In the webinar last week when I demonstrated my free rate-setting calculator, a participant shared that a contract of 24 years was going to be discontinued. The contract offered this participant 30 hours of work per week.
Although I didn’t have time to address the challenge in the webinar, I want to address it here. I also want to empower this participant with my feedback, while keeping the participant’s identity anonymous. Finally, I want to put my explanation into perspective for anyone who is a contractor (e.g. sub-contractor, independent contractor, self-employed, private practice owner, business owner). If you do not receive a W-2, this one’s for you.
Important stuff: Whenever you work in a normal “job” you usually have *one* boss. That’s *one* person to please. That’s *one* relationship to build and nurture. That’s *one* person to answer to. That’s *one* person to make happy. Employment has its perks.
Of course, there are other relationships and people in typical jobs. But when it comes down to it, there is usually one key decision-maker or manager who makes the call on whether you stay or go.
The 10% Rule: One thing my dad told me when I went off to start my own business was “K, you want to make it so that no ONE client is generating more than 10% of your gross revenue.” I asked him to repeat that several times before I fully understood it.
The Not-So-Tricky Math Part: So, does that mean if a contract comes in for 30 hours per week, then I should reduce it down to only 10% of my income? YES! But not by reducing the number of hours… do it by increasing the number of hours serving other clients. You can recession-proof your business by providing a total of 300 hours of service per week. That would make the 30 hours equal to 10% of your gross revenue (assuming the rates are the same across the board).
Are you with me so far?
When you’re pulling in 300 hours of service per week, you have the most amazing opportunity to create jobs. How cool is that? Is owning a business incredible or WHAT?
It’s Nature’s Law Of Going Independent: If you are a contractor and not interested in hiring staff, then you are literally choosing a path that will not always provide for steady income. You’re also making a choice that gives you a ceiling on how much revenue you can bring in. It’s not the “wrong choice” by any means! But it is a choice, and as an independent, you gotta own it.
Own your choices, because you own your business. Tweet this.
The advantage that we have as contractors is that we can choose to have lots and lots of tiny little bosses (aka clients). If each client is providing 10% or less of your gross revenue, and one client goes ka-put, then hey, no problem… You still have 90% of your business intact! Congratulations!
Got it? Ok good! =) So, while it seems like the participant in my webinar got the SHAFT, this participant has actually chosen the path and chosen the risk involved with one contract that supplies 100% revenue. Luckily, now the participant is starting with a clean slate, with the opportunity to build a recession-proof business. A business where no *one* client contributes more than 10% gross income. Yes!
By the way, this is the 284,473,280th reason I diversify my income in a few ways. (Yet, I don’t just slap down my services and wait for the phone to ring. I focus on each project, one at a time, with precision and determination.)
Another participant in the webinar asked exactly what modules were included in my new business training program, the 90-Day Activator. I’ve answered her question here.
Whew! Let’s take a break with this echo chant from Africa, taught to me by Kaleigh Thomas, MT-BC:
Che Che Koolay Echo Chant
Learn more about this chant here.
Che Che Koolay, (Che Che Koolay)
Che Che Kofinsa, (Che Che Kofinsa)
Kofinsa langa, (Kofinsa langa)
Kata che langa, (Kata che langa)
Koom a dayn-day, (Koom a dayn-day),
Koom a dayn-day, (Koom a dayn-day),
Koom a dayn-day – HEY!
Be well, feel good, and make MUSIC! =) Kat