Decisions are made by comparing two or more options and weighing them according to predetermined criteria. We have all heard the term "comparing apples and oranges." It is important that the criteria we use have a common metric. In the discussion that follows the common metric is money. Every career decision a contractor makes is ultimately reducible to a question of financial cost or gain.

If you decide to let a contract employment agency locate your next assignment, instead of locating it yourself, that decision could cost you annually as much as $50,000. Similarly, if you decide to stay in your job as a permanent employee, your need for perceived security and stability could cost you one year's college tuition, or a new car, or a month in Maui. When you reduce your decision to cold cash, it takes on a whole new perspective.

So, let us begin with the basics. How does one convert an annual salary into an hourly pay rate and visa versa? In other words, what hourly pay rate must an individual earn to justify a change in status from permanent employee to contract employee? Conversely, how much annual compensation is needed to financially justify a contract employee's return to permanent employment? The answers to these questions are key to making wise decisions about your career.

Understanding compensation for the contract employee is straightforward. The contract employee makes x dollars per hour. How much one earns in a year is simply a matter of multiplying the hourly pay rate by the number of hours one works in a year.

Understanding compensation for the permanent employee, however, is anything but straight forward. The solution comes into focus when we itemize all sources of compensation, actual and in kind, and divide that total by the number of hours actually spent on the job (equivalent to billable hours in contractor terms).

The formula looks like this:

(Annual Salary  +  Additional Compensation)  /
(Actual "Billable" Hours)
=  Hourly Pay Rate

First, let's itemize the typical sources of compensation in a large company.

Calculate Your Real Annual Income:

• Stated Annual Salary
  
  
• Replacement Value Of Company Paid Insurance
  • Health
  • Dental
  • Vision
  • Life
  • Disability
  
  
• Company Paid Professional Expenses
  • Software, Manuals & Textbooks
  • Subscriptions
  • Association Dues
  
  
• Replacement Cost Of Company Perks
  • Annual Bonus
  • Performance Bonuses
  • Automobile, Gas, Maintenance & Insurance
  • Laptop Computer, Other Tools Of The Trade
  • Cellular Telephone & Service
  • Data/Telephone Lines To Residence
  • Athletic/Country Club Dues
  • In-house Fitness Center
  
  
• Replacement Value Of Company Provided Training
  • Classes
  • Seminars
  • Conventions
  • Retreats
  
  
• Company Paid Expenses (When Out Of Town)
  • Food
  • Lodging
  • Transportation
  
  
• Company Contribution To Retirement Program
  • Standard Contributions
  • 401K Matching Contributions
  • Stock Options

One tends to overlook the considerable "personnel overhead" associated with the care and upkeep of a permanent employee. Corporate accountants typically figure on a labor load of 30% to 40%. But, the contract employee generally pays for these expenses out of pocket with "after-tax" income, so the equivalent labor load may approach 55% in replacement costs. If you are a permanent employee, use the preceding list to compute your real annual income. You may be surprised to learn how much you are actually making!

Calculating one's total compensation can be very illuminating, indeed. For example, many permanent employees cite the high cost of health insurance as a major reason for staying where they are. Yet, the total replacement cost for company paid insurance for a typical single adult averages between $3500 and $4000 per year. (And, yes, there are a few excellent group plans out there for contract employees and independent contractors.) Compare this with the value of a company provided laptop computer, company car, performance bonuses, company provided training and other perks.

Upon further inspection, one quickly sees that retirement benefits are possibly the single greatest contributor to total compensation after the salary itself. A straight salary of $60,000 may ultimately translate into a total equivalent annual compensation approaching $95,000.

Now let's work out how many "billable" hours a permanent employee actually spends on the job in order to earn the total compensation listed above.

Calculate Actual (Billable) Hours On The Job:

• Total Working Hours In A Year = 2080
  
  
• Less Paid Days Off
  • Vacation
  • National Holidays
  • Sick Days
  • Personal/Mental Health Days
  • Days In Training, Conventions, Etc.

Calculating the total hours on the job by a permanent employee is also very illuminating. There are 52 weeks in a year. A typical corporate employee receives three or more weeks paid vacation, one or two weeks sick leave, two weeks paid national holidays and two weeks of company training. In other words, the typical corporate employee works 43 weeks in a 52-week year. That equals an annual billable total of 1720 hours.

Calculate Your Equivalent Hourly Pay Rate:
We now have all the information we need to convert a $60,000 annual salary into an equivalent hourly pay rate. Dividing the total compensation ($95,000) by the actual billable hours (1720 hours) yields an equivalent hourly pay rate of $55.23/hour.

If, as a contract employee, you expect to experience additional unplanned days off between assignments, you will want to factor them in. Dividing by fewer hours increases the break-even hourly pay rate. If your current company gives you meager benefits and little time off the job, naturally your break-even hourly pay rate will be less.

This break-even hourly pay rate is your minimum acceptable pay rate. You will be losing ground if you accept any assignment that pays less than your minimum acceptable pay rate.

Okay, you say, but I'm already a contract employee with a fully leveraged pay rate of $75/hour, and my client just offered to hire me at $80,000. Should I accept the offer? The answer is, "It all depends." Just do the arithmetic backwards. What are all the benefits you can reasonably count on receiving? Will you be locked into a rigid salary structure, or is there room to grow. What is your projected total compensation over the next five years as a contractor? . . . As a permanent employee? Will you be comfortable returning to a structured work environment? How much will you "charge" for your loss of freedom, . . . $10,000, $25,000 per year? Or how much are you willing to "pay" for the perception of added security?

You must be brutally honest in your assessment of all the factors you weigh when making a career decision. All factors, even emotional factors, have a dollar value. Let the arithmetic tell you the answer. Then stick to your guns! If you are honest and diligent in your research, whatever decision you make will be the right decision, and a decision you can live with.

A Convenient Rule Of Thumb
Client companies understand the full value of a permanent employee, and they take that value into consideration when they budget for contract labor. For example, consider a company that pays its permanent employees an annual salary of $60,000 to perform a certain task. That company will budget between $60 and $70/hour for a contract employee to perform the same task.

Agencies and independent contractors use a convenient rule of thumb to compute their bill rates. They take the annual salary that a permanent employee would earn for performing the same task, and they divide by 1000. Then they tweak it up as far as the market will bear. Salaries and bill rates naturally vary with different kinds of work and in different parts of the country, but for any given salary, this rule of thumb will always produce a correspondingly valid bill rate.

In other words, a salary of $45,000 yields a bill rate of $45 to $55/hour; a salary of $60,000 yields a bill rate of $60 to $70/hour; a salary of $75,000 yields a bill rate of $75 to $85/hour.

If you bring the job to your agency, your agency should take no more than $20% of the bill rate as its fee for processing your payroll. Here is an example: Let's say you were downsized from a $60,000 a year job as a budget analyst. Now your old company wants you to return as a contract employee. Since your former employer has asked you back without the intervention of a third party recruiting agency, you should be able to negotiate a pay rate equaling at least 80% of the bill rate. The bill rate for a $60,000 salary is $60 to $70/hour, so your pay rate should be in the neighborhood of $48 to $56/hour. Note how closely this range compares with the pay rate of $55.23 calculated above by dividing the total annual compensation by the actual hours worked to obtain the minimum acceptable pay rate.

If your agency brings the job to you, you should expect to pay a significantly higher fee averaging 45%, and sometimes exceeding 65%, of the bill rate charged to the client.

Your agency should freely and openly disclose the bill rate for any assignment it presents to you. After all, you are entitled to know what you are worth! If your agency won't tell you the bill rate, find one that will. If your agency is taking more than a fair cut of the bill rate, shop around for an agency that will treat you fairly.

The above analysis produces this startling observation: A contract employee who locates an assignment without the assistance of a third party recruiting agency will earn about the same real income as a permanent employee doing the same job. However, if that same contract employee were to use an agency to locate their next assignment, they would most assuredly earn significantly less . . . in some cases less than half as much as a permanent employee doing the same job!

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Every Contractor's Fantasy
You're working at your current assignment when you learn that the budget has been cancelled, and your project will end at 5:00 PM on Friday. No Sweat! The fairy godmother of all contract employees is sitting on your left shoulder humming sweet nothings in your ear.

Suddenly the telephone rings. It's a project manager from that very wealthy, progressive company right down the street from where you live. A former coworker told her you walk on water, and she just knows you will be perfect for the job. Can you start this coming Monday? Oh, yes, the pay rate is 50% higher than your current assignment. It's a long term, open ended project, and you will have free access to the executive locker room in the corporate fitness center.

Every Employer's Fantasy
You're working hard on an important pilot project. You just learned that higher management has approved the enterprise rollout with a tight delivery date. You are understaffed, and to make matters worse your best contractor just retired to the Cayman Islands. No Sweat! The fairy godmother of all project managers is sitting on your left shoulder humming sweet nothings in your ear.

Suddenly the telephone rings. It's long distance from the Cayman Islands. The voice on the other end congratulates you on the success of your project, and, by the way, were you aware of this excellent water walker who lives right down the street . . .

Fantacies? Yes! Impossible fantasies? No!
The contractor who successfully lives every contractor's fantasy does so by making the project manager's fantasy come true. Here's how.

Flatter Your Fairy Godmother
Flatter your fairy godmother and she will conjure miracles. Ignore her and you will pay dearly. Your fairy godmother doesn't work in a vacuum. She requires proper care and feeding . . . and lots of attention. She will fulfill your fantasy if you are willing to cooperate. Here is what we mean.

Richard Nelson Bolles, author of What Color Is Your Parachute, observes that job-hunters prefer to job-hunt in exactly the reverse order that employers do. Below, in decreasing order, are the ways a typical employer prefers to fill vacancies (Adapted from Bolles).

1. From Within
   Transfer or promote an existing employee.
   Hire or reassign a temp or contract employee who is currently on assignment at your company.
   Advantage: A known quantity who knows the project, the people and the corporate culture.
   Disadvantage: Absolutely none.
   
   
2. A Job-Hunter Who Offers Proof
   A referral by a colleague, trusted friend or respected worker.
   A highly qualified candidate who walks in the door with a proven track record and portfolio of prior work.
   Someone the manager has already met and likes personally.
   Advantage: Next best thing to a known quantity.
   Disadvantage: How well does the manager trust his/her sources?
   
   
3. Search Firm For Higher Level Jobs
   Engage the services of a search firm, contract agency or employment broker to recruit and screen outstanding candidates.
   Advantage: The search firm does all the leg work, and their service is "free".
   Disadvantage: Their real cost is hidden in their high bill rate. Can they be trusted to refer quality candidates?
   
   
4. Employment Agency For Lower Level Jobs
   Sift through candidates submitted by employment agencies and one's own personnel department for someone who might grow into the position.
   Advantage: The search firm does all the leg work, and their service is "free".
   Disadvantage: The candidates they supply require more supervision and direction.
   
   
5. Unsolicited Resumes
   Sift through reams of unsolicited resumes of dubious quality that arrived by snail mail and e-mail with virtually no documentation or pre-screening.
   Advantage: What advantage?
   Disadvantage: Time consuming and almost completely futile.
   
   
6. Newspaper Ads & Internet Postings
   Buy classified ads, post jobs on the Internet, wait for the responses to roll in, read, review, interview, screen, check references and cross one's fingers.
   Advantage: Sometimes even desperate measures work out.
   Disadvantage: Absolutely the method of last resort.
   
   

There is obviously a good reason why employers/clients prefer to start with method #1. Moving down the list increases the time, cost and effort required to fill a position. Moreover, moving down the list dramatically reduces the employer's confidence in the quality of candidates. Method #1 is the safest bet. Method #6 is the riskiest.

So, Why All The Classified Ads?
So, why do we still see so many classified ads and job listings? Well, have you ever noticed how many are placed by HR departments and agencies, and not by the actual hiring authority? If you have ever looked for a job in the classified job section of your local newspaper, you know what an exercise in futility it can be. The classifieds contain hundreds of low paying jobs. The companies and agencies know that by running a classified ad they will receive dozens or hundreds of resumes from desperate job seekers. They can then cherry pick the "most qualified" to interview, and then offer low dollar to the "fortunate" winner.

Agency job listings are the electronic equivalent of classified newspaper ads. These ads are distributed to hundreds of subscribing agencies, which in turn hand them over to their newbie headhunters for follow-up. It's like fishing for goldfish. The hungry suckers will bite at anything.

Job-hunters, at least the less sophisticated ones, prefer to start at method #6 and move, reluctantly, toward method #1. They scour the classifieds and Internet job listings. They broadcast their resumes to dozens of HR departments and agencies. They register on agency sponsored resume sites. They are overwhelmed by agency requests for more information, and they jump through all the hoops. [Note: Headhunters routinely give their candidates little tasks to do: "Please fax me another resume, this time without any formatting.", or "Call me at exactly 2:35." This is one way headhunters separate the committed and cooperative candidates from the curious looky-loos.]

Finally, the hapless job-hunter simply can't understand why all this "work" turns up only under-paid jobs in far-flung regions of the globe. And why? Because the disappointed job-hunter failed to flatter the fairy godmother. You see, your fairy godmother uses only methods #1 and #2. These methods uncover the Hidden Job Market, and the Hidden Job Market directly feeds every employer's fantasy. Your fairy godmother works the Hidden Job Market exclusively.

The Hidden Job Market
Before going any further, STOP. Link immediately to The Hidden Job Market in the excellent JobSmart web site. Read this section completely. Print it out. Read it again. Memorize it. Practice it.

Chasing the advertised job market is easy, but terribly inefficient. Pursuing the Hidden Job Market is initially hard, but gets easier and more efficient the more you work at it. Also, the Hidden Job Market has a tremendous advantage for those who pursue it. As pointed out in the JobSearch web site, "The Hidden Job Market works precisely because it requires so much effort from the job seeker! Job seekers who work the Hidden Job Market are more persistent, creative and results-oriented than job seekers who rely on classified ads. Employers instinctively know that Hidden Job Market job seekers are the 'creme de la creme'. These are the kind of employees they want."

Let this be your mantra:

"Unemployed" Does Not Mean "Unemployable"
The prospect of being unemployed strikes terror into the hearts of even the bravest job seeker. All kinds of desperate images (best not described here) begin to occupy the mind's eye. Obsession turns to panic. Panic devolves into deep depression. That voice between your ears whispers unspeakable profanities, waking you at 3:00 AM in the morning to remind you that only losers are unemployed. "You MUST find work ASAP, no matter what you have to settle for." "ANYTHING", it now screams, "is better than being unemployed."

My unemployed friends, the voice lies!

Savy contractors plan for the inevitable periods of unemployment. They factor in projected idle periods when computing their minimum acceptable pay rate. They pay into an emergency fund while they are employed, and draw from it between assignments to cover expenses. Experience has taught them that unemployment is natural. Unemployment is manageable. And unemployment can be a godsend.

The Highest Paying Job You Will Ever Have
Unemployment does not mean you are not working. In fact, when you are unemployed your full time job is landing your next assignment. The scenario that follows illustrates how landing your next assignment can be the highest paying job you will ever have.

Jack called his recruiter as soon as he heard his contract was coming to an end. Jack's recruiter sprang to action, quickly setting up an interview with a client company. Jack aced the interview. The recruiter was ecstatic. Not only would Jack have no down time, but also he was able to keep Jack's pay rate at a low $35/hour, exactly what Jack was used to earning. And best of all, trilled the recruiter, the commute was only 45 minutes each way.

Unfortunately, the recruiter was unaware that Jack had recently met Dungaree Dan who had taught Jack to ask The Big Question. Jack asked his recruiter what was the bill rate for the new assignment. The recruiter was horrified that Jack would even dare to ask such a forbidden question. So Jack called the hiring authority with whom he had interviewed. He explained he needed to know the bill rate so he could effectively negotiate a fair rate of pay with his agency. Jack let the manager know that the agency was offering him $35/hour which seemed a bit low. The manager agreed, and revealed that the agency was billing $85/hour.

Jack called his agency and confronted the recruiter. The recruiter was appalled by Jack's brazen act of treason. Jack, he sniffed, could no longer be trusted. He would have to seek another, more trustworthy, candidate for the assignment. Jack, he explained, was henceforth persona non grata.

Jack was pleased to learn what he was actually worth, and he resolved to land his next contract on his own. Jack worked hard at his new "assignment". He followed exactly the methods he learned from Dungaree Dan. The hard work paid off. The search took four weeks, and Jack landed a one-year contract just fifteen minutes from home. Best of all, the bill rate was $85/hour. The company recommended a few pass through agencies from its list of approved vendors. Jack selected one that offered him a pay rate of $70/hour.

In just four weeks of concentrated effort Jack increased his gross annual income by $70,000. Computed over four weeks, that comes to $450/hour.

Of course, every situation is different, and your experience may differ from that described above. But any way you look at it, landing your own next assignment can be the highest paying job you will ever have.

Getting Started With Three Simple Steps
Getting started is as simple as one, two, three:

1. Identify and list the companies where you want to work.
   
   
2. Identify one or more key contacts in each company who has the authority to hire you, can recommend you to a hiring authority, or can refer you to either of the above. [Hint: The hiring authority is the one who owns the budget. Nobody in the Personnel Department has the authority to hire you. Those folks (God bless 'em) spend their days weeding out all the "less than perfect" matches, namely people like you!]
   
   
3. Make contact. Ask your contacts for help, and conduct informational or research interviews to obtain more information and, quite possibly, your next assignment.

A Brief Digression On The Value Of Research
Most career guides stress the value of research. Research on the industry, research on the company, research on the company's products/services. Research is especially important for the permanent employee attempting to make a long term career move. Research is less important for the contract employee seeking that next temporary assignment. We do not intend to discount the value of research. It's just that given a choice between more library research and more personal contact, you should opt for more contact.

You will get your most valuable information by talking to people. Collect names, collect gossip, collect personal information. The hiring authority has already read the company's annual report. What he or she really wants to know is:

• What do you do that I, or people I know, need?
• How well do you do it?
• Who do you know who I also know?
• What do you know that I don't know?

Step #1: Identify And List The Companies
This first step is easily accomplished through a quick trip to your local public library. Ask at the information desk where you can find the directories that list companies by industry type and geographic location. Most directories have headings for the main phone number, address and number of employees. Take the directory and a handful of coins to the nearest copier, and copy the relevant pages for your search.

Job seekers in California are blessed with three especially comprehensive directories:

• Commerce And Industry Directory
• Rich's Business Directories
• Dun's Regional Business Directory

Dun's directories are also available for every major metropolitan region in the United States. All three directories provide separate listings of companies by name, by product/service, by city, and by size. They provide phone, fax and 800 numbers, local addresses, number of employees, and in some cases e-mail and web site addresses.

Your librarian will also cheerfully direct you to additional lists compiled by local business journals and other sources.

Focus on the largest companies first. Large companies have operating budgets that are allocated to individual managers and projects. Fixed budgets are conducive to longer and more stable assignments. Also, large companies have lots of departments, any of which may need your services, and all of which have managers with the authority to hire you. Large companies are easier to move around in, they have more skilled people to help you learn new skills, and they are less inhibited in the way they spend money. Fairy godmothers love large companies.

Step #2: Identify One Or More Key Contacts
Your objective at this point is to collect names and titles. You are NOT looking for a job. Do NOT ask for an job. Do NOT even ask if they have any openings. If the people you want to talk to at this point believe you are really looking for work, they will clam up and refer you to Human Resources (A fate worse than death!). Worse yet, they may think you are just another pesky headhunter and refer you to that voice-mail address they NEVER listen to.

One more point, never leave your number with a secretary or voice mail. You have more productive things to do than play phone tag with several dozen strangers.

Here is a sample script for your call. This script works best on secretaries and receptionists.

Hello, I'm (Your Name). I hope you can help me.

I'm looking into career opportunities for (C++ programmers, budget analysts, database administrators, etc.). Can you give me the names and addresses of two or three people I should address my letters to? I would like to send them a brief questionnaire by mail to aid me in my research.

I'm particularly interested in what books and coursework might be appropriate to prepare for this line of work. I'm also very interested in what kinds of projects people trained in this area work on. Can you direct me to someone who would know who I should write to? It would really help a lot.

(Note: Get as many names as you can, and don't forget to confirm the address. Always ask after getting a name, "Can you think of anyone else." Keep on asking until the person runs dry. Then thank them and go to your next call.)

Another script, this time more direct. Use this approach if you think you have contacted a hiring authority.

Hello, I'm (Your Name). I hope you can help me.

I'm a contractor who specializes in (Fill in the blank). My last assignment was at (Company Name) where I (Brief description of project).

I'm trying to identify companies that are currently undertaking similar projects. Hopefully, you can steer me in the right direction. Would you have a moment to share some ideas with me.

Remember, if you push for an interview at this early stage your contact will likely resist. Of course, you are open for an interview if one is offered. Before you hang up, ask again for more names -- company names, people names and titles. "Can you think of anyone else." Never hang up without asking for more names!

Your daily goal should be 20 calls, or 40 names, whichever you reach first. Keep calling until you have at least 100 names.

The icing on the cake: Ask for the name of every person who gives you information, even if it is only the receptionist or the secretary. As soon as you hang up from your call address a pre-printed thank you note, add a brief word of thanks, and sign it legibly. Not only does this individual deserve your thanks, but you want them to remember you kindly if you ever call again!

Step #3: Making Contact
In step #3 you finally make contact. To soften the approach you will send a brief cover letter along with your resume to each name on your list. Send out no more than 25 letters a day. You will be making follow-up calls to these letters two to three days after you mail them. This approach establishes a schedule for your search that you will feel committed to follow. Don't let your efforts fall behind.

Here is a sample cover letter.

Dear Ms/Mr. Contact

("Referrer's Name", or simply "A colleague") recommended I contact you regarding contracting opportunities for (C++ programmers, budget analysts, database administrators, etc.) in your company and elsewhere.

My last assignment was at (Company Name) where I (Brief description of project).

I am trying to identify companies that are currently undertaking similar projects. Would you have a moment to share some ideas with me.

I will call back within 48 hours. I promise to keep it brief.

Sincerely,

When you do call back within two days, the contact will have seen your resume and will already know something about you. What makes this approach so effective are the following:

• It is NOT a cold call. The contact is expecting your call.
• You are demonstrating initiative, creativity and perseverance, the very characteristics a manager is looking for.
• You just dropped into your contact's lap -- What a gift!
• Your contact might as well speak with you now since you are already on the phone. It is certainly easier than returning a call to a complete stranger, and much easier than replying with a letter.
• It is human nature to be helpful. It makes your contact feel good to share information with a deserving individual.
• Chances are your call will not result in an assignment, but it WILL result in more names, if you ask for them.
• Finally, if your contact is friendly you can now call back every month or two and touch base. You have added a valuable contact to your referral network.

During your call you will conduct a brief modified Informational Interview.

The Modified Informational Interview
In his web site, What Color Is Your Parachute: The Net Guide, Richard Nelson Bolles provides a link to an informative article on Informational Interviewing. Read the article now, before going any further.

The article you just read is geared toward seekers of permanent, full-time, career positions. As a contractor you will need to modify this approach by making your questions more to the point.

Begin your call by explaining again who you are and why you are calling. This should take 20 seconds, max.

Below are the questions you, as a contractor, will want to ask. They are organized according to whom you are interviewing. Here is a sample script for the beginning of your conversation.

Hello, I'm (Your Name). I recently mailed you a copy of my resume.

I'm a contractor who specializes in (Fill in the blank). My last assignment was at (Company Name) where I (Brief description of project).

I'm trying to identify contracting opportunities in the area, and thought you might be able to steer me in the right direction. In order to be as brief as possible, I've prepared a few questions. (Without hesitating, ask your first question from the list below. Write down the answer, and go right to the next question on the list.)

Questions to ask if your contact is another CONTRACTOR:

1. How did you land your current assignment?
2. Are you a contract employee or an independent contractor?
3. What agency are you with?
4. Would you recommend your agency to another contractor? Why? Why not?
5. Is your agency open with you about discussing their bill rate and their mark-up?
6. Does your agency have any benefits to speak of? How do you qualify for them?
7. What other agencies would you recommend? Why?
8. Can you recommend any pass through or payroll only agencies?
9. What skills do you use most on your current assignment?
10. Based on my resume, what skills do you recommend I pick up or beef up?
11. How do you go about upgrading your skills?
12. What do you think of the experience I've had so far?
13. With the information you have about my education, skills, and experience, where do you think I should focus my job search?
14. What do you think of my resume? Do you see any problem areas? How would you suggest I change it?
15. Do you think there may be a contracting opportunity in your company for someone with my skill sets and experience?
16. Who do you know that I should talk to next? When I call them, may I use your name? Can you think of anyone else I should contact? Anyone else? Etc., etc.

Questions to ask if your contact is a MANAGER:

1. How do you usually recruit contractors?
2. Does your company prefer contract employees over independent contractors, or does it matter?
3. Does your company have a list of approved agencies?
4. Can a new contract employee recommend their own agency, for example a pass through agency that takes less off the top?
5. Can you recommend any pass through or payroll only agencies I might consider contacting?
6. What other agencies would you recommend? Why?
7. Can you tell me a little about the projects your contractors are working on?
8. What skills do your contractors use most on your current project?
9. What skills are the hardest to find, or are in the greatest demand?
10. Based on my resume, what skills do you recommend I pick up or beef up?
11. What do you think of the experience I've had so far?
12. With the information you have about my education, skills, and experience, where do you think I should focus my job search?
13. What do you think of my resume? Do you see any problem areas? How would you suggest I change it?
14. What bill rates do agencies usually charge for contractors with skill sets and experience similar to mine?
15. Do you think there may be a contracting opportunity in your company for someone with my skill sets and experience?
16. Who do you know that I should talk to next? When I call them, may I use your name? Can you think of anyone else I should contact? Anyone else? Etc., etc.

When you have asked the last question, thank your contact cordially and hang up. We said this before, and it bears repeating: As soon as you hang up from your call address a pre-printed thank you note, add a brief word of thanks, and sign it legibly. Not only does this individual deserve your thanks, but you want them to remember you kindly if you ever call again!

The above discussion is based on a number of resources, most notably JobSmart: Make Contact with the Employer. If you have not yet visited the JobSmart web site, it is highly recommended you do so now.

Summing It Up
Will your contact offer you a contracting assignment? Probably not. That is why you will have to contact many people. Nevertheless, the chances of landing a high paying assignment by following the steps described in this section will be much greater (some say 8 to 10 times greater!) than spamming agencies and HR departments with unsolicited resumes. Moreover, you will be building a professional network, the value of which will pay dividends many times over as you build your career as a contract employee.

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Different agencies offer different services and benefits. Which agency is right for you depends on what services and benefits you want your agency to provide. All things being equal, the more your agency offers, the less your agency will pay you.

This section describes the advantages to the contractor of various types of agencies, ranging from the most services and benefits offered to the least.

Consulting Firm
Consulting firms include such industry giants as Price Waterhouse and Coopers & Lybrand, as well as hundreds of smaller firms. Consulting firms are NOT contract employment agencies. They are vendors who consult. They may prepare reports, carry out research, conduct market analyses, or manage projects. The employees of consulting firms, often working as a team, may work for extended periods of time on the client's premises.

Consulting firms bill their clients by the project, or by the hour, but they bill on the basis of the firm's overall effort, and not on the basis of each individual's effort or pay rate. Employees of a consulting firm are not required to show their time sheets to the firm's client.

Employees of consulting firms are salaried, full-time, permanent employees who receive the same kinds of benefits received by permanent employees of other firms of similar size. When a project is completed, employees assigned to that project are reassigned to another project. The new project may be in the home office, or in another client's premises in another city. The employee is assured of continued employment, but may have little say as to where that will be. Consulting firms also offer excellent opportunities for advanced training in specific skills.

Employees of consulting firms share with contract employees the excitement associated with multiple changes in venue, new projects, and new challenges. It is this aspect of their lifestyle that frequently results in the consulting firm employee being confused with the contract employee. Although there is potential for significant income, especially at the higher levels of management, the average consulting firm employee will work harder, experience more job stress, yet make significantly less money than a contract employee doing the same job.

Consulting firms look to hire recent college grads and MBAs who have successfully completed a rigorous business-oriented or technical curriculum. For these individuals, employment with a consulting firm is an attractive first career move.

Job Shop
Job shops provide "leased employees". Job shops are contract employment agencies that resemble consulting firms in their relationship with employees. Employees of job shops are usually salaried, full-time, permanent employees. Job shop employees generally qualify for company-paid benefits after a qualification period ranging from three to six months.

Job shop employees are also assured of continued employment, and are paid their regular salary even when between assignments. Like consulting firm employees, job shop employees may also have little say as to where their next assignment will be. Job shops advertise extensive training for their employees, but such training is often limited to tuition chits for studies outside normal working hours. Overall, the benefits and training offered by job shops pale against the benefits and training offered by consulting firms.

Job shops experience higher overhead costs than other types of contract employment agencies. Also, they run the risk of having to pay their employees between assignments when there are no billable hours. Consequently, employees of job shops are likely to earn less than employees of other contract employment agencies performing the same tasks.

Several characteristics of job shops qualify them as contract employment agencies:

• Job Shops place their employees with client companies as individuals, and not as part of a consulting team.
• Job Shops bill their clients by the hour for the services of individual employees who submit copies of their time sheets to the client for verification.
• Employees are recruited by a headhunter who markets them as individuals to the client firm.
• The headhunter makes a commission, or royalty, based on the hourly bill rate of each contract employee placed with a client.

Job shops appeal to individuals with one or more of the following characteristics:

• Value continuity of pay over level of pay.
• Uncomfortable with the prospect of being unemployed.
• Prefer someone else to find them their next assignment.
• Prefer someone else to set up their benefits for them.
• Place an unrealistically high value on company-provided benefits such as health insurance and paid holidays.
• Motivated by the perception of financial security, as opposed to the reality of financial gain.

Full Service Agency
Full service contract employment agencies operate just like job shops, but with two important differences:

• They pay contract employees by the hour.
• They pay contract employees only for hours actually billed.

For all practical purposes, when a contract comes to an end the contract employee becomes unemployed. A full service agency is under no obligation to find another assignment, or, for that matter, pay an inactive employee during idle periods. A former contract employee has the same status as any other candidate in the agency's stable. An idle employee will be marketed to client companies right along with all the other candidates matching the clients' requirements.

It is not a very secure feeling to place one's career and livelihood in the hands of a headhunter who may or may not come through with a suitable assignment. In fact, if one is too picky, the headhunter may just decide to freeze the search. This is the very definition of "NOT IN CONTROL".

Lack of control is precisely why candidates end up spamming agency after agency with unsolicited resumes and e-mail. This practice only aggravates the situation by allowing agency headhunters to cherry pick the most "qualified" resumes for distribution to potential clients. The average candidate just doesn't stand a chance.

The explosion of so-called full service contract employment agencies is a direct result of the tidal wave of downsizing and company layoffs in recent years. The market has been flooded with former permanent employees who haven't looked for a job in years and years. Frightened and insecure, these unfortunate castaways grope in a sea of misinformation for any flotsam that promises to keep them afloat. Frequently, what they grab on to is a full service contract employment agency.

Full service contract employment agencies appeal to individuals with one or more of the following characteristics:

• Recently laid off from a long-held permanent position.
• Have failed to develop, or make use of, their professional network.
• Do not know, or are unwilling to use, effective job seeking methods.
• Are paralyzed by fear, desperation, and insecurity.
• Have unrealistic confidence in the value of spam.

Pass Through Agency
Pass through agencies are sometimes called payroll agencies. That is because their primary function is to bill the client, take a minimal amount off the top for payroll taxes and profit, and pass through the remainder to the contract employee. When used by independent contractors, pass through agencies are often referred to as employers of record.

• They neither actively recruit nor actively market contract employees.
• They do not have headhunters, thereby avoiding the overhead of high commissions.
• They never offer employer-paid benefits.
• The agency cut is a fixed percentage of the bill rate, or a set dollar amount.
• They are usually contacted by a prospective contract employee only after that individual has landed an assignment on their own.

The job seeker who approaches an agency with a bird in the hand, so to speak, is at a decided advantage. The job seeker can call several agencies (assuming they are approved by the client), and shop for the lowest agency cut. This dynamic places pressure on pass through agencies to keep their rates as low as possible.

Pass through agencies appeal to individuals with one or more of the following characteristics:

• Willing to conduct their job search with the same skill, persistence and creativity that they bring to their job.
• Prefer to be in control of their own careers.
• Possess specific skills, attitudes, and work ethic that create on going demand for their services.
• Asked to return by a previous employer following lay-off or early retirement.
• Prefer to set up their own benefit and retirement plans.
• Are veteran contractors who understand how to work the system.
• Maintain, and make good use of, a well developed professional network.
• Understand, and are willing to use, effective job seeking methods.
• Confidently exploit idle periods between assignments to land their next assignment.
• Have a realistic appreciation for the actual dollar value of every career decision.

Contract Broker
Contract Brokers are NOT contract employment agencies. Brokers match independent contractors with client companies. They charge a one-time fee for their services, paid up front. Brokers may bill the independent contractor, the client, or both the independent contractor and the client. Some brokers bill for their time whether or not their efforts result in a match. Others bill only when a contract results from their efforts.

Brokers may also provide additional services designed specifically for the independent contractor:

• Cash Flow Service -- Client companies almost always take at least 30 days to pay their bills. Some delay payment for 90 days or longer. This is not a problem for contract employees whose agencies usually pay within days. But independent contractors, being direct vendors, do not have an agency to take up the slack, and delays in payment can create cash flow problems.

  For a fee of 15% or more, some brokers will pay the independent contractor immediately when the client is invoiced, and then assume responsibility for collecting the bill. It's not unlike running a tab on your credit card. The cash flow service can provide a temporary solution to cashflow problems until an adequate buffer account is established.
  
  

• Market Rate Analysis -- Unlike job shops and full service contract employment agencies, brokers and pass through agencies have no incentive to conceal or misrepresent information on market rates. Your broker or pass through agency can be an excellent source of valuable information on bill rates for particular skill sets in your market area.
  
  
• Employer Of Record Service -- Many companies are reluctant to engage the services of independent contractors. They want to avoid the appearance that they are in fact hiring de facto permanent employees while denying them benefits. To counter this tendency, brokers and pass through agencies will act as the independent contractor's employer of record. For an additional fee they will process the independent contractor as a contract employee, and pay on a W-2 basis instead of a 1099 basis.
  
  

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Explicit vs Implicit Agendas
As a contract employee you have two jobs. The first job is what earns the big bucks: Completing your assignments cheerfully, competently, on time, and under budget. This is your explicit agenda.

The second job is perhaps less obvious, but just as crucial to your success as a contract employee. You must continually improve your skills, develop professional alliances with employees and other contractors, and set the stage for your next assignment. Of course these are not billable activities, but they will pay dividends greater than any billable task. These activities together comprise your implicit agenda, namely landing your next assignment.

Improving Your Skills
Contractors provide skills and expertise that are usually not available within the client company. As a contract employee you are your skills. You practice your skills eight hours a day, day in and day out. Permanent employees rarely have the opportunity or inclination to practice new skills and technologies, they are so busy attending meetings, supervising subordinates, and keeping current with the latest corporate hogwash. They are usually treading water so fast, they scarcely have time to keep their heads above water, let alone breathe.

Another great advantage contractors have over permanent employees is their mobility. Contractors change venues often, thereby gaining exposure to many different working environments, while interacting with uncounted talented co-workers. Permanent employees are severely limited in this regard.

All this can't help but accelerate the learning process, not just with new skills, but with new approaches to solving problems. Nevertheless, expanding your skill set is not an automatic process. You must continually seek out challenging opportunities to keep abreast of new developments and technologies. Given the extremely fast pace of technology, today's high-paid C++ guru may rapidly devolve into tomorrow's low-paid Java rookie. Constantly adding new skills to your skill set is not just important, it is imperative. And what better place to learn than on the job.

Ask management to assign you to projects that require new and improved skills. Or simply take the initiative yourself to incorporate new skills into current projects. In doing so you will enhance your usefulness to the client company, and quite possibly create your own next assignment without even changing venues.

As you acquire new skills, add them to your resume, and distribute your updated resume, as a courtesy, to managers and project leaders within the client company. Include a brief cover letter explaining that your are currently on assignment within the company, and have recently expanded your skill set to include this and that skill. Add that you are currently working on such and such project, but you will be available for reassignment when your current contract is up. Send out a similar package to each of your outside contacts as well. Follow up the mailing with a call to touch base and confirm that your contacts know about your new skills. It pays to advertise!

Developing Professional Alliances
The JobSmart web site has an excellent section on networking. Take time to read this section now, especially the article called "Are You Reluctant To Ask Strangers For Job Leads?" This site contains valuable information. Of course, as a contractor, your networking will need to be more focused than advocated by JobSmart, but the same principles apply.

Developing professional alliances is key to successful contracting. In the section, Landing Your Next Assignment., you learned how to uncover the Hidden Job Market by creating a list of professional contacts, mailing your resume, and following up with a modified informational interview.

The process of making contacts, however, does not simply end when you land your next assignment. In fact, as an insider, you now have a tremendous advantage. You are surrounded by hiring authorities and fellow contractors who can see first hand the quality of your work (plus your natural good looks and cheerful personality, if you got 'em). And don't forget you have access to the company phone directory that frequently lists contractors by job title. This is a networkers dream come true!

Here's how it works. During the course of your assignment you will meet many employees, consultants and contractors. Some will be working on the same project as you, some on different projects. Some will have skills similar to yours, most will have different skills. Exactly what they do, and where they do it, is not important. What is important is this: They all have eyes and ears. And most, before long, will be moving to new clients and new venues.

It is so much easier to call someone you already know, than to call a complete stranger. By sharing information on the job market, or by simply calling to say hi, you are tapping into a vast cadre of insiders. It's like having your own network of personal "spies". Or, if you prefer a gentler metaphor, it's like building your own community, your own support group and extended family.

Recruiting your network is as easy as having a cup of coffee, or dropping by to say hi. But it doesn't happen by accident. Just follow these simple steps:

1. Collect the name, home phone number and personal e-mail address of EVERY contractor you meet. Ask them the same questions you would ask when making initial contact calls. Take notes.
2. Give your personal business card to everyone you meet.
3. Build a logbook to record your professional contacts. Create a separate page for each contact. At the top place their name, address, business card, and description of skills. Below, write the date and brief comment for each call you make. A three ring binder works well.
4. Collect the same information on employees, managers, department heads, and anyone else who may have information on the availability of future assignments.
5. Call your key contacts monthly, and no less than every 60 days. Touch base. Exchange information on new projects, updated skills, and corporate gossip. Collect more names and titles. Be cordial, but keep it brief.
6. Update your professional contact list, mail your resume with standard cover letter, and follow up with an informational interview.

If your logbook contains 100 key contacts, you will need to make four or five calls to your network every day. If you keep your calls brief and focused, this should take no more than 15 or twenty minutes. You can make many of your calls from home, after hours and on weekends.

Over time you will gain a reputation as an industry insider. Your contacts will welcome you calls, and eagerly share information that will point you toward your next assignment.

A Note On The Value Of Mentoring
The relationship between a mentor and their protege is one of the strongest relationships in the professional world. Mentoring is an extension of the basic human need to help others, and mentors satisfy this need by passing on their skills and knowledge to a worthy successor.

The conventional image of a mentor is that of a seasoned patriarch coaching a talented, young protege. But a mentor can be any age, even significantly younger than their protege. The mentoring relationship is defined by its dynamics, and not by its physical appearance.

A mentor is anyone who meets these three criteria:

1. Knows more than you do about a specific area of expertise.
2. Expresses an interest in your progress and success in that area.
3. Is willing to share their knowledge and insight with you over an extended period of time.

Anyone can be a mentor in something. Your next door neighbor, the automobile mechanic, might be an excellent choice to mentor you during the restoration of a classic auto. That is, if your neighbor is interested in your project, and is also willing to give you guidance. In return, you may choose to mentor your neighbor in the fine art of business computing. Mentoring can be a reciprocal process.

To cultivate a mentor you must do three things:

1. Ask your mentor for advice. You must initiate the relationship!
2. Listen actively and positively to what your mentor tells you.
3. Follow your mentor's advice.

The mentoring relationship requires a commitment of time, discipline, and focus by both mentor and mentoree. If you don't ask for what you need, if you listen poorly, or interrupt with negative or contrary feedback, and if you disregard your mentor's advice, then your mentor will recognize you for a fool, and will ignore you.

Respect your mentor's time and intelligence, and support your mentor's ego through your sincere appreciation of their interest in you. By validating your mentor's good assessment of you, you reinforce their continued interest, and you further strengthen the relationship.

Can you have more than one mentor? Absolutely. You can have as many mentors as you can manage. And we do mean manage, since you are fully responsible for keeping the relationship on track. It would be unwise to overextend yourself.

"But, what if I outgrow my mentor?", you ask. It is entirely possible that you will, in time, come to know more than your mentor. At that point the relationship begins to tilt in the opposite direction, as you begin to mentor your mentor. Actually, you should fully expect to outgrow your mentor. You may also find that you will mentor your mentor in some areas, while your mentor mentors you in other areas.

Be selective in your choice of mentor. And remember, even the most brilliant expert can be an utter fool outside their area of expertise. How do you recognize bad advice? It's simple. Good advice works. Bad advice doesn't. Here's a good rule of thumb. Accept advice from people who are more successful than you are in the area of their advice. Ignore advice from anyone who is not successful. A case in point: Would you accept career advice from someone who is chronically unemployed? Beware of this all to common trap!

So, you ask, what does mentoring have to do with contracting? Well, the answer is just about everything. A mentor who respects your talent and appreciates your gumption is your strongest ally. Your mentors will find jobs for you because they have a vested interest in your success. They invested their time and knowledge in you, and they want to see a positive return.

You will also benefit by mentoring others. Consider selecting one or two bright co-workers at each assignment who have expressed an interest in your skill set, and coach them in your areas of expertise. As a mentor you will earn the respect and gratitude of your co-workers, and they might just recommend your services to their own clients later on. Those who have benefited professionally from your mentorship will return your investment many times over.

It is an interesting observation that the mentoring relationship is much less effective if you expect a payback for your efforts. Ironically, you create the greatest respect, the strongest relationships, and the greatest potential for a positive return when you share your knowledge and expertise without any expectation at all.

Setting The Stage For Your Next Assignment
Your mission as a contractor has two agendas -- an explicit agenda, and an implicit agenda. You have learned that your explicit agenda is to complete your assignments cheerfully, competently, on time, and under budget. This is what the client pays you to do. It can be argued that you are as good as your last best reference, so keeping the client happy by giving them more than they expect is paramount to your success as a contractor.

Your implicit agenda, landing that next assignment, is equally important. If you don't work on your implicit agenda during your current assignment, you are destined to work on it between assignments. All things being equal, most contractors would prefer to land their next assignment while they are being paid.

The following action items are on your implicit agenda:

• Continually upgrade your skill set.
• Take on ever more challenging assignments and projects.
• Develop a network of professional contacts.
• Inform your contacts of your new skills and experience.
• Conduct informational interviews with contractors and employees you meet during each assignment.
• Create a logbook to track your professional contacts.
• Call your key contacts every 30 to 60 days to touch base and exchange information.
• Develop mentored relationships with more experienced contractors and employees.
• Become a mentor to less experienced contractors.

When you actively pursue the action items on your implicit agenda, you create demand for your services. You continually reinforce who you are and what you do with the very people who can help you the most. And, you set the stage for your next assignment.

Independent Contractors
Independent contractors usually have a fixed payment schedule set by the terms of the contract with their client. If the project is organized by stage or phase, the client makes a partial payment at the successful completion of each phase. Alternatively, the contract may call for progress payments at fixed intervals based on the total projected cost of the project. Also, the most recent IRS training manual would seem to allow independent contractors to negotiate an hourly bill rate. Generally, there are additional provisions for ad hoc changes and out-of-pocket expenses. Frequently, a good faith payment is paid to the contractor up front before work begins. The payment process is initiated when the independent contractor submits an invoice, or bill, to the client. The client makes a straight payment to the independent contractor. Nothing is withheld, and, if the independent contractor is a sole proprietor, the client issues a 1099 form to the contractor at the end of the year.

The client may require that it's independent contractors use an employer of record or pass through agency. When this is the case, the contractor still negotiates the contract directly with the client company, but does so as an agent for the employer of record. The employer of record then signs the contract on behalf of the independent contractor. When the contractor submits an invoice, the client cuts a check to the employer of record. Upon receipt of payment, the employer of record deducts a small service fee, and passes through the remainder to the contractor. If requested by the contractor, or required by the employer of record, the employer of record may withhold taxes and issue a W-2 form.

Most businesses attempt to "age" their accounts payables for as long as possible. Few companies issue payment is less than 30 days. Ninty days is not uncommon, and the Federal Government may withhold payment for 120 days or longer! Such delays create significant cash flow problems for small businesses, including independent contractors. For this reason, employers of record and pass through agencies may offer an advance payment program. For a fee, usually 15% or more, the agency fronts the contractor for the amount of the invoice, and assumes the risk of slow payment.

In summary, the independent contractor is a small business that provides a specific service for a fee. As such, they experience every cashflow problem encountered by any other small business.

Contract Employees
Contract employees, on the other hand, have a much simpler payment process. For one thing, there is never a question of 1099 vs W-2 tax status. Contract employees are always paid on a W-2 basis. That is why they are called contract employees. Secondly, contract employees are always paid an hourly rate, and payment is always on time, even when the client is slow paying their bill. The Labor Relations Board insures that all employees, even contract employees, are paid promptly and in full. Consequently, contract employees never have the collection problems that constantly bedevil independent contractors.

Like most other hourly employees, contract employees fill out a time sheet, NOT an invoice, either weekly, bi-weekly, or twice monthly. The time sheet is signed by a designated client employee, who keeps a copy. The contract employee also keeps a copy, and mails or faxes the original to their contract employment agency. The agency then processes the payroll, withholds taxes, and mails a check, usually within a week of receipt. Many agencies offer direct deposit, further speeding up the payment process.

In summary, the contract employee is a bona fide employee who is paid on payday like any other regular employee.

You should always strive to earn more on your next assignment than you earned on your last assignment. At the very least, you never want to accept less. Actually, the contract employee who works the system will see their earnings increase faster than most so-called permanent employees.

Here are three ways you can increase what you earn as a contract employee:

• Increase your bill rate.
• Increase your cut.
• Decrease your down time.

Increase Your Bill Rate
As a contract employee you will work in many more environments, meet many more talented people, and be exposed to many more technologies and ways of solving problems than any permanent employee. You will experience professional growth approaching warp speed. In fact, you will probably learn more usefull stuff in any one year than the average permanent employee learns in four or five. That is, if you take advantage of the many opportunities presented to you, and take responsibility for growing your skill set. Increase your bill rate by developing your skills.

Remember, you are being hired as a contract employee because the client company has neither the personnel nor the talent to do what you do well. Your skills are in demand, and you do not want to leave any money on the table, as it were, when you play your strong suit. Most larger companies will pay more for a contractor who they can trust will do a better job, especially if their resume reflects a successful track record doing the kinds of things the client needs done. Increase your bill rate by fully documenting your newly acquired skills.

Don't be afraid to ask for top dollar, especially if you are negotiating with the client yourself. If push comes to shove, you can always come down a notch. But be assured, the client will never offer more unless you ask for it. Increase your bill rate by asking for what you are worth.

Letting a commissioned headhunter find your next assignment for you can put a real damper on the rate at which you progress up the earnings ladder. If you ask top dollar, even if you are worth every cent of it, your headhunter may view it as a threat to their commission spread, and send in less qualified, lower priced candidates instead of you. You must always expect that a commissioned headhunter will promote their commission before they promote your bill rate! Increase your bill rate by finding your next assignment on your own, and by avoiding commissioned headhunters.

Increase Your Cut
The pay rate is what's left over after the agency has taken its fee. For any given bill rate, the less the agency takes, the more you earn. Consequently, you want to work with agencies that take as little as possible while still serving your best interests. But how can you compare agencies if you don't know their fee structure. One way to avoid this problem is to administer the Acid Test. When an agency tells you about an assignment, and quotes a pay rate, just ask them what the bill rate is. If they refuse to disclose the bill rate, tell them about The Contract Employee's Handbook and the Acid Test. Then politely hang up. An agency that withholds the bill rate has a license to steal. Increase your cut by working only with agencies that freely and openly disclose the bill rate.

An agency that withholds information about their fee schedule assumes full control of the hiring process, and will naturally take the highest possible cut of the bill rate. In other words, agencies are "paid" to take control. The more control you give them (or allow them to exert) the higher will be the agency cut. The relationship between control and agency cut is absolutely exponential! The more they do for you (linear effort), the more they take (exponential cost). Thus, a large consulting firm may charge their client $250 to $300/hour for your services, and only pay you $40,000 to $65,000 a year. A job shop will bill $75 to $100/hour to support a similar salary range. A full service contract employment agency using commissioned headhunters can be expected to take 40% to 65% of the hourly bill rate. These firms take complete control of the hiring process, including recruiting candidates, marketing their services (and yours) to potential clients, negotiating contracts, billing the client, processing payroll, and completing all necessary paperwork. Increase your cut by working with agencies that give you more control over the hiring process.

Pass through agencies exercise very little control, and typically charge less than 20% of the bill rate. Some take only $4 or $5/hour off the top, passing through the rest to you. Pass through agencies operate on either a W-2 basis or 1099 basis, and may provide additional services for an incremental fixed rate. When you land an assignment on your own, you earn the opportunity to "shop" the pass through agencies for the lowest possible agency take, thus maximizing your cut of the bill rate. Increase your cut of the bill rate by finding your next assignment on your own, and then shopping the agencies for a good deal.

Decrease Your Down Time
Permanent employees take planned vacations, and celebrate national holidays. They also receive additional days off for personal emergencies and for training. In large corporations these days off can total as much as eight or nine weeks out of every year. Why shouldn't you, as a contract employee, have just as much time off? As a prudent contract employee, you will have factored in all this down time when you calculated your minimum acceptable hourly pay rate. Increase what you earn by allowing for planned down time when calculating your minimum acceptable pay rate.

The best way to avoid unplanned down time is to plan not to have any. In the section called Your Mission As A Contract Employee you learned that every contractor has both an explicit agenda and an implicit agenda. By following the action items on your implicit agenda you create demand for your services. Also, you continually reinforce who you are and what you do with the very people who can help you the most. Thus, when you learn that your assignment is comming to an end, you can make a few (or as many as necessary) phone calls to your key contacts, and quickly set up your next assignment without even missing a beat. Increase what you earn by actively pursuing your implicit agenda to set up your next assignment while you are still working.

Of course, there will be times when you find yourself suddenly and unexpectedly out of work. In such cases, simply follow the same regimen as when you were working for the client. And, since you are no longer working for the client, you have the enormous advantage of being able to spend a full eight hours a day calling your contacts and following leads. In fact, if you have developed a strong network of fellow contractors and corporate contacts, you will probably outperform your friendly local headhunter, and quickly set up your next assignment on your own. Increase what you earn by using down time to land your next assignment on your own, without the assistance of a commissioned headhunter.

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