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Contract Employee's Newsletter
Helping Contract Professionals
Manage Their Careers
May 01, 2002
Edited by James R. Ziegler
A Companion to:
The Contract
Employee's Handbook
www.cehandbook.com
Sponsored by:
P.A.C.E. - Professional
Association for Contract Employment
www.pacepros.com
About The Contract Employee's Newsletter
The Contract Employee's Newsletter is a free e-mail publication
for technical and professional contractors containing news, commentary,
tips, links to useful resources, nuggets of wisdom submitted by
readers, and anything else that seems appropriate at the time. The
CENewsletter is distributed bimonthly or whenever issues warrant
and time allows. The subscriber list is confidential and will not
be disclosed outside this organization.
In This Issue
Read recent
issues of The Contract Employee's Newsletter.
Suggest A
Topic For The Newsletter
Ideas Anyone?
Thank you for your excellent suggestions for future newsletter
topics. Keep 'em coming. Chances are, if a topic interests you as
a Contract Professional it will certainly interest the majority
of our readers.
Guest Appearances
I would like very much to publish short guest contributions
to the Contract Employee's Newsletter. Maybe a marketing tactic
that works for you, or a true story of agency madness? I'll cite
your name, your e-mail address, and a link to your professional
website. I can't pay you, but I'll make sure that everyone who reads
the Contract Employee's Newsletter knows who you are and what you
do. It can't hurt, and, who knows, it might help your consulting
career. Contributions should be of general interest to all Contract
Professionals.
Mail your suggestions to suggestion@pacepros.com.
Return to Table of Contents.
News and Views
P.A.C.E. Division Managers Are Invoicing More Lately
In the last quarter of 2000 and the first quarter of 2001, just
prior to the downturn, P.A.C.E. Division Managers invoiced on average
about $11,500 per month. As the economy turned south rates dropped,
as did the number of hours billed. During the remainder of 2001,
P.A.C.E. Division Managers on average invoiced between $9,000 and
$10,000 per month.
I am pleased to report that the situation has definitely improved
since the beginning of 2002, and dollars invoiced per month are
again climbing to previous levels. Below is the trend since January
2002 for the average amount invoiced per P.A.C.E. Division Manager.
Jan: $ 9,110
Feb: $ 9,712
Mar: $ 9,891
Apr: $11,009
During the past year we experienced a few companies resorting to
slow-pay tactics, and a few clients filed bankruptcy. Nevertheless,
P.A.C.E. only lost money when we were forced to subcontract through
a staffing agency or preferred vendor. P.A.C.E. never experienced
a default of payment when it contracted directly to the ultimate
client.
In every case where P.A.C.E. contracted directly with a company
that went bankrupt the company paid us in full before closing its
doors. We ascribe this to the close relationships that we build
with all of P.A.C.E.'s direct clients.
Fortunately for all concerned, it looks like the tide has turned.
We are seeing very little evidence of slow pay tactics, and the
average P.A.C.E. client is paying within three weeks of being invoiced.
Also, collected revenues for April 2002 were the best yet for P.A.C.E.
Division Managers, up 26% over revenues for the month of January
2002.
All of us at P.A.C.E. are saying "Whew!" and "Hooray!".
Return to Table of Contents.
From The Trenches
Project Based Billing
Project based billing is not for the faint of heart. Nor is it
recommended for newbies just breaking into the consulting field.
To succeed in project based billing you must carefully define the
project's scope and requirements, and assiduously manage your client's
expectations. If you don't you can easily loose you shirt as well
as your good reputation.
One participant in a local SF Bay Area e-mail discussion group
points out another concern with project based billing:
"One suggestion I heard was to bid the project, not the
hourly rate. But then that means not getting paid until the project
is signed off."
Geno Pedigo responds with the following advice that I would like
to share with you:
This is not necessarily true. It is not uncommon to ask, and
more importantly get, 25 - 50% of the cost up front; if you've
ever had construction work done, most of the construction contractors
work under this model. Most software consulting firms (not placement
agencies) also work under a similar model.
To ease the financial burden further, you can work with the client
to identify milestones where you get paid an additional percentage
or dollar amount. A tried and true concept is to build in a bonus
if your contributions bring in a milestone early and/or under
budget.
Another option, depending on the length of contract, is to ask
the client to commit to a rate review after 2 - 3 months (or even
every 2 - 3 months); explain to them that the rate being given
at this time is below your usual standard, but you are willing
to give their wonderful project your best efforts on the rate
review condition due to the current market. The idea is to make
yourself indispensable to them during this time. I have successfully
used this method on a four month contract that resulted in a rate
increase, and I've now been at the client for a year!
Best of Luck,
with
Best of Pay,
Geno
--
Geno Pedigo is an independent software craftsman and IT consultant
specializing in leading development teams to produce custom server-centric
and distributed software for businesses.
Contact information:
web: http://geno.pedigo.com/
e-mail: geno@pedigo.com,
voice: (877) 302-5756 (toll free)
--
Return to Table of Contents.
Marketing Tips
Create a Killer Thirty-second Pitch
In the last issue of the CENewsletter (Get
Your Message Across With A Seven-Second Introduction) I described
how to promote your consulting services with a seven-second introduction.
Now, I want to show you how to expand your seven-second introduction
into a thirty-second pitch that you can also use as the summary
in your professional skills profile.
Recall, that I explained that your seven-second introduction is
something you say over a handshake while you are introducing yourself
to someone. You say it every time you shake hands, regardless of
the circumstances and regardless of who you are meeting. Here is
one that I use:
"Hi, I’m Jim Ziegler. My business helps consultants
make more money."
The idea is to create a snappy, emotion-charged statement that
makes the other party want to say "That's interesting. How
do you do that?"
The answer to that question is a brief twenty-three-second add-on.
Here is mine:
"We do this by setting up each Contract Professional in
their own business unit within our corporation. That way they
enjoy all the freedom and financial advantages of self-employment,
all the security and continuity of corporate employment, and the
best benefits package available to any employee in any company
in the USA."
Now, follow up immediately with:
"Is this something you could possibly use? I would be happy
to explain more. May I call you later?"
Let me explain what makes this approach so powerful.
First of all, the initial seven-second introduction is too short
to be intrusive or obnoxious. It simply explains who you are and
what you do in the time it takes to complete a handshake. The kicker
is that you say it in a way that generates interests and invites
a request for more information.
You only proceed with your twenty-three-second add-on when the
other party gives you permission by asking "How do you do that?"
Now it's a two-way conversation between you and someone who is genuinely
interested in what you do and how well you do it. It's easy and
its natural.
In combination, your seven-second introduction and your twenty-three-second
add-on make up your thirty-second pitch.
Here is my full thirty-second pitch:
"Hi, I’m Jim Ziegler. My business helps consultants
make more money. We do this by setting up each Contract Professional
in their own business unit within our corporation. That way they
enjoy all the freedom and financial advantages of self-employment,
all the security and continuity of corporate employment, and the
best benefits package available to any employee in any company
in the USA."
Because your thirty-second pitch is brief, concise, and focused
on the value that you deliver to your clients it makes a
great summary of experience for your professional skills profile
or resume.
I wrote about how to create a powerful and compelling summary of
experience in the last issue of the CENewsletter (Create
a Compelling Summary of Experience).
Your thirty-second pitch and summary of experience are absolutely
central to your self-marketing efforts. Take the time right now
to create a compelling tag line (seven-second intro) and summary
of experience (thirty-second pitch). Wear them like you wear your
clothes. They are part of your overall appearance. Just as your
clothes project who you are personally, your tag line and
summary of experience project who you are professionally.
This is all the more meaningful because, as an independent professional,
your personal life and your professional life are fully integrated
into a common presence -- who you are and what you do -- that you
project to everyone you meet.
In the next issue of the CENewsletter I will discuss how to expand
your thirty-second pitch into a three-minute presentation that you
will use to great advantage during discussions with prospective
clients.
Return to Table of Contents
Ask Dungaree Dan
Seek Advice of an Attorney for Abusive Noncompete
Clause
Q: Dear Dan -- I am in an interesting position.
I took an 8 week contract through a blood sucking agency here in
Virginia. The contract had a noncompete clause for a year and sites
damages of 350 hours of pay if it is breached! My original 8 week
contract ended a couple of weeks ago and the agency has not found
another position for me.
The client I was working for on the 8 week contract just called
me and told me that he has an opening. He really likes my work and
is open to offering me either a permanent or contract position.
I really don't want to work through the blood sucker anymore. They
aren't doing anything for me. No benefits, nothing. I think the
perm position will be at a much lower rate than a contract. In any
case I am interested in working for the client directly.
I'm considering seeking advice from a lawyer. Can you offer any
suggestions? Where can I find additional info on this. Perhaps there
are recent cases in Virginia that would indicate to me how I might
proceed. Any information is most appreciated! -- Signed: Leaches
In MY Breeches
A: Dear Breeches -- Talking to an employment law attorney
is an excellent idea. Be sure to choose one that ONLY represents
employees. Attorneys that work both sides of the fence are amoral
reprobates and cannot be trusted to represent you fairly.
Sadly, VA is one of the worst states in the union, from the employee's
perspective, for blanket noncompete agreements.
I entered the following text string < noncompete Virginia VA
> into the Google.com
search window and got some good information, including the two links
below. Try some of the other links in the Google
results page and see what you can learn.
Here is an interesting
article (actually a PDF slide show) I found that discusses noncompetes
in VA primarily from the employer's point of view.
Last June, Virginia Beach, Va.-based lawyer Carl Khalil founded
Breakyournoncompete.com
to provide advice to lawyers engaged in court battles over noncompete
agreements. This might be a good place to start.
Probably your best defense is to get your client to request that
the the agency release you from the noncompete -- If the agency
ever wants to do business with the company again, if you get my
drift. I have seen this tactic work many times, but it does require
that you have the strong support of the client. Get the release
in writing!
-- Signed: Dungaree Dan
Questions for Dungaree Dan
Send your questions about contract employment to Ask
Dungaree Dan. We will try to answer all of your questions, and
we will publish the most interesting ones in The Contract Employee's
Newsletter.
Return to Table of Contents.
Contract Employee's
Glossary
Terminology For Contract Professionals
More terms from Appendix
B: Glossary of Terms for Contract Professionals of The
Contract Employee's Handbook.
Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act (FLSA) is a federal law that establishes
minimum wage, overtime pay, record-keeping, and child labor standards
affecting full-time and part-time workers in the private sector
and in Federal, State, and local governments. FLSA guarantees a
worker's right to be paid fairly.
Family and Medical Leave Act (FMLA)
The Family and Medical Leave Act is a federal law that requires
employers with 50 or more employees to provide an employee with
12 weeks of unpaid leave during the year for the birth or adoption
of a child, family health needs, or personal illness. Under FMLA
employers must let employees return to the same or similar position
that they held before taking the leave.
Federal employer identification number (FEIN)
The federal employer identification number (FEIN, or simply EIN)
is a nine-digit number (for example, 12-3456789) assigned to sole
proprietors, partnerships, limited liability companies, corporations,
estates, trusts, and other entities for filing and reporting purposes.
Note the placement of the dash after the second digit. In contrast,
a nine-digit Social Security number has dashes after the third and
fifth digits (for example, 123-45-678).
Individual employees, and sole proprietorships with no employees,
use their 9-digit Social Security number to identify themselves
on tax forms, checks, and other communications with the federal
government. All other business entities, including one-person limited
liability companies and one-person corporations, must obtain a federal
EIN. Some banks require a sole proprietorship to obtain an EIN before
the bank will open a business bank account. An EIN is also required
when a sole proprietor opens a Keogh plan.
If your business has employees it must also obtain a state employer
identification number for reporting state unemployment taxes.
Federal withholding
Federal withholding is the federal income tax withheld by the employer
from an employee’s gross payroll and submitted to the IRS.
Federal withholding is reported on IRS Form W-2 at the end of the
year.
FICA
FICA is short for Federal Income Contributions Act, the law that
requires employers and employees to pay Social Security and Medicare
taxes. One-half of FICA taxes is paid by the employer, and one-half
is paid by the employee. Self-employed individuals pay both halves
because they are both employer and employee. FICA taxes are payroll
taxes because they are calculated as a percentage of the employee’s
payroll.
FICA – Medicare
FICA - Medicare is the portion of FICA taxes earmarked for Medicare.
The tax rate is 1.45% of gross payroll. There is no wage cap on
this tax.
FICA – Social Security
FICA - Social Security is the portion of FICA taxes earmarked for
Social Security. The tax rate is 6.2% of gross payroll. The wage
cap for payment of FICA - Social Security is set each year by the
IRS. The wage cap for 2002 is $84,900, above which no tax is owed.
Fictitious name
Any business name that is an assumed name and different from the
legal name of the business’s owner. Often referred to as a
D.B.A., for “Doing Business As.” A name is considered
fictitious if it does not contain the business owner’s surname,
or if it contains words other than those in the owner’s full
name. For example, if the owner’s name is Sally Smith, the
names “Acme Java Jockeys,” “Sally Smith Consulting
Services” and “Sally Smith & Company” are D.B.A.s
or fictitious names.
Fictitious name statement
Business owners must file a fictitious name statement (usually with
their local county) if the business goes by a name other than the
legal name of the business’s owner. The fictitious name statement
is used to register a fictitious business name with the county recorder.
There is small filing fee and an additional charge to publish the
fictitious name statement in a local paper.
A properly filed fictitious name statement lends credibility to
the claim that an individual worker is an independent contractor
and not an employee of the client company.
Return to Table of Contents.
Strategic Alliances
Web-enabling COBOL Legacy Systems and COBOL Expo
2002!
P.A.C.E. has entered into a strategic partnership alliance with
Legacy Reserves to identify, aggregate, and train veteran COBOL
professionals in web services.
The demand for web-enabled legacy systems threatens to outstrip
the supply of qualified COBOL professionals. The shortfall in COBOL
talent casts a shadow over the future of web services, threatening
the timely role-out of web-enabled legacy systems.
Seventy-five percent of the world's data is encoded in COBOL technologies,
yet young programmers are reluctant to learn COBOL business rules,
favoring instead the more "modern" languages and technologies
of Java, Visual Basic, ASP, and XML.
For a number of reasons it makes more sense to address this problem
in the short-term by teaching web-enabling technologies to veteran
COBOL pros than it does to teach complex COBOL business rules to
younger Java jockeys. This is the rationale behind the strategic
partnership alliance between P.A.C.E. and Legacy Reserves.
The message below from Legacy Reserves announces a major COBOL
initiative to be formally presented in detail at a major convention
for COBOL professionals next month in Chicago.
Attention: COBOL Weblers:
It looks like COBOL Web Enabling is about to take off… and
plans are afoot to spread the latest initiative all over the country.
The site of the announcement will be COBOL
Expo 2002!, Chicago, June 21-23, 2002.
The DePaul
University Graduate School of Business calls the initiative
“e-Legacy Learning.” This is the first Graduate level
e-learning course in “Legacy Systems: Transformation Strategies”
to be taught anywhere in the world. The course uses as its text
the landmark reference by William
Ulrich, titled "Legacy
Systems: Transformation Strategies", to be published by
Prentice Hall in June, (©2002, Paper, 448 pages, ISBN 0-13-044927-X).
The course continua will be under the supervision of Howard
A. Kanter, Ed.D., CPA, School of Accountancy, Kellstadt Graduate
School of Business, DePaul University and co-director of the Laboratory
for Software Metrics of DePaul University.
Dr. Kanter will present at COBOL Expo (with his colleague Dr. Thomas
Muscarello), “An Empirical Analysis of Alternative Software
Strategies for Migrating Business-Critical Legacy Applications to
the World Wide Web.” This is a very significant paper, and
it leads directly to the larger universe of graduate school attention
to Legacy Systems Transformation Strategies, possibly the most important
IT initiative in a generation.
If you can possibly attend this presentation, go to the Legacy
Reserves website at www.cobolwebler.com
and use the link at the top of the home page to get a substantial
discount off the registration price of COBOL Expo 2002. If you cannot
attend, keep your eyes open for the new www.elegacylearning.com
site, which will be posted right after the close of COBOL Expo,
sometime during the week of June 24, 2002.
Meanwhile, stay tuned to the new Home Page at Legacy
Reserves, especially the FAQs, which will keep you up to date
on what’s what in the new world of Legacy Systems Transformation
Strategies.
Hope to see you at COBOL Expo 2002.
Bill Payson,
President & CEO
The Senior Staff, Inc.
www.srstaff.com, www.seniortechs.com, www.legacyreserves.com,
www.cobolwebler.com.
(408) 371-9064
wspayson@hotmail.com
Return to Table of Contents.
Contract Employee's
Workshop
Look For The New, Online CEWorkshop
- Beat the recruiting firms at their own game.
- Get better gigs.
- Make more money.
- Keep your independence.
I am developing an online presentation that will allow anyone with
a telephone and a browser to attend live presentations of the CEWorkshop
over the Internet. The online CEWorkshop will consist of four, one-hour,
weekly sessions, each covering a different aspect of marketing your
consulting services.
Weekly sessions will cover the following topics:
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Week 1:
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Identify and Package
Your Core Competencies.
What are you selling?
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Week 2:
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Short Term Marketing
Tactics.
How to get work in a hurry.
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Week 3:
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Corporate Intelligence
and Research.
How to get inside prospective clients.
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Week 4:
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Long Term Marketing Tactics.
Build your credibility and your reputation.
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New e-book on marketing
I am developing a new e-book called Nuggets in a Nutshell:
Marketing Tips for Contract Professionals. This invaluable
resource has over 250 proven tactics used by experienced recruiters
and seasoned consultants to land contract assignments directly with
client companies.
Every participant in the online CEWorkshop will receive a free
copy of this useful resource.
The online CEWorkshops and the e-book will be available within
the next 30 to 60 days. I'll let you know in the CENewsletter when
we are ready to roll them out.
Would you like to see me cover a specific topic? E-mail your ideas
and suggestions to Workshop@pacepros.com
Return to Table of Contents.
The Contract Employee's
Project
The Contract Employee's Project is the larger context under which
the following interrelated vehicles operate to promote and defend
the interests of Contract Professionals:
- The Contract Employee's Handbook
- The Contract Employee's Newsletter
- The Contract Employee's Workshop
- Professional Association for Contract Employment (P.A.C.E.)
Return to Table of Contents.
Copyright and
Publication Info
Copyright (c) 2002, James R. Ziegler. All rights reserved.
You may copy or forward this free publication provided it is left
intact with all links and this notice unchanged. Any unauthorized
duplication, including republication in part or in full for commercial
use, is an infringement of copyright.
Published by:
P.A.C.E. - Professional Association for Contract Employment
1355 Willow Way, Suite 244
Concord, CA 94520
USA
http://www.pacepros.com/
Editor:
James R. Ziegler, Ph.D.
Executive Director
P.A.C.E. -- Professional Association for Contract Employment
(925) 680-0200
CENewsletters@pacepros.com
Return to Table of Contents.
Disclaimer
The Contract Employee's Newsletter is designed to provide information
in regard to the subject matter covered. Use is granted with the
understanding that the publisher and authors are not engaged in
rendering legal or financial advice. If expert assistance is required
you should seek the services of a competent professional.
The purpose of this information is to educate and entertain. The
publisher and contributors shall have neither liability nor responsibility
to any person or entity with respect to any loss or damage caused,
or alleged to be caused, directly or indirectly, by the information
contained in this Newsletter or by information contained in any
web site or resource referenced by citation or hypertext link within
the pages of this Newsletter.
Return to Table of Contents.
Subscribe to The Contract
Employee's Newsletter
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Newsletter: Sign Up Now! Useful News & Updates
Return to Table of Contents.
Sign-off
I hope you have found the information in this newsletter to be
interesting, informative, and provocative. I encourage you to share
the CENewsletter with your friends, colleagues, coworkers, clients,
and agency recruiters.
Why clients? Because you need every ally you can get. Why agency
recruiters? Because they need to know the jig is up.
Wishing you success in your contracting career,
James R. Ziegler, Ph.D.
Executive Director
P.A.C.E. -- Professional Association for Contract Employment
Return to Table of Contents.
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