Being a contractor is very different to being a permanent employee. There is no boss to keep you in line, you are responsible for your own successes and failures.
Contractors work under a contract for services for another person or organisation, for a fixed period of time usually to work on and complete a project. Nearly 80% of contracts go through a recruitment agent at some point and are usually 3 months long. However they are more often than not renewed 1 or 2 times meaning the contractors engagement period could be 3-9 months long with some contracts lasting up to 2 years.
A contractor therefore has to sell their skills and time and are usually paid by the professional day- although contracts paid based on delivery for a fixed sum are also available.
Why do clients engage contractors?
There are a number of reasons why client companies use contractors.
- They can be more flexible over hours worked than permanent staff
- They can be committed for the term of the project
- They are easier to hire and fire according to the needs of the project
- They can be hired for skills that permanent staff do not have.
- Costs can be lower because contractors usually do not receive sick pay, holiday pay or redundancy pay and
- the client does not have to pay employers national insurance
How do contractors benefit from contracting?
Each contractor will have his or her own personal reasons for being a contractor
- Being your own boss
- More money generally earning higher rates and paying less tax
- Variety – not working in a mundane, repetitive role and steady environment
- Avoiding becoming a legacy contractor with old out of date skills through the variety of experience that can
- be gained from different clients
- The challenge -This is the number one reason why experienced contractors contract, you can strive for and
- meet a challenge and move on when it is achieved.
What are the drawbacks of contracting?
If there were no drawbacks everyone would be contracting and not working in a permanent job. Some of the disadvantages people need to consider are:
- Little or no security as contractors do not have employment protection and only have the terms of their contract.
- Levels of uncertainty over the length of the contract – whether it would be renewed or not and if they can gain another contract.
- Administrative hassle that takes away the enjoyment factor by being burdened by unwanted paperwork and legal responsibilities in running a business.
Where and when are contractors successful?
- Where they have the ability to move from work location to work location adapting to different conditions, tools, cultures, ways of working and environments.
- If they have the ability to forge new relationships, be liked easily and fit in.
- Where they easily muck in and get their hands dirty allowing the client to tap into and use their wealth of experience.
- Where they can recognise whether their advice is wanted and needed or not.
Maintaining their network and are alert to new business requirements
- Are able to update clients and colleagues regularly on social media on their work status and review the effectiveness of their network to assist in finding work opportunities.
- They must recognise the importance of IR35 and compliancy, ensuring that they are seen to operate outside of IR35.
- Use or have a database of potential clients which they maintain and use with current contact details.
- Where they have developed effective negotiation skills to be able to charge market rates regardless of relationships.
“Contracting is a journey not a destination!”
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