Are you looking to make the transition from a permanent employee to a contractor?
Maybe you’ve been thinking about it for a while. Maybe the idea has only just occurred. Maybe you’re yearning to be your own boss and control your own lifestyle. Whatever the reason is, there is lots to think about before considering swapping permanent employment for the world of contracting.
Especially when it comes to who you work for, contracting is a completely different way of life to permanent employment. Employers make a long-term investment in permanent employees whereas contracting is temporary – it’s all about trying to convince a specific client that they should use your services to meet a specific goal.
You do this by demonstrating to the client that you have an endless supply of knowledge regarding their business. Clients hire contractors to fix a problem, so that’s what you need to sell. But don’t be concerned if it takes a while to get lift-off. Rome wasn’t built in a day – and neither is anybody’s career.
Before taking the plunge, you need to assess what your specific expertise is. Every contractor has a particular skillset that sets them apart from potential competitors.
When you’re searching for work with clients, your strengths and skills in specialised areas is how you will secure a worthwhile contract.
You have to take an in-depth look at your portfolio and your past experience to work out what your speciality is, and which skills you can best pitch to a potential client. The trick is not to go too over the top or undervalue your credentials. If you exaggerate how good you are at something, you will likely get found out. Yet if you don’t sufficiently broadcast your skills, you will be kicking yourself for selling yourself too short. Therefore, it’s all about finding the perfect balance.
As soon as you’ve established what your specialist skillset is, you have to learn how to develop it and maintain it. Usually, clients will expect contractors to hit the ground running with superpower-like adaptation techniques. You’ll be expected to mould into a business on the first day of any contract, and you’ll need to be at the top of your game at all times. There’s certainly no room for mistakes, so you’ll have to be up to speed on all the latest standards, practices and technologies regarding your proficiency.
The trick is to not be too impulsive. Take your time to set up your contractor business; lay the foundations, make contacts, network constantly and make a credible name for yourself. This all needs to happen before you make the ultimate decision of working under an umbrella company or setting up your own limited company.
An umbrella company removes the pressure of getting to grips with things like your accounts and taxes. It issues your work invoices to your recruitment agency and, once payment has been made, you’ll be paid via PAYE. Using an umbrella company also means you’re free from IR35 obligations – which is usually the plus-point that attracts most contractors to this lifestyle.
On the other hand, a limited company could be the contractor paradise you’ve always longed for. You’ll likely be paid more whilst paying less tax, and you’ll be a completely solo operator with the ability to run your own working world as you so wish.
There are pros and cons to both; but make sure you weigh up your options before getting too ahead of yourself. Becoming a contractor isn’t the right road to take for a lot of people. It’s a dog-eat-dog existence, and only the bold will succeed.