Talented professionals are eschewing traditional, permanent job roles to forge their path as independent contractors at an ever-increasing rate. It is an attractive option as it enables workers to pursue a lifelong dream, control their destiny and attain a better work and life balance; however, there are many challenges, issues and pitfalls associated with flexible work.
Job roles and pay rates
Sourcing the right job roles at the right time is an ongoing challenge for contractors, and there will inevitably be times when you are ‘on the bench’. The prospect of being without a contract is daunting, but you should make peace with the fact that finishing one job and starting another immediately just isn’t feasible most of the time. To ensure you can navigate these slower periods, try to build a war chest and prioritize cash flow management at all times.
You will also have to be decisive about the contracts you decide to take on. Being your own boss is a fulfilling experience, but you should be wary of being too picky with the roles for which you apply. It is unlikely that a perfect contract with a preferable location, industry, and skillset and pay rate will be available so consider the opportunity cost of waiting for an ideal job. When it comes to pay rates, ask other experienced contractors with a similar skill set to help you to determine a ballpark market rate.
Contractors are also required to meet a higher standard of personal finance management compared to a permanent employee, as you will have to take care of your tax affairs and ensure you meet other legal obligations. The IR35 legislation, in particular, can be a difficult issue for flexible workers to fully comprehend and a recent study found that around half of contractors are currently facing issues regarding their IR35 status. It is important to get up to speed with your legal requirements as soon as possible and working with an umbrella company will enable you to get the best IR35 advice available.
Another important component of financial management is invoicing and general record keeping. Not receiving payments is on time is a common problem across various industries and it can be easy for micro enterprises and contractors to be at the mercy of larger corporations when it comes to getting paid. Late payments are particularly debilitating if you are just starting out as you may run into cash flow issues. To mitigate the risks of late, incomplete and non-payers, perform a credit assessment of each of the parties involved in a contract. Invoicing payment documents correctly and on time is of course vital and you should send reminder letters and final demands if someone doesn’t pay what is owed.
Standing out from the crowd can be tough in a crowded self-employment market, so you will have to market your skill set and persona effectively to get noticed. To increase your chances of success, leverage social networking sites and other platforms to build a list of contacts, use content marketing and other SEO focused activities to establish a presence on the web and become a member of an affiliated body. The life of a contractor can be complex and hard work, but you will reap the benefits if you overcome everyday problems and pitfalls.