Working as an Independent Contractor: How to Earn More Money

Have you recently lost your job, or have you taken a pay cut to keep the position you have? You are certainly not alone. The United States economy is in a state most of us have never seen before, with unemployment still high and few indications the worst is over. Even when the economic crisis abates, it has been reported that many jobs lost to the recession will not return. Because employment opportunities are scarcer than they were a decade ago, many men and women have turned to self-employment as a career option. They have returned to the labor force as Independent Contractors.

If you are self-employed, you can establish the value of your work and charge for it accordingly. The opportunity to make more than you made as an employee certainly exists, depending on your expertise and competition in the market. No matter what you charge for your services, however, you will eventually want to earn more money. Let’s face it; sooner or later we all need a raise. Working for someone else usually meant an annual salary increase or bonus, and if this was not forthcoming, you could always ask for more money. Putting a few extra dollars in your pocket is very different for the Independent Contractor—it requires planning and effort. If you are running a small operation and cannot invest your profits, the prospects of increasing your income will largely be determined by a combination of factors: your available time; your standing and reputation in your field; and, your knowledge and experience.

So what does it take to earn more money?

Regardless of what your business might be, there are general practices you can follow to achieve your goals. If your goal is to give yourself a raise, it is necessary to examine your business and see what options exist for you. You can certainly charge more for your services, but if you charge too much or increase your prices too often, your customer base will likely erode. In broad terms, you will bring in more money through taking one or more of the following actions, all geared toward improving yourself and your business:

1. Devote more time to your business. If you cut hair for six hours every day at $20 each and each haircut took ½ hour, your maximum earning potential is $240 per day. If you extended each workday another two hours, you can earn $80 more. Even if the extra $80 still isn’t enough, working more hours can benefit you indirectly. You might become faster at cutting hair and manage three haircuts in an hour instead of two; or, you might develop a broad base of loyal customers that keeps your appointment schedule filled. Putting in more time is the simplest way to bring in extra money, but it is the hardest path to follow for long-term success. There are only so many hours you can devote to cutting hair, and then you must find a different way to increase your earnings.

If you cannot devote more time to your business, it will be necessary to manage your time better. Using your time well adds value to your business by fitting in a few more phone calls or meeting with a new customer each day. Time management increases your efficiency and allows you to earn more money without charging more. It is the most straightforward way to give yourself a raise; you are doing more in less time.

2. Increase your knowledge. The top professionals in any field are experts, and you should strive to increase your knowledge to the extent you are regarded as an authority. It is not enough to call yourself an expert—your accomplishments must demonstrate you are indeed the best at what you do. To improve your knowledge you might attend college, network with other professionals in your field, find a mentor, or conduct your own research.

Opportunities sometimes exist to combine knowledge of disparate fields to create something new. For example, Steve Jobs saw what technology could do for animated films and helped Pixar rise from obscurity to unparalleled achievement in animation. Psychologists now use artwork as a form of therapy, and some universities offer art therapy as a degree. The merging of two fields of endeavor created new categories of experts.

You can also become an expert through focusing your efforts on a smaller, highly specific niche. Expanding into a niche market offers less competition and can be highly lucrative, provided the niche offers a relevant product or service and has sufficient demand to be worthwhile. Shoe stores that sell only athletic shoes are an excellent example of capitalizing on a niche market—it takes training and knowledge to know what shoes a competitive athlete requires.

3. Gain more experience. You can increase your knowledge through academic pursuits or mentoring, but true experts in their field combine their knowledge with experience. There is no short-cut to gaining experience—you have to put in the time. Hands-on experience is reassuring to customers and colleagues alike, and many businesses will tout their know-how and longevity in their advertising. Whether the caption reads “locally owned for over 30 years” or “billions and billions served,” consumers equate experience with value and trustworthiness. Experience couples wisdom with knowledge to make you a true authority. You will notice more clearly where your business should go. You will anticipate trends instead of reacting to them, and your entrepreneurial eye will see new and innovative ways to enhance your business. You will own the bandwagon others jump onto with the opportunities your expertise creates for you. Success is a product of good judgment, and good judgment is a product of experience.

4. Improve your reputation. This can be accomplished in a number of ways already mentioned: improving your knowledge and experience, gaining more satisfied customers, developing a reputation as an expert in a niche market, etc. Your reputation can also be improved through identifying yourself and your business with principles and actions others respect. Customer satisfaction or fast service, for example, are principles your customers will value. Linking yourself to humanitarian efforts or local causes can also enhance your standing in your community. No matter what your approach may be, the common denominator in any attempt to improve your reputation is authenticity. Your reputation must be built on accomplishments—it cannot be simply a public relations campaign.

If your reputation is exemplary, you may be sought out for participation in charities or civic affairs. Others will seek to link their reputation to yours. If you maintain your perspective and carefully select who you choose to affiliate with, it will only further enhance your now-sterling reputation.

In summation

Take a few minutes to think about the possibilities. How much more money do you need or want to accumulate? How much do you wish to earn annually? What financial decisions do you need to make to accomplish these goals? What actions can you take today to move toward them? As you consider all the possibilities you will become motivated to achieve your goals, especially if your goals are exciting enough to inspire your passion and creativity.  These four suggestions are certainly not the only ways to make more money for yourself or your business--they are only a few general ways to improve your financial picture.  You will find many more with time.

This article is meant as encouragement to everyone trying to survive on their own. As a writer and artist, I have learned that working as an Independent Contractor is not an easy task—it is time consuming, the risks are many, and the work can be stressful. Despite the inherent difficulties, most Independent Contractors (including me) still perceive the advantages of self-employment as far outweighing the disadvantages. Studies reveal that more than four out of five Independent Contractors preferred self-employment to working for someone else. Even among those forced into self-employment because they were downsized or fired, 66% claimed they would rather be working for themselves. The ability to exert control over your life and make choices for yourself is important—so important that in the United States, a new home business is launched every few seconds. Businesses built not only on dreams and aspirations, but hard work and sacrifice. Businesses just like yours and mine.

Good luck and I hope you achieve all your goals.