A reader sent Contracting this article on contractor lessons that he learned after the boom and bust.
I wasted all the money that I earned in contracting. Firstly, I spent big and then I used all my money whilst out of work. I am now heavily in debt. However, the market is picking up, and, if I get another chance I will do things differently.
There are not many people that get a second chance. Normally footballers and other sportsmen on the way down are finished and have to become labourers or buy a pub – unless they were at the really top level.
However, with the recovery coming along nicely it looks as if I might get a second chance.
I‘m not too old at 36, and my skills aren‘t out of date.
I‘m starting to get a few calls and might even have an interview next week.
Contractor Lessons Learned
However, I‘ve learned my lessons.
How could I have made all that money during the boom and have only debts to show for it?
I bought a Porsche – which had to be repossessed. Then I plunged my spare cash into the Stock Market and lost most of it – and the rest I had to use to live on so I wasn‘t able to invest in the recent Stock Market upturn.
I did get on the property ladder, but stupidly I sold that first before my Stock Market portfolio.
Once I get back into work, I plan to do things very differently this time. I‘ve learned my lesson.
Ten Things I’ll Do Differently
This time round I will:-
1) Make sure I start looking for my next contract when I have about a month to go in any current one I have. I used to leave it to the last minute and then I‘d spend a few weeks out of work.
2) I was quite a good negotiator with agencies and with clients and was normally on close to the highest rate of all the people on most projects I was on. However, when they were not renewing everybody I‘d be one of the first to go as I was the most expensive. It‘s much better to be slightly cheaper than everybody else but to be working constantly.
Not Spend All I Earn
3) I‘ll keep to a rigid discipline and not spend nearly as much as I earn this time round. As I‘ve been out of work for a while, I‘m used to scrimping and scraping, so I‘ll continue to do that when I get my first contract.
4) There‘ll be no fancy cars next time round. As long as my car can get me from A to B that will be fine.
5) The expensive nightclubs and lap dancing clubs where you can blow a few hundred in a night will be out too. No more Champagne. I‘ll be happy to have a few beers down the local with my mates now. It‘s too easy to let easy money go to your head. I was spending it like the boom would go on forever.
Invest More Money
6) I‘ll invest more of my money. I‘ll also diversify more between the Stock Market and the property market and maybe even buy a few antiques and works of art. They can‘t all go down in price at the same time.
7) I‘ll actually put a bit more work into earning the money rather than putting most of the effort into spending it. I used to do just enough to get by. I can do better than that though, and if I get a second chance I‘m going to make myself invaluable to any companies where I work.
8) I‘ll also look out for opportunities to turn myself into a real small business if I can with more than one client rather than just the one. I tended not to enquire about opportunities when they were there. With the new Agency Regulations, it will now be more possible to approach clients about extra business and I shall. I don‘t want to be stuck with just one client when the next downturn comes.
Selling My Services to Client
9) I‘m going to put much more effort into selling myself and my services to the important people at my client‘s site. Before, they used to joke about me as being a bit of a nightfly. This time round I‘m going to spend a little bit of money in taking my clients out to lunch to keep them sweet.
10) Lastly, I‘m going to build up a bit of cash first, which will go into a high interest bearing account and which I won‘t touch. This will be my safety net. It will only be when I have built up a sufficient safety net that I will start to use some for my earnings for investments. I expect that 20 grand will be sufficient as a safety net.
I’ve learned the most important contractor lessons.
Now, all I need is that second chance.
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