There are many times in your career when you take a step back and ask yourself “Is this this for me?” It can be due to increasing hours for little reward, a role that’s evolving into something you don’t want or that you’ve hit the ceiling and the only way is a management position where you lose all the best aspects of your job.
There are three options: stick as better the devil you know, move to pastures new and hope the grass is greener, or move into contracting or consulting. But how do you know if starting your own business as a contractor or consultant is for you?
Reasons to consider contracting or consulting
Contracting and consulting is all about getting more of what you want out of your career, whether it’s time, flexibility, job satisfaction or money. Successful contractors and consultants spend more time working on projects that they love, for companies that inspire them, for more money. There are many reasons why starting out on your own is a great choice:
Funding your dream lifestyle
Javier works in the city as an IT contractor and jets home to Barcelona to spend time with his family and build his custom bike business. “I work hard to give me time to do the things I love.”
Doing what you want and are good at
More than two thirds of contractors cite ‘more interesting work’ as one of the main reasons of making the change. Because you are contracted for specific tasks and projects, you get to move where the interesting work is rather fill your time as an employee with the less interesting tasks.
More money and time
Contractors and consultants can typically earn 30-150% more per day than their permanent employee counterparts. That’s off set by you taking the risk of dry spells (effective unemployment), sickness and the usual overheads an employee would attract. This is to your advantage as you can plan for what’s important to you. Stack up the hours now and retire early, or work for just 6 months a year; the choice is yours. Julia works as a consultant copywriter and proof reader. “I keep odd hours as a lot of my clients need overnight turnaround to meet printing deadlines but that gives me the flexibility to be with my family. If I’d stayed in my old role I would only really get to see my kids at the weekends, now my work fits around them and I get to work on things I really enjoy. Having my own small business is really rewarding and requires only a little effort in terms of managing the business admin side of things.”
So why sit at a desk for a prescribed amount of hours when you could be doing something that gets you jumping out of bed in the morning? If you have the desire, there’s always going to be a market for flexible workers.
Why there will always be a market for contractors and consultants
Clients love contractors and consultants. They’re value for money and low risk but why?
Essentially, contractors and consultants are paid for what they are contracted to do, then they go. Contractors come in, do the job, then leave; no hefty notice periods, employee benefits, pensions, NICs and promises of continued employment.
Contractors and consultants also bring in new skill sets and particular fields of expertise from competitors which a business can harness within the finite time of the contract. Specialist projects can be completed quickly and the legacy of the contractor lives on through the partial skills transfer to the business.
The majority of businesses will never rely solely on contractors and consultants but there will always be a significant proportion of the workforce that is contracted rather than permanent – it allows businesses to flex with demand.
It’s all about supply and demand. By ensuring you have transferrable and up to date skills you can tap into companies’ needs to bring skills in for particular projects. So how can you ensure success?
What makes a great contractor or consultant?
Passion and drive
To be successful, you need to be passionate about what you do. It makes you work harder and smarter plus drives you towards roles that are going to keep your skill set fresh. Smart choices of contract roles will ensure your skills remain relevant and in demand.
You need to be able to say no and hear no – a lot. When starting out on your own you expect to hear ‘no’ quite a bit; it’s part and parcel of chasing the best contracts. What can be more difficult is saying no. You’re not an employee any more so it is important to be able to stick to your contracted commitments. That’s not to say that you should say no to every request, but you do need to be able to say no to unreasonable requests and being sucked into doing tasks outside of the remit of the contract. You also need to be able to say no to the ‘never ending extension’ to a contract where you risk becoming seen as an employee. One of the biggest challenges of a successful small business is being able to say no to work that doesn’t fit with your long-term goals; it may be because the work isn’t what you want or that the client isn’t a good cultural fit, either way you need to stand firm.
People buy people, so it’s important to understand that you’re more than just a specialist. You are the face of your business so you need to be your own business development team, negotiator and salesman. There are plenty of self-help books and courses to improve your business skills and help you choose which core business areas to outsource to other specialists such as accounting, drafting contracts or sales and marketing.
You’ll be your own boss so it’s important to keep on track with the day to day running of your business as well as looking ahead. Having your sights on the next contract or project and keeping to your business plan requires organisation and determination.
Ensuring that you enter the world of contracting or consulting with the right skills and your eyes open is a great way to start. Before making the leap, let’s dispel some of the myths.
The biggest myths and truths about contracting and consulting
Myth: Contractors get paid more for doing the same thing
Truth: Contractors get paid more for contracted periods. Yes you will be paid more, but that’s down to reasons explained earlier as you don’t get paid for downtime. You also need to ensure you have adequate protection and cover for: when you can’t work, holiday pay, other ‘employee benefits’ you would want to keep, and retirement planning. Your income will cover this and more, but you do need to plan and save for the future.
Myth: Contractors and consultants get all the rubbish projects
Truth: You get the pick of the projects, as you only go for contracts that you want. The majority of contracts available will be exciting and it’s in the client’s interest to attract contracted specialists so they will make the role attractive. There will be projects out there that will be your idea of purgatory, but the great thing is that you don’t need to go near them – something employees rarely have the luxury of saying no to.
Myth: Your skills will stagnate
Truth: As the owner of your own business, you are in control of your professional development. Make smart choices on contracts with a view to keeping up with new developments in your industry. Invest in yourself with training, membership to professional bodies and resources as it’s tax-efficient and ensures your skills and accreditation stays fresh. Ask many employees and they’ll tell you that the promise of training in new areas is rarely delivered.
Myth: You’ll never get a loan
Truth: In the dim and distant past, this was the case but banks and other lenders have tailored products for self-employed people and are more flexible about proof of income.
Myth: It’s a huge step to make that could go horribly wrong
Truth: Choosing to become a contractor or consultant is comparable to moving jobs in terms of risk. Yes, you’ll need to do a bit more preparation for the leap, but providing you have a reasonable cash cushion to catch you should there be a break between contracts the financial risk is the same. And what happens if you can’t make a go of it? The same as if you take a job that doesn’t work out – you can always go back to employment somewhere else.
Surely the biggest risk is living your life asking “What if…”
- Do I have a transferrable skill set that is in demand?
- Do I have experience and a network of contacts or agency to attract the right sort of contracts/work?
- Do I have the business skills to make it work?
- Do I have a cash cushion ready to start?
- What’s my goal and do I have ideas about how to make it happen?
- Should you be a contractor or a consultant?
Talk to contractors or consultants you know that have made a success of it. Do some research on rates and what you need to do to make the leap. We’re here when you want to talk about setting up your own company and getting started.
Ready to take the next steps?
Find out more about finding reliable contracts in our related articles for your contracting business
- Finding contracting work
- Understanding the value of agencies
- Signing a contract
- Are you a contractor or consultant at heart?
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