At some point in our working lives, many of us will worry about the prospect of redundancy. Should our employer close their business, should a mass restructure arrive or our specific skill set no longer be required – where will that leave us? Redundancy can have huge financial and emotional consequences; but it’s important to remember that being made redundant doesn’t necessarily mean the end of your career. Instead, it could lead to new and rewarding opportunities.
Following a redundancy, many people will simply begin to look for permanent employment at a new company; using the same skills they always have. For some however, this period may be the perfect time to take stock and consider the move into something different. Redundancy can provide the perfect opportunity to evaluate going it alone, starting up a business and becoming your own boss.
Becoming a contractor or freelancer can be one of the most fulfilling choices you ever make; allowing greater flexibility and potentially higher profits. With the right drive and focus, contracting can be as stable and secure as any permanent role. You will be able to utilise your creativity and put your own ideas into action, experiment with new things, choose contracts that you want to do and work around your lifestyle. Yet, starting your own business is not a decision to rashly hurry into; it can be a stressful experience with financial risks.
Here we pose five top questions that we think anyone considering contracting after redundancy should ask themselves before taking action.
1. Are you ready?
While this might seem an obvious question, redundancy can be a sharp blow to your confidence. The first step, following redundancy, should always be to take a moment to rebuild your self-belief and analyse your potential prospects. Are you really ready to work for yourself? The type of person you are is vitally important to whether you will enjoy being your own boss. While some people thrive under their own leadership, others may rely on the prompts of colleagues and require a set direction to their work. Many people struggle with the solitude of contracting; where you will often be on the peripherals of work place relationships and, dependent on your market, spend the majority of your time solving problems alone.
Do you have the drive to be self-employed? In the majority of cases, companies don’t fail because they didn’t have the correct skills for the job but because they couldn’t continually meet deadlines, struggled to gain new clients and didn’t manage their finances.
Can you take control of your own personal development; ensuring your continual progress and success? If the answer is yes, you’re already well on your way to taking matters into your own hands and turning your redundancy into a positive career change.
‘It’s not as difficult as you think. Just do your homework and check out the contractor market where you want to work. There’s lots of opportunities out there, just concentrate on getting the work in.’
A contractors comment, from a recent inniAccounts testimonial.
2. What skills can you offer?
Before starting the process of becoming a contractor, you need to have a firm understanding of what skills you can offer both your clients and your business. Perhaps you have strong interpersonal or organisational skills, maybe you have expert knowledge of working with specific machinery or are adept at coming up with creative ideas? Knowing what skills you have to offer and appreciating the areas you need to improve upon will enable you to both successfully start up your business and focus your contracting career on areas where you are most skilled, and hopefully most enjoy. These skills needn’t be what you were working on before your redundancy, they could be an accumulation of skills from across your career.
Once you are aware of your skills, you can start your market research. Who would need these skills, how much are they worth, how should you price yourself? You can always discuss your options with your contacts and scour the internet for businesses and other contractors in your field.
‘As long as you have a good set of in demand skills, big business will need you and quickly.’
Paul Nicklin, inniAccounts Technical Director and former contractor.
3. How are your finances?
Choosing to enter the world of contracting after redundancy will have a substantial affect on your finances. You will be both fully in control, and fully responsible for what you earn, paying your tax, covering holiday and sick leave, claiming expenses, ensuring you follow the necessary legal obligations as well as a host of other financial concerns.
First and foremost, take a look at your finances. Did you receive a pay off with your redundancy that will help you start up? Do you have savings that will help you through hard times where contracts are thin on the ground? Many experts suggest that all contractors should have savings that will keep them going without any work for three months, at a minimum, before they begin contracting.
Next, you need to find an experienced accountant specialising in contractors – preferably one that offers a company incorporate service. A good accountant will provide you will all the support you need to set up your limited company and assist you with the daily financial running of your business. You should also begin to scope out potential legal specialists and independent advisers who can support you with your contracts, insurance, pensions and investments.
‘Don’t try and do the numbers yourself; delegate and employ experts to look after the financials and dealings with HMRC. It’s great being involved, but you need an expert to check it’s all correct and submitted properly.’
A contractors comment, from a recent inniAccounts client testimonial.
4. Can you find clients?
Finding clients can be the biggest challenge for new contractors. For those moving from redundancy to contracting, it can be best to act as soon as possible by using your formulated business contacts – be sure to let them know you’re moving into contracting and regularly keep in touch.
Throughout our ‘Thriving in Brexit’ series we have examined the different ways you can track down new contracts and engage clients; including the many ways technology and social media provide access to new contacts. When first starting out you need to evaluate the contacts you current have – will you be using these contacts or are you moving into a new area where you will need to start from scratch? Are you confident that there are clients who require your skills (hint: the answer will almost certainly be yes, you just need to find them). Be sure to be on the look out for a range of opportunities and continually consider who requires the skills you have to provide.
‘If you want to work with multiple clients I’d suggest building up a good network of contacts first; that way you can hit the ground running when you want to build your client base.’
A contractors comment, from a recent inniAccounts client testimonial.
5. Do you have a plan?
So, you’ve decided you want to make the change from a permanent employee to a contractor, great news, you know what skills you have to offer, the type of clients you want to work with and the specialists to get involved to ensure the smooth sailing of your business. Having been bogged down with all these details, it might be time to take a step back, look at the bigger picture and plan for the future. Consider what you want to achieve from your limited company and set yourself goals, start a business plan, learn everything you can about your market including any peak or off peak seasons and plan how you can manage these.
Hopefully having asked yourself these questions you now feel resolute in your answer: I want and am ready to become my own boss. If so, congratulations on your new career and best of luck as you enter the growing world of independent professionals.