Melanated Mogul

Many of us who are side hustling or hustling full-time as entrepreneurs are grinding in several ways. A lot of us are taking on contractual work, depending on the skills we have and the demand. It can be beneficial to take on contract work for a variety of reasons. We often hear from companies that contract with us that we are business owners, which, in many cases, we are. After all, we’re managing our own time, resources, and projects. But does working as a 1099 contractor automatically mean you’re in business for yourself? Or does it simply reflect a strategic choice entrepreneurs make to expand their revenue streams?

For some, entrepreneurship means launching a product or a company from the ground up. For others, it means leveraging the flexibility of contract work to build something on the side while honing essential skills or gaining financial security. For example, a web developer might take on contract work for multiple clients to gain hands-on experience and stabilize their income while building a portfolio for their own agency. In fact, some entrepreneurs who are 1099 contractors even subcontract the work to others, creating teams that allow them to expand their capacity.

But what about the mindset that shapes how we view these opportunities? The perspective we take about contract work—whether it’s seen as a temporary solution, a strategic business decision, or a long-term income stream—will ultimately define how we benefit from it. In this blog, we’ll explore how a scarcity mindset can hold entrepreneurs back, how being a 1099 contractor factors into the entrepreneurial journey, and how adopting a growth mindset can help entrepreneurs thrive regardless of whether they choose contract work as part of their business strategy. We’ll also cover the pros and cons of 1099 contracting, how to subcontract this type of work, and how to cultivate a growth mindset that can propel entrepreneurs toward long-term success with actionable steps to take right away.

Scarcity Mindset in Entrepreneurship

A scarcity mindset revolves around the belief that resources, opportunities, or success are limited. Entrepreneurs with this mindset often fear missing out or losing what they’ve built, leading to decisions that come from a place of insecurity rather than strategic foresight. In the world of entrepreneurship, this can manifest in several ways:

• Fear of competition: Entrepreneurs may avoid collaboration or networking because they view others as competitors rather than potential allies. For example, a freelance graphic designer might hesitate to collaborate with other designers on larger projects, fearing that it will take away future work. This could limit their potential to grow and take on bigger opportunities.
• Reluctance to invest: With a scarcity mindset, there’s often a reluctance to spend money, time, or effort on things that could grow the business. This includes not investing in marketing, technology, or even personal development. Entrepreneurs might say, “I’ll do that when I have more clients,” missing out on chances to scale their business earlier.
• Taking any work that comes their way: Entrepreneurs may feel the need to accept any project or job, no matter how small or misaligned with their core goals, for fear that a better opportunity might not come. For example, a business consultant might take on low-paying gigs that don’t match their expertise, limiting their availability to pursue more lucrative, aligned contracts.

The Role of a 1099 Contractor in Entrepreneurship

Working as a 1099 contractor has become increasingly common for entrepreneurs across various industries. But does being a 1099 contractor mean you’re in business for yourself? Not necessarily, but it can be a part of your entrepreneurial journey. Here’s how 1099 contract work fits into entrepreneurship:

• Freedom and Flexibility: 1099 contractors are independent and not tied to any one employer. They can choose their clients and projects, which offers flexibility that aligns with the entrepreneurial desire for autonomy. For instance, a content writer may prefer freelance contract work because it allows them to control their schedule and pursue creative projects on the side.
• Income Diversification: For entrepreneurs building a business, 1099 contract work can serve as a vital revenue stream, especially during the early stages when the business itself might not be consistently profitable. For example, a startup founder may take on contract work to ensure steady income while their product or service gains traction in the market.
• Skill Enhancement: Contract work can help entrepreneurs hone new skills or deepen their expertise in certain areas, positioning them as more valuable and well-rounded business owners. For instance, a software developer who freelances on various projects may acquire niche expertise in different industries, which can later enhance the value of their own tech business.
• Subcontracting and Scaling: Some entrepreneurs take 1099 contract work to the next level by subcontracting to others, effectively creating a team or network of contractors under their brand. This allows them to scale their capacity and take on larger projects, such as a marketing consultant who subcontracts graphic designers and copywriters to fulfill larger, more complex campaigns.

Is Contract Work Entrepreneurship?

While working as a 1099 contractor can provide a lot of freedom and flexibility, it doesn’t automatically equate to “being in business for yourself” in the full sense. Running a business typically involves broader responsibilities, including managing operations, growth strategies, financial planning, and sometimes hiring employees. In contrast, a 1099 contractor may focus more on fulfilling specific tasks for clients rather than building a company.

However, a growth mindset can bridge this gap, transforming contract work into a strategic part of an entrepreneur’s business journey. Rather than seeing contract work as a fallback or something secondary, entrepreneurs can approach it as a complementary revenue stream that provides flexibility and resources to build their larger vision.

Pros and Cons of 1099 Contracting for Entrepreneurs

Before deciding whether to pursue 1099 contracting as part of your entrepreneurial journey, it’s important to weigh the pros and cons.

Pros of 1099 Contracting:

1. Flexibility: You control your workload, schedule, and client list. This can provide a better work-life balance and more freedom to pursue passion projects.
2. Income Security: By diversifying clients and projects, you can stabilize your income flow. This can be particularly helpful for entrepreneurs who are launching a business but need steady revenue to support operations.
3. Low Overhead Costs: Since 1099 contractors typically work independently, you avoid many overhead costs associated with running a traditional business, like office space and full-time employee salaries.
4. Networking Opportunities: Working with various clients expands your professional network, which can lead to future business opportunities and collaborations.

Cons of 1099 Contracting:

1. Lack of Benefits: Unlike W-2 employees, 1099 contractors don’t receive benefits like health insurance, retirement contributions, or paid time off, which can make long-term planning more challenging.
2. Unstable Income: Contract work can sometimes be inconsistent, leading to periods of feast or famine. If your business relies solely on contract work, financial instability could be a risk.
3. Administrative Burden: As a 1099 contractor, you’re responsible for managing your own taxes, insurance, and accounting, which can be time-consuming and complex.
4. Limited Control: While you can choose your clients, the scope and nature of the work are often dictated by them. This can limit your creative freedom or the ability to focus on your larger business goals.

How to Subcontract 1099 Work

If you’re finding success as a 1099 contractor and want to scale, subcontracting can be an effective strategy. This process involves hiring other independent contractors to help fulfill your client contracts. Here’s how to do it:

1. Identify Opportunities to Scale: Determine when subcontracting makes sense. For instance, if you’re consistently receiving more work than you can handle or want to offer services beyond your expertise, subcontracting could be a viable solution. For example, a web development agency might subcontract content writing and SEO services to specialists, offering a more comprehensive package to clients.
2. Find Qualified Subcontractors: Look for professionals whose skills complement your own. Use platforms like Upwork or LinkedIn, or tap into your network to find reliable contractors. If you’re a project manager who needs software developers to help with a large contract, seek out those with proven experience in the same niche. Be sure to vet their work quality and professionalism thoroughly before signing them on.
3. Draft Clear Contracts: Establish a subcontractor agreement that outlines payment terms, deadlines, and scope of work. This protects both parties and ensures that client expectations are met. For instance, a marketing consultant subcontracting a graphic designer for a client’s campaign should specify the deliverables and timeline in detail to avoid miscommunication.
4. Manage Communication and Quality Control: While subcontracting allows you to offload tasks, you still need to oversee the quality of the work being done. Regular check-ins with subcontractors and maintaining open communication with your clients is essential to ensuring that standards are met. For example, a digital marketer might set weekly milestones with a copywriter and editor to ensure the content meets brand guidelines before delivery.
5. Deliver Consistent Results: Even if you’re subcontracting, your clients expect you to deliver as promised. Maintain control of the project and ensure that the final product reflects your business’s quality and values.

Developing a Growth Mindset as an Entrepreneur

Developing a growth mindset is crucial for entrepreneurs who want to unlock their full potential. A growth mindset, popularized by psychologist Carol Dweck, is the belief that abilities and intelligence can be developed through hard work, learning, and perseverance. Here are actionable strategies you can implement right away to cultivate a growth mindset in your entrepreneurial journey:

1. Embrace Challenges: Instead of shying away from difficult tasks, view them as opportunities to grow. If you’re a freelancer hesitant to take on a large client project because it feels beyond your current skill set, take the challenge on as a learning opportunity. For example, if a client needs a service you’re not fully proficient in, such as web design, you can invest time in learning the basics or subcontract that part of the work to someone more experienced.
2. Learn from Feedback: Feedback, especially constructive criticism, is vital for growth. Entrepreneurs with a growth mindset actively seek feedback from clients, colleagues, and mentors to improve their performance and refine their business strategies. Start by asking clients for honest reviews after projects, and incorporate that feedback into your workflow to deliver better results next time.
3. Reframe Failures: Entrepreneurs with a growth mindset view failures as part of the learning process. If a contract falls through or a client isn’t satisfied, use it as an opportunity to learn and refine your approach. For instance, if a project doesn’t go as planned, assess where communication broke down, and create clearer deliverables and timelines for future contracts.
4. Invest in Learning: Continuous education is a cornerstone of a growth mindset. Whether through online courses, workshops, or self-study, entrepreneurs who prioritize learning are better equipped to innovate and adapt to changing market demands. If you’re a graphic designer, taking a course in user experience (UX) design could help you expand your offerings and stand out in a competitive market.
5. Celebrate Effort, Not Just Success: Entrepreneurs often focus solely on outcomes, but a growth mindset emphasizes the value of effort. By recognizing the hard work and perseverance it takes to grow a business, you build resilience and stay motivated even when immediate results aren’t visible. For instance, celebrate the time you spend learning a new skill or securing a challenging client, even if the project isn’t yet complete.

Growth Mindset for Thriving Entrepreneurs

Adopting a growth mindset is a game changer for entrepreneurs. It encourages approaching challenges, including contract work, as opportunities for learning and improvement rather than obstacles or signs of failure. Entrepreneurs who cultivate a growth mindset tend to experience:

• Greater Resilience: Setbacks are inevitable, but entrepreneurs with a growth mindset view them as learning experiences rather than reasons to quit.
• Innovation and Adaptability: A growth mindset encourages entrepreneurs to adapt, innovate, and embrace change. They are more likely to pivot when necessary and explore new revenue streams.
• Long-term Success: Entrepreneurs with a growth mindset are focused on long-term development rather than immediate results. They’re willing to invest in learning and improving, even if it doesn’t yield immediate gains.

Conclusion

Being a 1099 contractor can play a valuable role in an entrepreneurial journey, offering flexibility, financial stability, and opportunities for growth. However, it’s crucial to assess whether contract work aligns with your long-term business goals and whether it contributes to the bigger picture of building a thriving business. Entrepreneurs who adopt a growth mindset can make the most of any opportunity, viewing contract work as a stepping stone to long-term success, not a distraction. Whether you subcontract, expand your skill set, or focus on full-time entrepreneurship, your perspective and willingness to learn will be the key drivers of how far you go.

References

Dweck, C. S. (2006). Mindset: The New Psychology of Success. Random House.