Turning the tables: you worked for them, and now you want them to "work" for you. Find out what you need to know to land your former employer as your startup's first client

Entrepreneur, Dec, 2004 by Laura Koss-Feder

Getting Started

While a solid relationship and mutual trust and respect are very important to persuading a former boss to hire you for contract work, you must rely on more than just goodwill to solidify such an arrangement. Write a formal proposal--essentially, a business plan--to show your employer what you can offer, why you're the best person to do the job, and just how much money the company can save by outsourcing to you, Fairbrother says. Also show in your proposal how the current need you can fulfill is not being met within the company.

"Since you've been an employee, you have an inside track," says Nan Langowitz, professor of management at Babson College in Wellesley, Massachusetts. "You know the company's strengths and weakness, and you can use this to your advantage as you launch your own business."

Show this written proposal to your immediate boss, and be prepared to do an in-person presentation, if necessary, to that person and perhaps a layer or two of management above that. "A presentation should be totally professional--with handouts and lots of number crunching," adds Fairbrother.

Any mutual agreement between you and a former employer should be made in writing. Don't be tempted to be satisfied with a verbal OK just because you feel an added level of comfort with your ex-boss and former colleagues. The written agreement should spell out your obligations to your client, what tasks and assignments you'll undertake, how many hours per month you'll work, and what materials your ex-employer will furnish to you, says Dennis Haase, a Service Corps of Retired Executives counselor and attorney in Hot Springs, Arkansas, who works with small businesses. The contract should state your fee, when you will be paid each month, and what kind of notice both parties will need if the arrangement is cancelled.

As long as all parties understand their responsibilities, bringing on your former employer as a first client can help smooth your transition into entrepreneurship. Says Haase, "The situation can be just great for everyone, and you'll be well on your way to building your business, with your first client already in hand from the get-go."

CLIENT CAVEATS

Thinking about taking on a former employer as a client? Watch out for these potential pitfalls:

1. Make sure any agreement you sign spells out whether you're permitted to take on competitors as clients. Large multinational companies typically don't have a problem with this and often anticipate that your client base will include some competitors. But you don't want to wind up with a problem down the road.

2. Don't rely solely on this one client. Ideally, your former employer should account for no more than 20 percent of your total business, especially once you're on your own for at least six months. Always be marketing to get new clients.

3. There's a chance your former employer could take advantage of you, since he or she knows your weak points and may try to get extra work for the same price. Don't let this happen.