Become a Contractor
Should you become a contractor?
This is the biggest question that those in IT ask themselves once they get two or three years experience under their belts.
Right Skills for Contracting
I suppose the most important question that those who are thinking about going contracting should ask themselves is ‘Have I got the right skills’?
The best skills to have when you go contracting are those skills which are up and coming and haven‘t reached their peak yet.
There are quite a lot of people who have the current most popular skills but who are out of work at the moment. If you are going to go contracting make sure that you either have some of the coming skills or take a contract where you can pick them up.
We published an article recently which showed that niche knowledge and skills pay even better than the coming skills. The article showed that knowledge of SEM, Tibco and LDAP will bring you in more than 100K a year.
However, one has to be careful here. These skills are niche because few people have them. Therefore few companies use them either. Make sure you know who these companies are before you go contracting and where they are located. If they are all in London and you live in Liverpool, you won‘t be spending much time at home in the next few years.
If you have the niche skills, do your homework. It would be the perfect opportunity to cut the agencies out altogether. That’s because it would be easy to get to know all the companies who use these skills.
You could then develop a real consultancy business. If the skills are in a tool, it might be an idea to contact the tool vendor and use them instead of an agency to get work. After all, who knows better who is needing contractors with the tool knowledge other than the vendor? They can also charge more than agencies do as they are further up the food chain.
Of course, they would probably prefer to use their own staff. However, they may not be able to train them up fast enough.
The worst possible scenario here is if the skill becomes no longer niche and you have no other skills. Try to make sure you are using other skills too.
Contractor Market Downturns
As sure as night follows day, there is going to be a downturn in the market. When the market is at its peak, don‘t buy a Porsche. Buy a second house, or make some other investments. When the jobs market is at its peak stay away from the Stock Market. Shares are also likely to be near their peak too.
Too many contractors have had to watch not only their job prospects disappear, but their investments dwindle as well just when they need them most.
A good tip would be to buy property during boom times. Property prices trail shares time-wise in either direction by 18 months to 2 years, for the obvious reasons. Then when you the Stock Market and Jobs market has crashed, switch to shares.
It would also make sense to switch out of contracting and into permanent employment at the first signs of a downturn in the economy and the contracting market. The very last thing you want to happen to you is to that you are out of work during a downturn, clutching to old skills. When the upturn happens it is those with new skills that are selected first.
Of course, you may become a career contractor and have no wish to be an employee again. If you remain as a normal contractor the chances are that you will experience long periods of unemployment during a downturn.
Alos, if you haven‘t put anything aside, or you haven‘t made the right investments, you are going to be in a lot of trouble. And there is definitely going to be a downturn.
If you want to be a career contractor, then it is crucial that you try to take the next step up and become a genuine business, with more than one client, and perhaps with employees too.
To do this, you will almost certainly have to get your contracts without using agencies. That’s because the restrictive clauses they put on their contracts will pretty much stop you availing yourself of any opportunities that you come across for new business at a client‘s site.
To sum up then, there are always contracts available for those with the right skills. However, those who do want to go contracting will have to understand that they are not going to be working continuously from now to retirement. They will have to create a strategy for themselves that takes into account the fact that their skills won‘t be new forever. At some stage they are going to experience a long period of unemployment.
If you still decide to be a contractors, then good luck!
However, you need to go into it with your eyes wide open to become a successful contractor.
If you know anyone else who would find this article useful, please share it with them using the social media buttons at the top and bottom of the page.
Ad – Contractor Services
Would you prefer to get expert advice about which umbrella company is right for your specific needs? If so fill in the form below and they will be in touch.
For all necessary business insurance, including IR35, try Business Insurance for Contractors