Why I am Leaving the IT Corporate World to Become Self Employed

Update 3/18/2013: This was almost a year and a half ago, and while I may still agree with parts of this, it was more of a brain dump at the time, and I no longer agree with some of the statements.  I’d thought I’d leave it unedited though.

For the last few months I have been seriously contemplating leaving my job to start my own company.  I have a nice job at a large corporation doing software development.  It pays a decent salary with excellent health benefits. My job isn’t overly stressful, and I don’t work obscene hours.  The people are nice to work with, and many of the projects that I have worked on have been interesting. Many people would think I would have to be stupid or crazy to quit in the middle of our current economic situation. Maybe this is true, but I felt it was inevitable.  Being in a large corporate setting has many benefits; a steady salary, health benefits, 401k, etc. But they also have several negatives.

Being part of such a large institution often restricts creativeness. Because of the demands of a large company, by the time a project reaches you, you will have little to say on how it should look or function.  Many of my projects I was given creative leeway, but many other times it was grunt work.  The nature of the department will restrict the types of software you can write as well.  Occasionally you may be given creative leeway, but if they hand you 2 colors of paint, an old brush, and a piece of bent cardboard, there is only so much you can do with it.

You are also expected to be working from 9-5 M-F, even if you have nothing to do. So, many days, people will have nothing to do and still stay until 5. Other days people are slammed but then are expected to stay until 9pm. Even if your company is moderately relaxed about this, people may begin to see you as lazy, regardless of how efficient you are. You are better off rewriting a bad program several times and leaving at 5 than you are writing it once but well polished and leaving at noon.  If you do end up with nothing to do, you have to stare at your computer screen at some word document or with your IDE open until the magical hour of 5pm before you leave. That guy must be a hard worker!

Another big problem is the incentive to work at your full potential (More than just 9-5).  Sure, you are awarded financially once a year with a small bonus and a small pay raise, and maybe even a promotion once and while, but it is really hard to see your real impact on your company, and with a mostly fixed pay check every 2 weeks, you don’t really see any change.  People with X years are paid Y.  Contractors may come in getting paid twice, three and even four times as much as you, and relying on you to teach them and even do most of their work.

One guy I remember in particular had a pathetic understanding of even basic programming principles (hiring processes in corporate environments are a whole different story.) and got an offer from a sister company for 96k just because he had X years of experience!  Sure, it mostly makes sense that X years of experience pay Y, but if a person can apply 2 years of experience better than another guy can do 6+, then there should be a way to measure performance even out the divide.

Instead you must go through the arbitrary year long process before you receive another raise, only 20% of the members on your team are allowed to get an decent raise, and the other 80% receive only a 0-2% raise. And most of the time office politics determine who gets what.  Oh, and we also got a bonus every year for a fixed amount, based on company performance and your “rating”, again, this isn’t much of an incentive.  If you want to generate better workers, do more periodic incentives throughout the year for the completion of projects.  Instead what we end up with is a corporate system that rewards experience over merit.  This does not motivate people to be better workers.  It puts them into the mindset that you need X years of Y to receive a promotion or make X amount of money, or you need A and B certificates.  This system may work best for much of the corporate world, but for me, being “comfortable” and “secure” isn’t enough.

You also have no control after awhile to choose which types of projects to work on.  I got hired to do intense and challenging RCP development, and ended up working with a propriety software suite where you end up playing a game of “Where do I place this 100 line script?” (Lotus Domino, if anyone cares).  I don’t regret any of it though, Domino definitely taught me about application workflow and is probably irreplaceable for its cost/effectiveness, but it definitely wasn’t the type of software dev I saw myself doing.  I could have switched jobs, even within the company to something more interesting, but I what I really wanted to do is go into a different direction.

I have been wanting to do this for a long time, but I didn’t think my experience level and financial situation would allow me to pursue it.  Though I haven’t been in the professional world for very long, I am comfortable with calling myself a competent developer now.  I was actually kind of amazed that in my last months I could provide detailed technical information to train my colleagues on processes I have worked on, as well as consult on other projects.  People were asking for my opinion and I could actually provide answers.  I finally felt like I was in the position to make the change.  That’s not to say that the road ahead won’t be challenging. With all my complaints about corporate life, going solo I will need to work harder than I have ever in my life to be successful. I feel like the next year will make or break my life.  I think it will be worth it, either it will be financially successful or I can use the experience to put me in an area of work I would rather be.   We shall see.

I put in my two weeks.  My last day is tomorrow.

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Posted in Entrepreneurship
25 comments on “Why I am Leaving the IT Corporate World to Become Self Employed
  1. One good thing about staying with a company for a while is that you get X years of experiences. After a while, X will mean that you earn a pretty good salary.

    • admin says:

      Yea, this is true. But to keep a competitive salary you have to company hop, right now many companies are only providing 1-2% raises, if that. If you switch companies you can get a 5-10k increase.

      • Mike says:

        This is so true. I’m struggling myself right now. I really like the company and people I work with, but I can move to a company down the street and make 11k more. This is really appealing after we were just passed out 2% raises this month. So I can take a 11k raise starting in two weeks or wait a few years and possibly be up 11k by then.

        • Jason says:

          I was in much the same position. 2% or under 3 years in a row. Switched jobs 3 months later for a 15k pay raise. A year later at the new company I received another 2% raise. 1 Month later I switched jobs again for a 25k pay raise. Will see what happens after a year at this place.

          • sai says:

            Jumping between companies will eventually spoil our resume weightage at the same time…we cant avoid as well.
            Most cases..once u put paper, you will be convinced saying they will pay you the same offer to retain in you in the company.
            Lesson Learnt : Get an Offer..show to HR, Get the same pay or Jump. Dont expect them to Give what you deserve..naturally !! :-)

    • jason says:

      This is not true, especially in today’s economy. Where I work there is no such thing as a raise, there have been people here for 4 years making the same as me. Same with the last company. Before that I ran my own IT company, for a raise all I had to do was find another client. I am currently involved in another company that I hope to be full time with in 3 months. This will be a major raise from what I am making and will only continue to grow. there is no way working x years and getting paid Y for that will ever match what you make on your own!

  2. Nick Mudge says:

    Sounds good. What is your new company going to be about?

    • admin says:

      More coming later, but I am going to start out with an indie game release and see where it goes from there = )

  3. Chad says:

    no guts — no glory

    You are spot on in many of your observations.

    Do it. Do it. Do it. You will succeed.

  4. rich says:

    good luck… be prepared to eat ramen for a few years. until you have the contacts to make a go of running your own business, be prepared to watch a lot of daytime television, and watch your saving dwindle to nothing.

    • Kiran says:

      @ rich : Sit back and think again, read the post again. If you want to make money, you can with the right attitude. No, seriously!

      Admin – good luck with your new game, share it on Reddit for quality feedback…

  5. Federico says:

    Man,… I feel very identified with your situation. I haven’t been programming for so long (around 1 and a half year) and I am already helping people who’s been in the business for longer than I have. But of corporations don’t give a crap about this, they cannot measure it. Programming is such a vocational thing that someone can definitely become a really decent programmer in not so long… rewarding only seniority is retarded

  6. Josh says:

    I’m leaving my job of 6 years at a large (6000+) corporate IT shop. I’m moving to Sunnyvale, CA to see what I can do out there. I would love to start a profitable company (I have a non-earning company already). I also got tired of the lack of trust and missed being creative. I want to build things for people and I am not that worried about money.

  7. SMH says:

    I would encourage you to re-evaluate your perspective of “I feel like the next year will make or break my life”. You should be starting on a journey that may have many ups and downs with no set timeframe. A life journey has no set schedule. You may have to go back and work for a big corporation at some point in the future, but that would not be a failure–just another stepping stone towards your goal. Think of the journey and the reward will come without you having to plan it or have a set schedule.

  8. Evan says:

    I did this 3 years ago and now I’m heading back. I imagine nothing I can say will change your mind — it wouldn’t have changed mine — so instead I’ll give advice:

    1) Either it sells or it doesn’t. The only way to figure out which it will be is by shipping fast. If you can’t release it fast you are doomed. This has insanely important consequences like don’t do stuff that will take a long time=). In my opinion anything longer then 1 month development is too long. Anything longer and you will never finish.

    2) Stop after 3 years unless you are clearly making more money year over year and have solid revenue. A business that is doing well will have revenue that exceeds your previous salary, including benefits and 401k . If it doesn’t exceed it or have clear growth you need to get out.

    3) Keep a journal. It goes fast and it is worth remembering.

    Good luck.

  9. Q-efx says:

    This is something companies just seem to dont “get”. The more intelligent is needed for the job. The less money driven you are.

  10. Anon says:

    Maybe try working part time for the corporate world to keep an “air supply” while developing your own business and transition to it full time once its financially viable. This will alleviate pressure that could otherwise lead to failure.

  11. Biff says:

    Best of luck – I did something similar a few years ago. I wish I could say I was successful at it, but I ended up going back to corporate America. Here are some of my mistakes in no particular order:

    I formed an LLC to do consulting under (computer programming and systems engineering)

    1- After I formed an LLC, I signed up for ADP Payroll and issued myself a paycheck. HUGE Mistake. The IRS and a few City and State govt. agencies now considered my LLC an employer. My accountant went nuts and told me that I should have just drawn money from the LLC as an owner instead of as an employee. This one single paycheck took three years to unravel with the Dept. of Labor and the IRS.

    2- I had no problem finding work, I have a really good word of mouth network and have been in my industry for a number of years. My problem was keeping the quality of work at a level I was happy with when I hired other developers to join a project. It turns out that most employees don’t care about your business as much as you do. I also ran into some reliability issues with employees. I had one guy that just disappeared in the middle of a project. Poof – gone. I had to make up a ton of lost hours myself.

    3- stay on top of the paperwork. Once you start your business, it seems like every government agency comes out of the woodwork and makes you fill out forms. lots and lots of forms. This wasn’t the creative part of software development and and systems engineering that I liked .. I wasn’t good at organizing this stuff. It turns out that if you don’t fill out some of those forms .. they fine you. It took a while to get through my thick noggin’ that staying on top of this stuff was important.

    4- Maximize your savings – I was lucky enough to have a great accountant. From the get-go, he advised me on opening a SEP account (Self Employment Pension). It’s like a 401k, only you can save a LOT more into it pre-tax. One of the smartest things I did.

    5- instead of hiring employees, pay 1099 consultants; by doing this you avoid things like unemployment insurance, dealing with the dept. of labor and dealing with a slew of agencies. 1099′s are also easy at tax time. They are line item expenses.

    6- the biggest mistake I made was staying with corporate america while I started up my new business. The transition to my business full-time took a really long time because I was worried that i needed my corporate paycheck. I should have bit the bullet and starved for a while.

    Best of luck in your new business. As I mentioned, I ended up going back to Corp. America, but there are lots of people that start out and never look back.

    • Bill says:

      Listen to Biff – he says basically everything I experienced, myself, being an independent contractor with my own Subchapter S corp these past 5 years. The only things I would add are:

      - As a corollary to Biff’s #1: if you do not go the payroll route, you will need to put aside taxes yourself and pay them quarterly. This can be a real pain, but if you don’t do this, the IRS will kick you in the nuts via penalties. I signed up for payroll with SurePayroll so they could worry about the needed deductions and deal with the IRS on my behalf, but as a result I also am currently untangling misunderstandings with the IRS. Get an accountant once you start pulling in money. If they’re worth their salt, they’re well worth their fee.

      - Keep in mind that being self-employed causes complications with credit until you’ve been in business more than 2 years. Basically, banks suspect that all people who list themselves as self-employed are actually unemployed and will be unable to pay the bank back, even if you can show a year’s worth of earnings. So if you’re thinking of buying a house or getting a car loan in the next couple of years, you might want to hold off on the jump to self-employed until afterwards.

      Sounds like you’re young and unattached (i.e. no kids). This is a perfect time to try your hand at being self-employed, because you won’t have the added stress of making sure your kids are fed and clothed. Best of luck to you!!

  12. Don Julio says:

    Well said, this is the best advice i’ve seen so far. People think running your own company is easy, it’s not and you end up doing ALOT of grunt work. So if you are leaving corp america to get away from Grunt work that is not a good reason. Instead of your manager giving you the grunt work, the clients give it to you! What OP said about the downtime is true, i.e. you don’t have to stare at your monitor for 5 hours with nothing to do. But you better be spending that time getting new clients, b/c it is heard to get new clients AND do all of the programming. If you are not doing the programming then you need to hire people and as Biff says, that is a shit show untue itself. Hire the wrong person and poof you might actually lose money on a contract.

    I could go on for ages, but of course owning your own company is fun, demanding and rewarding. But if you really want to make money you should start a business that is scalable. In consulting, you can make a lot of money and live well, but if you are going for the big pay off start something that can really take off.

  13. Chris says:

    Any thought as to how you are going to make money now? You didn’t really go over that in your blog post… I feel the same way, but I am unwilling to leave to do strictly consulting work (I’ve done it and its no better except for the pay).

  14. Harley says:

    Very interesting, Ryan. I’m a new dev and although have never worked professionally as a dev I can relate to all the corporate concerns you have. I have been considering just entering the development world as a freelance web developer and this article kinda stokes that fire

    • admin says:

      I didn’t mean to completely bash working for a company, you definitely learn a lot. It can be hard to be a freelancer without previous work experience. My issue was basing your whole life around it. I worked with many people who spent 25-30 years working in the same few departments at the company. A few years of gives you enough experience to go out from there and do whatever you want. Plus it can be hard if you don’t have the cash when just leaving college.

  15. rlb says:

    Like Biff says, everyone tends to think the grass is always greener on the other side of the fence – that’s simply not the case. You will be paying for yourself all the things that your company has always quietly taken care of for you.

    Depending on your country, health insurance can be quite costly, especially if you are an American. Good thinking not forgetting that in your blog post. You may also need to look into whether or not you are allowed to conduct a business out of your current residence. Taxes will be the bane of your existence and they will eat up a lot more money than you think it will. You will want to do your homework and find as many deductions and write-offs as possible.

    If any of your machines breaks, if you need new software, if you need new office supplies, you will be eating all of those costs yourself. Many “standard” software titles in the corporate setting come with ungodly price tags.

    All of this will drive up your prices and in the end you will not be making nearly what you expected. As your own company, you are exactly that, free to do what you will, but with no one to blame for any failures except yourself. You have more freedom at the cost of less security.

    Cost aside, before you jump the gun, you need to take a very close look at yourself. Are you self motivated? Are you dedicated? Do you know the right people? What kind of situation will I be in if it doesn’t work out, do I have a back-up plan? Do I have the moral support and motivation I need to start and continue? If I do well, will I be capable of dealing with a law suit (you’re not in business until you get sued) ?

    Good look in your endeavors. I work at a 9-5 place as well, and I agree that old-fashioned mentalities are not always the best, but nothing stops you from working on your own projects when you have completed your work. Nobody ever said you had to quit your dayjob to start your own business, there’s always the option to dip your toes in to check the waters before you make the plunge.

  16. “You also have no control after awhile to choose which types of projects to work on. “

    You DO have control over which projects to work on… just talk to your boss! If they care about keeping you, they need to keep you happy and engaged. They may need you to do a crappy integration project once in a while (someone has to do it), but make a deal with your boss – OK I’ll do this boring 3 month Lotus project for you, but then you have to put me on the exciting greenfield project I really want to work on for the next 6 months. If you don’t ask, you won’t get.

    If they ignore you, then either 1) you signed up for a job position you shouldn’t have, or 2) the company doesn’t care about employee engagement and happiness and will probably go bust in a few years anyway. Time to move on.

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