How to Become a CAD Contractor

CAD contracting is great work. It’s fun, the cost of entry is relatively low, and if you have a couple of customers, they can keep you going for a while. There are two kinds of CAD contractors: Those who work from a home office, and those who work at the customer’s location. Most of what you need is a computer, a place to use it, a connection to the internet, CAD software, a CAD education, and a few customers. If you work at the customer’s location, you don’t even need that much. Depending on what you’re doing, you’ll probably also need some experience in design and manufacturing processes.

CAD is a pretty broad topic, but of course here I’m using it to mean documentation of equipment and product design. You can extend most of what I say here to architecture, structural engineering, civil engineering, even soft goods like textiles and food products.

Anyway, first of all, lets look at what kind of person it takes to be an independent.

If you’re going to work at your home office, you have to know if you are comfortable with being alone for long stretches of time. The first time I tried to work at home, I only made it for a couple of months, then I bugged out because I needed people around. The second time I tried it, I was ready. If you’re a real people person, you might need to work at the customer’s location. Just to be clear, you can find both kinds of work, but knowing your limits is important. A lot of CAD contracting, at least the kind I have done, is done over the phone, email, skype, dropbox, and sitting in front of your computer in your home office. Possibly in your pajamas.

You also have to be the kind of person with a lot of discipline, and be willing to put in extra hours when necessary. You’re not the type to just blow off a whole day playing World of Warcraft because you’re home alone and no one is watching. You’ve got time management skills, and understand priorities.

To get started, sometimes you need little push. Mamma bird pushes baby bird out of the nest. Maybe a little crisis will help you muster the motivation to actually get started. When I first went independent, the thing that pushed me out of the nest was when my boss said he wasn’t going to cover my gas for company trips. “How about this, you give me two weeks worth of contract work, and I’ll rid you of my presence eternally?” Or something to that effect. It worked. I don’t know what gets you going, but that’s what it took to push me out. It was kind of a spur of the moment decision that had been percolating for months. That deal with the gas money was just the trigger, and the opportunity was right.

I went home immediately, and bought a new computer. Then I started a spreadsheet tracking business expenses. You know for taxes. That’s another side that you have to have – the accountant side. If you haven’t had an accountant side, you’ve gotta grow one. You’d be surprised how much energy keeping track of numbers can eat up, in fact, it can derail the whole thing. Without your employer taking taxes out of your paycheck automatically in a way you don’t have to think about, taxes become something you’ve got to manage yourself. Keep about a quarter to a third of whatever money you make aside for taxes at the end of the year. You might consider hiring a real accountant and getting better advice early on in the process, and get them to help you with your taxes when it comes time for that. Even if you’re the kind of person who does your own taxes, get an accountant familiar with “1099s” to help you. There are a lot of special rules and limits and practical advice they will be able to offer you, as to what sorts of things are tax deductible, and what is not, and more importantly, what kinds of things set off red flags at the IRS. The last thing you want to have to deal with is an audit. Time you spend messing with taxes is not time you can bill anyone for, and audits take more time than doing it right the first time. I don’t want to belabor the point, but the accounting of cash in and out is important, and is best to be done correctly. You might also have to get a business license, but this is something you can ask your accountant or an attorney about. There are some choices you have to make, and these choices affect how your taxes will work. LLC or DBA? The higher risk you take on (say debt for a nice 3D printer), the closer you need to look at the LLC option, but I’m not going to get too far into the business advice, other than to say, pay close attention to this choice.

And as long as we’re talking about tedious stuff that pays nothing, but you still have to do it, let’s talk about contracts, quotes, invoicing and collections. There are different ways to quote jobs. Some short, well defined jobs can just be quoted by the job “not to exceed $x000”. Sometimes there are a lot of variables, and you have to quote just an hourly rate with an estimate of hours “$75/hr estimate 30-40 hours work”. You should have a form for quotes and invoices to look professional and remind yourself this is official. Generally people understand, but you can remind them, that doing a lot of “what-if” scenarios will be expensive. Sometimes customers will look for a breakdown of how you will spend those estimated hours.

People invoice at different times in the process. Some every week, every other week, once a month, just when the project is done. It really depends on how big the project is and how much time you’re spending on it. I think every other week is best. It doesn’t allow too much money to build up, and it reminds the customer that time is literally money. Some projects last less than a week, so you just send the invoice with the data. (Or maybe the data gets sent after the payment.) Not all of your customers are going to be worth the trust you put in them. Not everybody pays their bills or even go into an agreement intending to pay their bills. I did most of my work without signing any silly contracts. Be really careful about over-promising. This is easy to do especially at first. Remember that you might have several projects overlapping one another, and you have to allow for other things. (This is much easier if you’re not married, I might add.) My rule for quoting hours was to multiply the amount of time it would take me to do the work by 3. Inevitably you’ll have to change something, and if you find a bug or blow up the feature tree, you’re hosed. In 8 years, I only really blew it once. I quoted modeling a baby doll, which it turned out was quite beyond the software I was using. Don’t make mistakes like that. Know your limits.

Interestingly, the contracts can work for or against you. I’ve been stiffed by people who had me sign a contract. (I don’t believe they ever really intended to pay me money). Chasing people, and worse yet, companies down is tiresome. And sometimes you’re a couple rungs down on the food chain, where sub-contractors are the last to see any money. Be careful of what you sign, because some companies actually put it in writing that they will not pay you until 60 or even 90 days after the work is delivered and invoiced. It’s ok for you to reject work based on payment terms like that. If you are month to month on bills, 90 day terms can really wreck you.

You’re not going to have any income if you don’t have some customers. Getting your first customers can be the trickiest part of going independent. Sometimes former employers won’t appreciate it if you contact suppliers or clients, so you need to handle this part of it carefully. If you are good at social media, you can use that as a way to find people who are interested in your services. Facebook, Twitter, LinkedIn, and all of the other services can be great sources of leads. Let me caution you about mixing professional and personal social media, though. I’ve seen people publicly document the process of flushing a budding career by not knowing the difference between personal and professional. The one thing you need to keep in mind for professional social media is that you should always be sharing stuff that your potential customers will value. Does anyone value what kind of coffee you had for breakfast? No. Do they care what movie you are buying tickets for? No. They care about useful facts you’ve learned in an article you’ve read, or some bit of wisdom you picked up from a supplier, or a great CAD tip you just discovered by accident.

When I first started contracting, and I had just quit my day job, my former boss thought I’d be back begging him for work in a month. He was a salesman, and knew I didn’t put much stock in that as a career. “How are you going to do marketing?” I have this way of answering, maybe you are familiar with it, where the answer just seems so unbelievably cocky. “If I need to do any marketing, I’m in the wrong business.” I’m sure my old boss was just waiting for me to fail. The truth was that I had been planning this escape for months, and this event with the gas money was just the trigger. I had a web presence, a social media presence, such as it was in 2002, and I had a lot of business cards, phone numbers, and email addresses. I just kept in touch with people, let them know I was available for hire, and within a month, I was sustaining myself with work. These days we have even more tools for staying in touch with people and finding new contacts.

How to deliver data? We used to do this with email, or more commonly FTP. Today it would be Dropbox or if you use Onshape, just an access code. You may have a PDM that allows off-site people to sign in and get data. Maybe you send a disk or a thumb drive in a FedEx box. This is something you should agree with the customer about before hand.

Finally, I think the big thing you really need that will give customers a reason to hire you is some outstanding expertise. Focused knowledge in plastics design, progressive dies, powder metal, weldments, GD&T, surfacing, CAD Admin, something. You can’t just read some book or watch an hour of YouTube to get this kind of knowledge, you have to sit in the chair and actually do a fair bit of this work. People need to know that you have these skills, so this is where social media really comes in. Generally, you’ve got to create something that people who might want to hire you will find valuable or interesting. Create a model and do some renderings, then give it away. Write an article about some specific design project you’ve done (of course get permission from people who own the design). Do some how-to video for a tricky or obscure feature. You see? You’re not doing marketing, you’re giving away valuable content. People, especially engineers, don’t want to be marketed to, salivated over, or otherwise coerced into some line of thinking. But free stuff is free stuff, and that’s cool. Huge difference in results. One is peer-to-peer talking about common interests, the other is just coercion and manipulation. One is respect, the other isn’t. (This is the part that marketing people in the engineering technology field just do not understand. They write marketing programs like they are trying to win some marketing award given out by other marketers, instead of trying to connect with engineers on their own level. Very few of them understand this, or why many engineers despise the marketing profession.)

Anyway, it takes the right kind of person to be an independent. You have to have mad skills in some area. You have to be ready for some tedious maintenance kind of work that doesn’t pay. You have to know how to attract your audience, and be ready to give away something of value. You have to be a little bit of a risk taker, a little bit of an optimist, a little bit self-confident, although not too much of any of those properties. Overconfidence, insane risks, and blind optimism can bring your enterprise to a screeching halt and result in consequences that last even after you’ve gone back to work for “the man”. Be willing to re-evaluate if something isn’t right.

I’m sure I’ve forgotten a few things here and there, but these are the things that have helped me, or the things I learned the hard way in my time as an independent contractor/consultant. Questions or comments, please leave ’em below. Oh, and hate mail from salesmen or marketers just send directly to my spam account at spam@dezignstuff.com. Thanks.