Call centre agent stressed out in office [Courtesy]

Starting a consultancy business is a great way to transition from being an employee to an entrepreneur.

In the beginning, you may have one or two anchor clients who engage your services on a continuous or long-term basis. While they make it easier to pay your bills, they also come with potential pitfalls for an independent consultant or freelancer.

For example, it’s likely to find that you’ve committed yourself to a lot more work than stated in your original agreement. In some cases, the client may also expect you to behave more like an employee than an independent consultant – such as telling you when to work and assuming that you’re their only client.

The client may not be conscious of treating you like an employee, so don’t assume the worst of them. After all, most clients are used to dealing with salaried employees. While it’s important to keep them happy, you must also set boundaries that help you deliver on the work you’ve agreed on and also develop new clients.

If you let your clients treat you like an employee, you can easily find yourself doing full-time work for part-time pay…and all that with no benefits and paid time-off. As a consultant, your ultimate loyalty should be to yourself and your business. With that in mind, it helps when you know where to draw the line.

Let’s explore some ways that clients can treat you like an employee and how you can establish effective boundaries without losing them.

Asking you to sign a non-compete agreement

Read your contract carefully before signing. Make sure that the client hasn’t included a non-compete clause that prevents you from engaging in similar tasks with a different client. This kind of clause is more appropriate for employer-employee contracts. It prevents employees from moonlighting for competitors and ensures that the company’s trade secrets are safe.

When a client includes this clause in your consultant contract, they’re restricting you from engaging similar clients in their industry. It gives them unfair control of your business and prevents you from specialising. However, a confidentiality clause, which states that you won’t share anything about the client’s business is more appropriate.

What to do: Make sure that your contract doesn’t contain a non-compete or exclusivity clause. You should be able to perform similar services for other clients.

Paying you like an employee

You didn’t start your consulting business to be paid employee-sized wages. Typically, consultants charge higher rates than employees, bearing in mind that they have to pay their own taxes and don’t get the perks that come with being employed. They don’t get health insurance and retirement benefits and in most cases, the client also doesn’t provide equipment.

What to do: Realise that being a consultant isn’t the same as being an employee, and charge appropriately. Don’t agree to take employee-comparable wages, which sets precedent for clients to think of you as nothing but a cheaper employee.

Telling you when, where and how to work

One of the advantages of being a freelancer or an independent consultant is having control over your own schedule. As long as you deliver on projects within the agreed timelines, clients shouldn’t have a problem.

If a client starts telling you when, where and how to work, they’re treating you like an employee. For example, a client may demand that you work for them from 9:00am to 5:00pm, hire a specific subcontractor, or work from their offices. Again, these demands mark you as an employee and you shouldn’t comply.  

Please note that some requests in this category can be fair, such as asking you to be available for meetings with the team.

What to do: From the beginning, let the client know that you have control over when, how and where to work. Read the contract carefully to ensure that it reflects your independence as a consultant. Let them know that you may hire subcontractors of your choice to help you deliver on projects.

Micromanaging your work and processes

A client can also start treating you like an employee by being too involved in your process. Unlike an employee, who can be evaluated on how the work is done, contractors are evaluated on a project’s end result.

If a client is too involved, such as expecting daily reports, they’re treating you like an employee, which isn’t fair to you as a business owner. They should realise that you have your own process and respect it.

What to do: Have an open conversation with your client about their expectations. Let them know you’re also running a business with other clients and its own processes. Set timelines to review progress to avoid being micromanaged.

By Ian Dennis Jan. 25, 2023
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