As well as prerequisite business and technical skills, there are a number of character traits you’ll need to possess (or improve upon) to become a successful long-term contractor.
IT contracting isn’t for everyone. According to a fairly recent estimate*, there are around 120,000 IT / Telecoms contractors in the UK – representing around 14% of those working in the industry.
For the majority who make the move, contracting proves to be a wise and satisfying move, although – like all careers – there are likely to be challenges along the way.
Here are some of the key things you ought to consider if you’re thinking about making the move into contracting as a career:
· Are you a self starter? – contractors are responsible for finding their own work and dealing with renewals. It can take a while to become adjusted to this new way of life, particularly if you have worked for the same employer for a long time.
· New environments – contractors are expected to join projects and rapidly get up to speed with the client’s requirements, as well as acclimatising to new groups of people and locations.
· Dealing with finances – whatever business structure you work under (your own limited company, or an umbrella company), you will need to spend some time dealing with your financial affairs and budgeting. If you go down the limited route, a specialist accountant will take away most of this burden for you, however, you must ensure that you meet your tax obligations in full and on time. The administrative burden is lower for umbrella employees, however, the limited route is more tax efficient.
· Contingency Fund – contracting can bring its own share of uncertainties, particularly during recessionary times. From the start, you should avoid the temptation to spend all your contract earnings, and set aside funds for a ‘rainy day’, when you may find yourself on the bench. How long could you survive without contract income? Try to set aside at least six months’ living expenses in a savings account.
· IR35 – if you work via your own company, you should read up on IR35, a piece of tax legislation that has been the thorn in the side of the industry since its implementation in 2000. Essentially, to remain ‘IR35 free’, you should ensure that you are not deemed to be a ‘disguised employee’ (i.e. just a normal employee who has set up a company to reduce their tax bill). Find out more about IR35 here.
· Networking – most contract roles never even reach the job boards, or recruitment agents. If a vacancy comes up in a project, contractors working in the team may be asked if they know anyone suitable to fill the role. For this reason, you should try to keep in touch with old colleagues, and thanks to LinkedIn, networking has never been easier.
· Skills – alongside the traditional economic rules of supply and demand, your skillset is your most powerful tool for securing the most competitive rates. As a contractor, it is your responsibility to keep your skills up-to-date, and you will have to pay for any traditional courses yourself. Also, make the most out of online learning – which is ubiquitous these days.
· Negotiating – although you will undertake contract work on a fixed-price basis, there is usually some room to manoeuvre when setting your initial rate. Clearly, you will need to assess your situation carefully when pushing for a higher rate, as your position of strength will depend on the level of competition for the role, the economic climate, and how much the client wants to hire you above other candidates.
· Become an Expert – contractors are hired for their technical expertise, so you will be expected to demonstrate your abilities from the off. Although the temptation may be to keep your knowledge to yourself and just get on with the job, you will gain kudos and respect by offering help and guidance to colleagues. If you develop a reputation as the ‘go-to’ contractor, renewals and word-of-mouth recommendations are more likely to come your way in the future.
· Flexibility – a very important trait of the successful contractor. You may have your heart set on a particular type of role, or location, but the whims of the contracting market may scupper your plans. You need to be prepared to travel, and undertake contract work which may not fit your ‘ideal’ in terms of interest, industry or the skills you use.
If you feel you can work happily as a contractor, given the pros and cons involved, browse our other guides, which cover everything from deciding upon the right business structure to operate under (limited or umbrella) to tax and legal issues.
If you would like to know more drop us a note to discuss info@zephyrit.co.nz