s their job to fix them for you, the client.
4 Don’t assume everyone works the way you do. Different freelancers may have different levels of training and skills. While it’s not your job to train, you do need to figure out what people can do and where they might need some guidance.
5 Look for good work ethic and attitude. The best subcontractors want to be your go-to person and will work with that kind of integrity. Once you have a solid foundation, the relationship can grow.
A company executive doesn’t tell the client his assistant drafted and typed the letter he signed. The exec’s still responsible for the letter’s contents, as you are for the subcontracted work. What matters is that your client be satisfied with the work, which you’ve guaranteed will be delivered at a certain quality and price. That’s why the people you subcontract to must be excellent: They’re stand-ins for you.
If the work’s shoddy? Presumably you’ve built in checkpoints to head off disaster before it happens: you reviewed a portion before they proceeded with the rest; you’ve seen rough drafts; a rough cut; early sketches; preliminary spreadsheets—plus revisions or other key stages that would alert you to any problems, and you allowed time in the schedule for your subcontractor to fix it if it needs more work before you can send it to the client. Otherwise you’ll have to line up a rescue subcontractor ASAP (rush rates—ugh) or fix it yourself—in which case it’s going to be a very long night.
Check out Chapter 5 for details on the what, why, and how of deal making—including the importance of having a written agreement and what should be in it. The same principles and practicalities apply to hiring subcontractors. It’s a good idea to talk with an attorney about drawing up a boilerplate subcontracting agreement, especially if you expect to subcontract on a regular basis—or if you’re a subcontractor yourself. Here’s a cheat sheet to begin:
• Business terms (e.g.: the services being provided, the deliverables, the deadlines, the price, the payout). Research industry rates and ask your network for advice on payment terms for various services.
• Your legal protections and responsibilities
• Grounds and terms for termination
• Dispute resolution (see Chapter 5 for a discussion of the virtues of arbitration)
• Confidentiality/nondisclosure
• Noncompete (If included, make it restrictive enough to protect you and your client from harm that could come from the contractor working for a competitor while working for you, but lenient enough to permit the subcontractor to make a living—and if you need a noncompete, that might be an indicator that you need a lawyer to properly draft the agreement to protect you.)
• Language stipulating that the subcontractor can’t do an end run around you to be engaged by your client (again a place where a lawyer can be helpful)
• Intellectual property (make sure the intellectual property rights in the work product will belong to you, so you can adhere to whatever your intellectual property arrangement is with your client—yet another reason to consult a lawyer)
• Independent contractor status (clarifies that this is not an employer/employee relationship).
Start budgeting for subcontracting before you need it. When your marketing starts to pay off and you start to see that major gigs are gettable, start a subcontractor savings project, so when you need reinforcements, the money is there.
How much you set aside depends on what tasks you want to subcontract, and for how long. Look at the task list you made and pull out a couple that could help you the most. Ask around in your network about pay rate if you aren’t sure: “I once needed help transcribing audio recordings of interviews and didn’t know what to charge. I posted the question in a discussion group I belong to on an online networking site. I got many responses, including leads for transcribers.”
For information on setting up subcontractors for taxes, see Chapter 15.
Sometimes you have such a great relationship with another freelancer that you decide to team up in a more formal, ongoing way, maybe because you each bring skills the other can use to offer more services to clients: a tax accountant teams up with a financial planner; a small business coach teams up with a web developer; a personal trainer teams up with a physical therapist.
You can cross-promote or feature each other on your websites and mailings. You might guest-blog for each other. Or teach, give talks, or coauthor articles or books together. You work out the finances to reflect what each of you brings to the other’s party and formalize it in a written agreement.
You could do this with one other person or with several. Who knows, you might end your solopreneur existence and launch a partnership!
I like watching the beehive of preflight activity around airplanes at the gate. Fuel trucks, baggage trucks, mechanics, cleaning staff, and more all walk, climb, drive around, fill up, load, unload, stock, check, repair, replace, and otherwise make sure this giant thing will get off the ground. Then the passengers board; the plane departs, and all that activity quietly disperses—until the next plane arrives.
That’s how I picture teams of freelancers that nimbly assemble and disband on a project-by-project basis: the right people with the right skills, applying their excellence precisely when and where needed. Swift, scalable, and sustainable. The essence of work in the twenty-first century.
Today’s fluid workforce lets you expand and contract in tune with opportunity. These are high-trust, collaborative relationships: Brain Trust buddies, longtime subcontractors, or fellow corporate refugees you worked with in-house. You can form diverse-skill teams (e.g., an editor, cover designer, text designer, marketer, and publicist team up to help an author write and self-publish a book). This is a good reason to network across skill sets, not just hang out with your own. Or you can form same-skill teams (e.g., a band of animators cranks out a cartoon).
You might head the team as project manager. Or you might be a team of equals. One of you might be the rainmaker who brings in the business and serves as client liaison. Or the whole team might pitch or prospect, individually or together as a dog and pony show. For a Super Blue Chip gig, you might even form a mini-corporation, and then let the corporation go dormant or dissolve it when it’s no longer needed.
Into it? Here are some things to consider:
Location. Will you all work from your own workspaces, assemble in a common space (whose? or would it be a coworking space?), or some of both? (See Make the Connection, below.)
Liability. Do you have the insurance you need to cover yourselves? If you work out of your place, do you need additional insurance to cover someone getting injured there?
Job descriptions. Exactly how’ll this work? Make a flowchart, outline, or some other record of each person’s responsibilities.
M.O. The financial, contractual, and tax issues for subcontractors grows in proportion to the size of your team, its level of permanence, and the complexity of the projects you tackle. If you’re at this point in your freelance career, talk with your attorney and accountant about the best moves to set up legal protections and financials for you and the group.
Even if you’ve got your team, keep networking. Behind every great team is a great network. If you’ve got that, you’ve got the infrastructure to never have to refuse work because the project’s too big to do alone.
HELP YOURSELF ALERT
MAKE THE CONNECTION
You and your team can get big-company results without big-company IT costs. Using the Internet for secure file-sharing lets you do the equivalent of passing a project from desk to desk or collaborating in real time from hundreds of miles away, and serves as backup to your hard drives, too. With Internet-based video and phone conferencing, you can get all the heads in a room. Time-tracking tools can help you stay on budget by keeping tabs on time spent per task. To start checking out the possibilities, search under “online collaboration.”
We understand. If you’d wanted to run a business with staff, you probably wouldn’t have bought this book. But sometimes freelancers grow a new vision for themselves as their career develops. Hiring employees becomes a way to take on more complex projects and goals.
You don’t have to hire full-time help. And it might be another freelancer who could use a regular gig.
How can you tell if it’s time to hire more than subcontractors? There’s no way to know for sure, but here are some gauges.
Don’t go by outside events such as, “Just landed the mother of all gigs!” That gig could be gone tomorrow: your contact gets fired and the new guy kills the old guy’s projects; the company gets sold and the new owner puts all projects on hold; bad management or creative accounting come back to roost; and so it goes. You have to believe that by taking on staff, you can build greater profit over time, even in leaner times, thanks to greater built-in capacity. Other signs: if you know you’re on the growing edge of your profession and often have more work than you can do.
On the interpersonal side, you have to be willing to let go of some control over the tasks you’ve been doing yourself all this time. Sure, you need to ensure quality (that’s the purpose of job descriptions and performance reviews), but you also need to be willing to get out of the way and let your (presumably highly qualified) employees do what they do so well.
One way to explore the fit between you and staffing is to hire temporary help through a temp agency during busy periods. The temporary help company matches worker to job description, so you’re saved the search. You also don’t have to pay unemployment, health benefits, or the other protections employers commonly have to provide. Make sure you find out what kind of worker’s compensation and liability insurance the temp company carries; you don’t want to be swamped by a claim. Ask how they find their workers and monitor performance, and what happens if the temp isn’t a good match for the job. Request references from other clients and ask what trade associations the company belongs to (for example, the American Staffing Association), which can be a barometer of the company’s ethics, currency, and commitment.
Find out if colleges in your area offer internships. Interns might be paid a stipend, or might work gratis. It’s a great way to mentor young people into your profession, and who knows—they might stay and become a dream employee!
For part-time workers, consider students: Their schedule allows it and their pay scale may be lower, although their schoolwork or other activities might make them less dependable. Also consider retirees. Generally, their schedules are flexible, they’re glad for extra income, and often they’re veterans of the business world. Another possible resource: parents who want and need some paid work, but can’t work full-time because of their parenting responsibilities.
Here are some differences between hiring staff and hiring subcontractors.
Controls. If you become an employer, you’ll have the right to exercise the behavioral, financial, and relationship controls that employers have. You’ll be able to set up exactly what the job is, and how and where you want it done. In exchange, you’ll have responsibilities toward your staff. (See below.)
Forms and tax issues. As an employer, you’ll be paying employment taxes, unemployment tax, and withholding income tax. You’ll also need to receive and send various forms. For details, see Chapter 15.
Intellectual property and ownership. You own any work product that your staff creates as employees. But it’s still best to have a signed agreement spelling this out.
Fair employment laws. You may be subject to state and federal employment antidiscrimination laws.
On the spectrum between freelancer and small business that we talked about at the beginning of this chapter, you’re moving more toward the small-business side. Start reading up on small-business issues, and specifically employment. Books, magazines, and articles abound. Talk with your accountant and attorney about your plans and possible next steps.
We started this chapter with the idea of nimbleness. You’re plenty nimble alone. Teaming up should make you feel nimble, too—as though you can leap even higher hurdles with the strength of the team propelling you forward. There’s a sense of possibility and joy as together you take on and master new challenges. Everyone’s lifted, everyone benefits. It’s an amazing feeling to know you’ve built something more powerful than you can be alone. I hope you’ll have the opportunity to experience that.