1099 risk vs. prime risk

In my book, I have a chapter that teaches you how to fill out your sub-contract.

Sub-contracts are loaded with a ton of legal stuff that doesn't really apply to you, so for the most part you can safely agree or write "N/A" to the contracts.

The reason it's no big deal to you is because there is little risk for you.

Risk is made up of two components: the probability of something bad happening and the impact of that thing evening (or the severity).

When you're a solo 1099, you just have to worry about yourself. You control whether or not you screw up in most instances, so you can reduce the likelihood of something bad happening.

In terms of impact, the worst case scenario is you get fired. Not a great outcome but again, it's just you.

On the other hand, the reason the prime cares so much about paperwork is because they have so much more to lose.

There is a higher likelihood of a screw up happening when you have hundreds or thousands of employees operating on your behalf.

There is also a higher impact because the bigger you are, the more you have to lose. If you get sued, you could lose millions or hundreds of millions of dollars. You might have to lay off employees. You could be publicly embarrassed and even be newsworthy.

So as a 1099, you have an advantage due to your size. Because the risk to you is lower than a prime's, you can be more nimble and more aggressive. You have much less to lose.

So take advantage of your risk profile. Negotiate harder, be more creative with your clients, try new things.

The risk to reward ratio is in your favor.

Want the full playbook? Check out Going 1099.