While virtually anyone can make the decision to move into the world of contracting and work on a freelance basis, it takes much more than just luck to do so successfully and flourish as a contractor.
Indeed, there are a number of things you should consider if you are thinking of taking the plunge, while these tips will also be of benefit if you are currently contracting and are looking for ways to make improvements to how you operate.
A different way of life
People who are currently in a full-time salaried role will often look enviously at those who are contracting, jealous of the freedom that this way of life affords them. However, they are unlikely to be aware of the effort that is required to sustain it.
For example, one of the major benefits of contracting is that it allows you to choose when, where and how you work. But if you are not able to secure contracts that allow you to do this, then it will not be possible.
Some people also say that contractors have it easy because they can take days off or holidays whenever they like. Again, this is not exactly the case and it requires a significant amount of financial control to be able to take time off from work and sustain yourself while you are not bringing in an income.
To account for times when they are not bringing in any money – either because of a holiday, illness or a period where contracts are proving difficult to come by – contractors will usually put away a portion of their earnings and build up a contingency fund.
However, this takes a lot of self-control and it is important to be aware of the exact amount of income that will be coming in and any outgoings. Situations can occur whereby you are faced with unforeseeable costs – i.e for vehicle repairs or tools relevant to your role – which can prove to be a drain on finances.
This is why many contractors keep a detailed spreadsheet of the amount they are spending, whether it is related to their work or not. The added benefit of this is that many work-related costs can be claimed back as expenses and having detailed accounts of these will help when it comes to doing so.
An alternative to managing your finances in such detail is to utilise the services of an umbrella company such as PayStream. In this instance, you will simply be required to fill in a timesheet, submit expenses and will then receive a payment, with the company taking care of your tax and national insurance deductions and setting aside an amount that will be held and paid to you as holiday pay or sick pay during relevant periods.
To ensure you secure the contracts required to be successful, it is important to be aware of the benefits of effective networking. This has become much easier since the advent of the internet and social media sites, as these allow you to easily keep in touch with clients and people you have previously worked for or with.
Engaging with these sites – and attending events relevant to your industry – should enable you to retain contact with clients, meet new ones and advertise your services.