With the UK entering a period of potential economic instability, we examine what this could mean for contractors and consultants. inniAccounts was formed and established by a team of contractors and small business owners, most of which have weathered economic instability and downturns in their respective markets.
We take a look at the experiences and opinions of Matt Poyser, co founder of inniAccounts, and Paul Nicklin, our software guru, who have both worked as contractors through economic downturns.
Plan for the unexpected
In his 20s Matt became a contractor for Rolls-Royce. He remembers the impact of the early 2000’s recession and the 9/11 terrorist attacks on the contracting market. While Matt was working on a mainline project, many other contractors around him were shifted from the company as projects were cancelled.
‘You can be more at risk if you’re not on a critical project. When times are more unstable it’s better to choose more mature, concrete projects. Statutory or regulatory projects are always a good choice.’ – Matt
Paul on the other hand, gave in his notice in August 2001 to begin working as a contractor in the energy sector. Two weeks later, the whole economy had shrunk. While it took longer for Paul to find a contract than he had first anticipated, he quickly managed to secure a role through his contacts. While this was not his preferred contract, it soon led to others. Paul had similar experiences in the 2008 recession.
‘Sometimes you need to diversify and be more flexible. Take the opportunity to get involved in things.’ – Paul
Stress is unmanaged risk
Weathering a downturn, according to our entrepreneurs, relies on three key factors: reliability, reputation and resilience.
‘You need to have the right reputation. Talk to people, give the right impression – they’ll remember you and you’ll secure your next job.’ – Paul
‘Aim to be the last one logging off, reliably be supportive and go the extra mile. When your contract ends, always end on a high. You’ll remain in the job for the longest and be the first to be invited back.’ – Matt
Ensuring you are known as a reliable individual and maintaining a strong reputation are key provisions for any contractor; however, they are fundamentally important in times of instability. A good reputation will help to ensure that you are remembered and recommended by your past clients.
Matt suggests that another way to prepare for a potential downturn is to ‘read the signals’. He recommends networking both within and outside of the company you are currently contracting for to get a feel for what is going to happen. This allows you to build resilience as you can start to prepare if it looks like projects may be halted. Networking will also allow you to prepare, with a understanding of the outside market, when your contract comes to an end. Matt also advises regularly talking to your agent.
‘Agents are a good barometer of the market. Have a good relationship and regularly chat with your agent, they can keep you abreast of how the market is looking.’ – Matt
Paul recommends that all contractors should regularly check in with their customers directly. Checking in allows you to hear your clients current viewpoints, and also to offer flexibility to meet their needs if cuts are intended. After all, it may be better for both you and the client to flexibly drop some hours rather than to be completely out of contract.
Remember you are a business
When it comes to building resilience Matt and Paul both stressed the importance of remembering that as a contractor you are the director of your business. As such, when it comes to times of economic downturn you need to keep your ‘business head’ on at all times. Preparation is key, many contractors will budget and use savings to support themselves through slowdowns. It’s never too late to start saving to ensure that you can survive unstable periods.
‘Be prepared. You are the director of the business. You need to think about money as the businesses money, not your own money. You should always act in the best interest of the company and ensure cash is in the bank for a rainy day. You can ride most things out in six months and for the career contractor, big business will soon need you again.’ – Matt
There’s always something you can be doing
‘If you were a permanent employee and there was no work, you wouldn’t be sent home. It’s the same in contracting, there’s always something that you can be doing’. – Paul
Whether you are between contracts or know your contract will be ending in the next few months, it’s a good idea to make your CV as attractive as possible; even if that requires hiring a professional. If you are between contracts you can spend time refreshing your skills, volunteering and attending online training courses to maximise the opportunity and keep yourself as employable as possible.
‘As an individual, be as professional as you are in business.’ – Matt
Matt and Paul both recommend using any available free time to update your online profile, ensuring LinkedIn and similar websites show the best possible information. Contractors should also ensure that their Facebook and Twitter accounts appear professional to an outsider; many recruiters will now examine potential contractors social media pages to get a glimpse of their personality.