Should You Become an Agency Subcontractor?
Marketing your services as an independent creative professional can consume a big chunk of your time, and it’s stressful not knowing when the next project — or paycheck — will come in. One option is to sign up as a subcontractor for a larger agency, such as a PR/marketing or staffing firm, that will sell your services and can help you line up more consistent work. But is subcontracting worth it? Consider these pros and cons before signing on with someone else.
- Pro: You don’t need to look for clients. One of the biggest benefits of being an agency subcontractor is that you don’t need to focus on finding work. By the time you’re hired, your agency has already partnered with a client and determined the scope of the project(s) at hand. Instead of chasing down potential jobs, you’ll get to spend your time doing billable work.
- Con: You may have to take a pay cut. When an agency “bills you out,” it charges the client more for your services than it plans to pay you. The agency may even ask you to lower your usual rate to allow it to make its profit margin (sometimes 50 percent or more). Of course, as a subcontractor you aren’t spending any time or money on marketing — and you may even get to use the agency’s equipment or software — so dropping your prices a bit may be justifiable. In any case, do the math and make sure that the numbers work for you.
- Pro: You could work with big clients. Subcontracting your services to a reputable agency may give you opportunities to do higher-profile projects than those you would typically find on your own. When you include these projects (say, from Fortune 500 companies) in your portfolio, they may impress other prospects — and increase your earning potential. However, make sure that the agency allows you to take credit for your work; some prefer that subcontractors remain anonymous.
- Con: You might be asked to sign a non-compete agreement. Most agencies require contract workers to sign detailed contracts. These agreements often include a clause that prohibits subcontractors from working independently with any of the agency’s clients within a set time frame (often a year or more). Find out how many clients the agency works with and think carefully before signing any such contract: Because you’re still running your own business, you don’t want to sign away your right to accept lucrative jobs outside of the agency’s purview. Consider reviewing new contracts with a lawyer who can look for terms that might jeopardize your independent operations. A lawyer can also help you ask the agency to remove or modify those terms before you sign on the dotted line.
- Pro: You’ll get paid on a regular basis. Well, maybe. Depending on the agency you work with, you could be paid on a weekly, biweekly, or monthly schedule — a big bonus if you tend to have cash-flow issues as an independent contractor. However, some agencies don’t pay subcontractors until they receive payment from their clients, in which case you may end up waiting for money even longer than you do when you’re running the show.
Kathryn Hawkins is a business writer for Intuit and is passionate about solving small business problems.