Editor’s Note: This is a guest post from Ethan Waldman of Cloud-Coach.
Recently, I quit my job. I submitted my written resignation, my boss gave me a hug, and I walked back to my cubicle a changed man.
But I’m not leaving. Far from it. Oh, and they’re also going to keep paying me. More than double my hourly rate.
Think I’m kidding?
I’m not. Everything I’ve written here is entirely true. This is the story about how I quit my job, cut my hours in half, and got a raise all at once.
The Backstory
Two years ago, I got hired by an up and coming company to work in their HR department teaching technology classes and producing online training (called eLearning). This is a company that’s very focused on growth and development of employees, so I had a regular performance reviews with my boss.
It also doesn’t hurt that the company was (and is) one of the fastest growing companies in North America.
Once these regular performance reviews started happening, I ran into a big challenge. My boss was always asking me what my “3 year plan” was. Essentially, the question she was asking was “What kind of management position would you like and how can we help develop you so you can get there?”
Flattering, really. But I wasn’t interested in working my way up the corporate ladder. I never had been, and even though this was a great company to work for, it didn’t change the fact that I’m not interested in a corporate career.
After about a year of asking “where do you want to be in 3 years”, I gulped and told the truth. I told my boss that I wanted to be working for myself in 3 years. Her response surprised me. “Make sure you give me AT LEAST 3 to 6 months notice before you do that. And I would hope that we would be one of your best clients!”
That was a surprise. She had just opened the door to me quitting, but continuing to freelance. It was a possibility that I hadn’t ever considered.
A year later, on March 1st, I sat down with my boss and gave her my notice for June 1st, and reminded her about the conversation we had a year earlier. She hadn’t forgotten. I was nervous, but firm. I made my intention clear: I was ready to leave, but hoped that I could continue supporting our team as a contractor.
It’s more common than you think.
Most people think that there is absolutely no room to negotiate when it comes to matters like this. But my story should be proof to you that it is possible. I started talking to some of the other consultants who worked for my team, and they all had similar stories- At some point in their careers, they had left their job to go out on their own, and almost all of them were able to maintain relationships with their old jobs that translated into steady, reliable work.
And while working for your current company certainly may not be the end goal for you, the time that you’ll need steady work most is right when you quit your job. So who better to get that work from then a company that already knows what you do, already trusts you, and needs what you have to offer?
When you look at it that way, you start to realize that you do have more power than you think: They need you just as much as you need them. Setting your own terms at your job is not so out of reach.
Here’s how to do it:
1. Have a unique skill-set. If I had been a recruiter, or an HR generalist, or something that is less rare, I think they would have just replaced me.
2. Do really great work. If they didn’t like the work I did, this would have been their opportunity to get rid of me without having to fire me.
3. Don’t take them by surprise. If you’re interested in continuing your relationship with your former employer, you cannot leave on bad terms.
4. Be firm. When I had the conversation a year ago, I don’t think my boss ever really thought that I would leave. It’s a growing company with fantastic benefits, employee stock purchase options, and generous development benefits. It wasn’t in her reality to think that anyone would want to leave. People are clamoring to get in. But not me. You have to make that clear. How? Set a date, and stay firm.
How to Double (or triple) Your Salary
According to the Consultant Journal, to figure out your freelance rate, you can take your salary (plus your benefits, paid vacation time, etc.) and figure out what your real hourly rate is. You can then double to triple that rate.
This is standard practice. Why do you get to inflate the hourly so much? Well, for one you’re no longer guaranteed 40 hours per work a week. You also have to pay for all of your own overhead: office space, self-employment taxes, connectivity, etc.
When I sat down to talk to my boss about my rate, I had all of this prepared. I had my salary, benefits, and adjusted hourly rate. I had the articles printed out that explained why I get to double or triple that rate.
When my boss asked me what my rate would be, I started high. I gave her the triple number, knowing that it was out of the ballpark. She didn’t blink. She told me that she could see paying me that, but right now I have no experience as a consultant. She said that she would be taking a risk on me, just as I was taking a risk by leaving.
I didn’t start so high because I thought I would actually leave with that number. Starting the bargaining high anchored us with a high number, so the doubled number seemed downright reasonable. And so, we shook hands and agreed on my new hourly rate.
I can’t tell you how things are going, because I am not making the transition until June 1st, but I can tell you what a huge weight off my shoulders this is. I was going to leave whether they wanted to keep me on as a part-time consultant or not, but this will make my transition into Cloud Coach full-time a whole lot more comfortable.
Challenge Your Assumptions
We base our reality upon the the people around us. And if you’re working a 9 to 5 in a cubicle, the people around you are likely unhappy, unhealthy, or both. OR they are happy and healthy people who love working in a cubicle. They exist too. I hope that in sharing this story with you that you are able to challenge your assumptions.
The point I’m trying to make is that 99% of the people around you at your job aren’t trying to leave; they’re trying to stay. I hope my story has shown you that it’s possible to go against the current and make it upstream.
And so I ask you again, what is stopping you from leaving your job? What assumptions have you made about how the working world works? Are they really set in stone?
About the Author: Ethan Waldman is the chief technology hero at Cloud-Coach, where he helps people get un-stuck on technology so they can get back to business. Over 500 people have liberated themselves from email hell using his free Email Ninja Kit.
That’s a very rock-star move!
I think people don’t realize just how much they are worth if they do awesome work. You have to think that your employer is making way more money off of you than he’s paying you (which makes sense) or he wouldn’t have you at all.
With that said, even if people do know their worth they are afraid to negotiate. They don’t want to get shut down or look audacious. They also dont know where to start and usually begin by being apologetic and then end by not even bringing it up at all.
This is especially true for women. I don’t know why but women just don’t negotiate! I think it should be a requirement for everyone to go to Mexico and start negotiating there. You’ll be surprised what your results are.
Also, if your employeer is worth a damn they will respect you for knowing your worth.
Congratulations. This is just another way to live life on your own terms. It doesn’t have to be all or nothing.
Thank you! I agree that realizing your own value is absolutely crucial. You can’t start your own biz, or negotiate a contractor role without believing that you’re worth getting paid. :)
I really enjoyed reading your story. Thank you for sharing.
You’re very welcome, Philippe. I hope it helps you on your path to being paid to exist! :)
Congratulations Ethan!
What a fantastic and inspirational story that proves how being paid to exist doesn’t mean we have to destroy the relationship with the people at our day-job.
I loved this article because not only showed that this can be done by anyone, but also because you provided an action plan that we can follow. I believe that this will increase the chances of landing the first costumer *inside* the company we work with.
Jonathan: keep this kind of guest posts coming my friend!
Way to go, Ethan! You’re an inspiration! I wish I had explored this option when I quit my job.
Thank you Cara- It is probably never too late to inquire :)
Great post Ethan,
You bring up a point that many of my friends get hung up on. Determining your value and sticking to your guns by charging what you are worth. I have watched many of my friends who have either been downsized or who have stepped away from their careers offer their services for less than they were making before! They really have troubles seeing what great value they offer.
One of the things I have been telling them is that they are less expensive to the company simply because they do have to cover the costs of having them in the building daily. By being a free lance asset the company no longer is paying any benefits or any of the built in costs (taxes, insurance, etc.) and is only paying the hourly rate. This can be a huge benefit to the company! Once you begin to understand that simple fact then you can begin to see your value go up.
Best of luck on your journey! It sounds like you have a bright future in front of you.
Thank you Scott! I think the number is something like 40% additional cost on top of your salary is what a company spends on all those benefits.
Great article Ethan. I think what you did is a dream for many people, including myself. My problem is not wanting to do the same work I was doing and thus, needing to completely leave the company. My brother was fortunate to do something similar in moving from a company to working for the government doing the same job, in the same office, sitting at the same desk, just making a bunch more money.
I am curious as to how it’s going now. Is your workload from your previous company dropping off? I’ve heard that, as a contractor, you can typically get finished with a days work in a few hours of non-interrupted time, allowing you time to work on other clients or your own business. Do you find that is accurate? Thanks
Alan,
Yes, you can get boat-loads more work done when you have no interruptions and work in your own comfortable environment.
When we’re in school we’re trained to think we have to be in school for 8 hrs a day to learn. My husband and I are unschooling our kids and it’s common knowledge among homeschoolers that kids can learn tons more in much less time when they learn on their own terms. School is the training for having a job so we then think that we’re supposed to sit at a desk for the rest of our lives for at least 8 hrs a day. HUGE MYTH!!
As long as you keep yourself focused (frequently a challenge for those who move from a structured office to unstructured working from home), you’ll get twice the work done in half the time.
Alan, I do find that accurate, but not quite as much as I was expecting. In my line of work, I often am waiting on other people for a number of pieces before I can put them together into a training piece. So there are times where I want to sit down and do a few hours of work uninterrupted but cannot.
I agree with the comment about not recognizing worth. I’m a software developer and I have decent skills, but I don’t seem to trust myself to go out and just start contracting. It’s what I want to do, but I’m concerned with views of not finding clients. Stability. And overall not being quite good enough. It’s slightly different building internal web applications vs. external, and competing with outsource agencies kinda puts me at a hard place to start. I suppose it’s just a leap I have to make.
Any advice for someone who wants to start doing this ASAP?
Johnathan,
You’re worth as much as you think you’re worth. Change the stories in your head and start believing how amazingly valuable and unique you are and new opportunities will start to appear out of nowhere. Yes, it really happens that way. Your thoughts create your reality and your future.
Jonathan- You’ve got a skill that is always in demand! You could look on online freelancing sites like eLance and others. When you leave your job, you definitely lessen the stability, but setting up a contracting arrangement can help smooth things out.
Great article! Describes my situation really well and gives me hope for the next year ahead. Might be able to do the same someday!
When contemplating this type of move you need to do the math, not just for salary but all the other benefits and drawbacks associated with being an employee vs. freelancer. At first glance, freelancing sounds like a no brainer: double your pay! Great! But then what about health insurance? 401K contribution? Subsidized gym membership? Professional development/training? Equipment purchase and upgrades? One of the reasons freelancers command a higher hourly rate is that they need to pay for those things out of pocket. Typically those cost an employer about 40-50% over and above an employee’s base salary. Of course there can be cost savings as a freelancer: reduced (or no) commute costs, less money spent on a work wardrobe, fewer purchased lunches, tax deductions for home office, etc. Depending on one’s family and health situation, the decision to go freelance may not be a financially advantageous choice (though it may offer other advantages). It’s all about doing the math and deciding what makes sense for you.
You’re absolutely right Lisa. It’s definitely important to determine what expenses you’re looking at working for someone else vs. working for yourself. However, for some people it’s not just about the money, it’s also about being able to work less, or work whenever and wherever they want. There are other benefits to consider that aren’t just monetary.
Lisa, that’s a great point. While I enjoyed a lot of those other benefits while I worked full time (like the subsidized memberships, free products, etc.), I took a hard look around and decided whether they were really making me happy or not. I found that I was taking advantage of them simply because they were available- not because I really wanted them. So now I have less, but what I lost wasn’t really anything that mattered to me.
The only really important thing was healthcare, and I decided to use COBRA to keep the coverage that I had with my employer. I can do that for up to 13 months, and will then get health insurance through the local SBA.
You have to make those decisions for yourself though!
About a year ago I was hating my job as I was completely underutilized and un-challenged. I wanted out but wasn’t sure how. Then I reconnected with a guy whose company I had worked for as their VP of Finance until it was sold in 2007. He was getting a couple new start-up’s off the ground and needed a CFO (chief financial officer) for them but not full time. We worked it so that he would pay me the same as I was making at the job but would work from home part time. He knows I’m worth much more and we have a deal that my income will go up to what I’m worth when the start-up’s start generating revenue (which should be in the next month or two).
There are no plans for the companies to have an office so I’ll keep working from home, which is perfect for me. Although my title is CFO, I get to use my many varied skills that I’ve picked up as I’ve grown my blog (social media, web site development, copywriting,marketing, etc.) and I get to be involved in all aspects of operations (which I love).
This paid position leaves me the time I want to write, develop my first program and further develop my online community. And I could pick up other paid work, if I wanted to (I’ve been paid to develop a few web sites).
For health insurance, we use an independent broker to find a policy that works for our family and our budget. We’ve used him for about 15 years. You can also find policies on http://www.ehealthinsurance.com. Since we’ve had kids (oldest is 8), I haven’t used my employer’s insurance because it’s always been much more expensive for family coverage than I could find on my own.
As for any other benefits, if you get creative, you can create the same benefits for yourself for free.
As the CFO for other companies, I’ve been in charge of HR departments and help to make policies on hiring and pay. Companies like contractors, especially in IT. In other departments (like a call center), companies love contractors for seasonal work. From the company’s perspective, contractors are MUCH easier to hire and fire (much less risk). As long as you’re doing great work, you won’t have to worry about them firing you, even if the volume of work lets up. They’ll find something else for you to do, knowing they’ll need you again when things get busy.
It’s time-consuming, expensive and disruptive for companies to hire and fire people, whether they’re employees or contractors. When employers find a good person, they’ll do what they can to keep the person, if they’re reasonably smart.
Know you’re worth it and ask for what for what you’re worth. What’s the worst thing that could happen? Unless the employer is a complete idiot, if you’re a half-decent employee, they will not fire you.
All sounds great apart from that my skill set used to be HR generalist, and as you point out, unless you’re a specialist/expert you’re not un a very strong position. So for some if us its got to be something like a 2 year pre-quitting plan of choosing and perfecting a special skill set.
I don’t think being a specialist is necessarily required, although it definitely doesn’t hurt. What is required I think is that you’re a huge asset to your company and are incredibly valuable to them. You can be a generalist and still accomplish that.
Jonathan hit the nail on the head with this comment. It really all comes down to creating value. Create huge value and get huge pay. Make the people you help NOT be able to afford to lose you.
I do struggle with how to create value as a generalist – not even an HR generalist. I have a law degree but am not licensed, have an MBA but it’s in entrepreneurship (trained to be a generalist). I provide lots of value in working on lobbying issues, some light financial model building, and business development efforts, but it’s hard for me to see how any of those translate to an outside consultant position.
THIS IS GREAT INSPIRATION.TOO MANY WORDS WO’NT DO
Thanks for this great post, Ethan (and Jonathan for sharing it). It was very motivating and inspirational to me. I figured out a couple of years ago that I had no interest in climbing the traditional corporate ladder, nor can I see myself staying exactly where I am for the rest of my career. It’s great to hear your first hand account of how to negotiate a better deal and refocus your energies. Bravo!
Ethan, congrats and thanks for sharing your story. It’s great that you have a very good relationship with your boss and took advantage of the opening that she gave you. Be open and honest and most managers are willing to work with you, especially if you give them enough lead time.
Totally. I think we personify the boss as this evil monster too often. Bosses are people too, and they don’t like to be taken by surprise. Sure there are good ones and bad ones, but I’ve found that honesty is the best policy.
Impressive
Personally I don’t have an urge to quit my business
I actually opened another business, consulting small businesses as I enjoy my work and sharing my knowledge. I even wrote a book about my experience in business: When Opportunity Knocks Answer the Door which is sell on my website. One day when it sells enough copies I’ll think about retiring :)
Hey Ethan,
I probably could have pulled off a contractor transition when I left my corporate gig, but decided not to. It’s awesome to hear the story of someone who not only tried, but rocked the hell out of the attempt. Way to tell a great story and give everyone a quality path to follow if they choose to blaze their own trail.
Ethan this is a very inspiring post man.
It is practical but real. There is a lot of content out there that says “quit your job, follow your passion.” But they don’t talk a lot about the process that comes with that. I enjoyed this post because it gives respect to the actual process rather than the final event.
Personally, I am very interested in the process you took over the course of that year to transition from working for this company to being your own boss. Clearly, it is a transition that takes time and my guess is that a lot of hard work and planning went into it. But I don’t know :).
Either which way great post.
Hey Ethan
Cool story. And congratulations to you.
I met a guy recently who was explaining how he longs to be back in the Portuguese countyside where he’s building a farm, but considering the recession, he had to come back to the UK and find work. What he was doing, was working remotely for a company whilst being in his beautiful farm house in Portugal, as a contractor. After losing that contract, he simply returned to the UK, but with eyes to go back as soon as he can.
So it’s definitely possible, but like you said, you also have to be great at your work. And being unique, or in a unique position where it is hard to find someone who can come with your skills is a bonus. That’s a very good point. It may take a little imagination on how you can differentiate yourself in your position. But being excellent is definitely something everyone can implement right now.
Gemma
Congratulations, Ethan, that’s an awesome story. Great to see that you were able to separate your mindset from the collective mindset around you. I’m on a similar path. My last day at my job was 3 weeks ago and I’m out on my own now. While I am not doing any contractor or consulting work for my former employer now, which is fine because I’m busy enough and frankly I wanted a bit of separation anyway, I know that I will at some point down the road for mutual benefit. The ability to have that anchor client is huge. Best of luck with Cloud Coach – heading over there now to check it out.
Dude, this is amazing! I am going to think about it seriously and maybe try it next week… I’ll report back with results.. :)
Let us know how it goes!
Wow, this is an amazing read!!!!!!
Wow, these are the sort of posts that I love reading. I blog about how to quit your job and I have to admit what you did here was truly awesome. I recently gave up the 9-5 grind and it was the best choice I ever made.
Most people are way too worried about the potential failure when it comes to quitting a job and moving onto something they would love to do. I think it is a bigger risk to pass up on opportunities and to stay doing something you hate.
Inspiring story. Have done a similar thing myself and it worked out for a few years.
But the world keeps turning…and changing and its difficult to continually change when you are busy doing what you do….until it becomes redundant!
Bottom line….need to keep creating and evolving…moving forward with intent. Relying on past formulas in this rapidly changing environment can result in your momentum slowing.
I guess we need to keep stretching ourselves. Getting comfortable with what you are doing can be the beginning of the end.
Wow, I had a very similar experience to you, doing a very similar line of work. I left a great job of 7 years to launch my own creative pursuit of selling art @ alignbetween.com – but as with any solo-run new business, one often needs residual income in the meantime as you grow that 5-year business plan (especially in the world of art!). Through one of my contacts at the job I left, I was recruited to do contract work at…twice the pay and about half the hours. I could work much more effectively by focusing on only the project at hand, versus a broad range of “full-time” responsibilities. Having a solid portfolio of projects and accomplishments at the job I left enabled me to become desirable as an outside consultant. Now with that behind me, the resume is even better. It was a total win-win. But I had to venture into the unknown first. Good luck to you and thanks for sharing your story which I guess is more common than people might think :-) The point is to think about the possibilities, instead of only focusing on the obstacles.
I did that and got fired. 5 years ago. My income is not where near what it was.
I also quit my job three months ago. I thought I would do great in home-based freelancing. :D Well, it’s not that easy, I think I should try to figure out first what unique skill I should develop to be successful. :)
Ethan, great story….
Unlike Joe and Melanie, when I quit my job at years end, I think I will have a better chance of succeeding since my online business is beginning to grow rapidly. It’s been a long time coming, but it is finally here. Good luck to all.
In the early 1980s, managers were already saying that 40% of the compensation was your benefits package such as your health and retirement plan. Since then, the cost of health care alone has exploded. I don’t think you should use the 40% number today. It’s my humble experience as a long time freelancer that if you have only doubled your previous hourly wage but given up health, retirement, vacation pay, stock options, etc. you are losing ground financially.
I think your manager gamed you.
6 months is a huge notice period for me. I am planning to leave my job and my CEO started talking about my appraisal next month that he kept postponing for around an year. He does not want me to leave and said he`ll never fire anybody. But a dude who casually asked for a salary hike 2 months ago got fired. I recently discovered that our CEO was hiring lot of freshmen just so that he can pay them peanuts and kick the older folks, even though my salary is no where near a peanut. He expects that we seniors would train the freshmen spending overtime at no extra cost, so that he can fire us and enjoy the benefits of cheap work force. This is what i get for being loyal to my company for over 2 years, since the company was launched. I`m scared to take a decision as i don`t want my CEO to play with my experience certificate. I hope i gather enough courage and relieve myself soon, as i know i have the potential to start my own business soon.
Unlike Joe and Melanie, when I quit my job at years end, I think I will have a better chance of succeeding since my online business is beginning to grow rapidly. It’s been a long time coming, but it is finally here. Good luck to all.