Sometimes it seems the grass is always greener on the other side. If you’re a contractor, you’ve no doubt heard full-time workers comment on how wonderful the freedom and flexibility must be. And whilst this is true, the fact is there are pros and cons to contracting, just like anything else.
Contracting offers you the chance to be more selective about scheduling your own time and what projects you want to work on. For many, it’s the ideal employment solution. But if you are considering contracting, or if you already are and have been facing roadblocks, be aware of the associated concerns and learn to manage these potentially stressful issues.
Let’s take a look at the 5 most common frustrations for contractors – as well as some suggested solutions.
Finding the next contract
Unlike full-time workers, contractors must always have their ears to the ground in hopes of landing their next job, even when they’re on a project. It can be unsettling not knowing where your next pay cheque is coming from, so freelancers must be networking, marketing themselves and engaging with potential clients – in many ways, it’s like having a second full-time job.
Solution: Optimise your networking opportunities in ways that make effective use of your time. If you’re busy with an existing project, spend a bit of time each week connecting on LinkedIn and keeping your social media profiles up-to-date and active. If you find yourself between contracts, take advantage of conferences and industry events for a chance to mingle; you never know where your next referral could come from.
Getting paid on time from clients
Raising invoices and chasing down payment can be one of the biggest headaches for contractors. Most clients are well organised and have a reliable system in place to be sure you’re paid in a timely fashion. But sometimes you’ll find that – even if you've delivered your work on time – some clients don’t have the same sense of urgency about paying you.
Solution: Sometimes, it’s simply a matter of sending a friendly reminder. We all know what it’s like to get buried under in paperwork. A phone call or email is usually enough to sort it, but keep in mind the burden of tracking invoices is on you. Review the terms of your contracts, and set up a spreadsheet with outstanding items and set reminders to contact clients after 30 days. Finally, be sure all the invoices you raise are accurate, labelled with a purchase order number if required, and sent to the correct contact.
Say goodbye to perks
Whilst it’s generally true that contractors earn a higher hourly rate, bear in mind that’s all they’re getting paid for. Each hour they charge represents an hour of actual work, as opposed to a salaried permanent job, where you get paid the same whether you’re hard at work or chatting over a cup of tea in the canteen. Standard workplace perks, such as training for on-going personal development, insurance and paid holidays, are now out-of-pocket expenses.
Solution: Be aware of what your rights are as a fixed-term employee. The terms will vary depending on the employer, but you may be entitled to certain basics. Take time to review your contracts and terms of employment.
The bidding wars
Deciding how much to charge can be a balancing act. On one hand, you don’t want to price yourself out of a job; on the other, you don’t want to sell yourself short. Knowing how to determine your cost can depend on the complexity, scope and timelines of a project; the client involved; and the specific assets you bring to the engagement.
Solution: Know what you’re worth. Consider not just the time you spend on a job, but your unique selling points and skills as well. Also remember to factor in invisible costs, such as travelling time, checking emails, dialling in to conference calls, and so forth. Ask yourself whether you’d be willing to work at a lower rate for a client you really connect with, a project you believe in, or the chance to work from home. Finally, study up on industry rates and negotiating tactics.
Legal liabilities and tax issues
There’s something to be said for having a full-time employer who handles all these issues for you. For many IT contractors, being a skilled specialist is where they want to focus their energies – not on understanding the nuances of the tax code for self-employment. The pressure to be up to date and correct when it comes to legal exposure and tax obligations can add additional stress to contracting life.
Solution: The key is to educate yourself as much as possible. For example, recent legislative proposals could limit the expenses you claim for, so it’s important to keep abreast of such developments. You may want to consider operating through an umbrella company, which would deal with most of the administrative tasks for you. However, this option is not without its own drawbacks and is subject to legislative changes as well. At the very least, you should consider joining a professional association for support and having an accountant (and perhaps even a solicitor) on hand.
Don’t let these concerns put you off the idea. Contracting can be the greatest professional decision you make – just be aware of the ‘cons’ as well as the ‘pros’ and formulate the strategy that works best for you!
Considering a move to contracting? What are your concerns? If you’re already contracting, tell us what you think the pros and cons are. We look forward to hearing your thoughts.