Contractors are individuals who perform jobs on a contractual basis and by default are not classed as permanent employees. This can mean a lack of straighforward career path and progression as each contract could last a day, a week, or several months. In this blog post from Umbrella Search we will learn more about contracting and how to progress your contracting career, whether you are just starting out or a seasoned pro.
The objective is to provide you with knowledge and insights in the field of contracting, how you can become a contractor, the aspects related to deciding the contracting fees, and lastly, the most important thing: how you can grow your business as a contractor.
What is Contracting?
The terms "Contractor" and "Temp" are often used alternately.
Diving into a contracting career option has certain advantages, including flexibility in working hours and expertise in various professions, industries, and businesses. One must remember that a person is only paid for his work and cannot accrue annual leave in most cases; however, the upside of contracting is a higher pay rate, which makes up for the other downsides.
How to be a contractor?
The following are the most essential steps to be taken to get started as a contractor.
1. Establish Your Business Structure
There are several business structures that you can choose from-
Sole trader
Forming a limited company
Opting in for an umbrella corporation
Each structure has different financial, legal, and tax implications. You should study and choose the best structure based on your expertise and the help you need.
2. Register your business
There are two ways to do it:
Companies House
Formation Agent
3. Organise your finances
Opening a business bank account is necessary for Limited Companies. Because your business is a different legal entity from you, you must declare your revenue and transactions through this account. As a sole trader, you will be able to use your usual current account.
4. Understand your tax obligations
If you wish to become a contractor, you should know that contract workers are responsible for paying their taxes and knowing IR35 compliance. The IR35 tax rules are intended to prevent corporations from paying less tax by stating and classifying full-time employees as contractors.
5. Other requirements for business
Your insurance obligations can vary greatly depending on your business type and the client contracts you hold.
Some contracts may need a particular level of professional indemnity cover (usually £1 million), while others may not.
6. Find Prospects
Once you start contracting, you should start updating your LinkedIn profile. Getting endorsements, creating posts, commenting on posts, and growing your relationships are all excellent ways to promote your services and raise your profile.
Let's deep dive into the Contractor Fees
Several factors affect your contractor fees. They include:
• Experience – The proven experience from running other businesses and technological skills drive the rates.
• Contractor's Location – It might affect the daily contract rates as the location affects the more significant living costs, like London, which has higher rates.
• Industry, where you provide service — Contracting pay rates vary from one industry to the other (more in a financial service than any other)
• Purpose of the contract—The rate follows necessity and the goals that need to be met with the role.
• Customer Budget— Companies with larger-than-life budgets might also have higher contract rates than others.
The second half of this article addresses the growth of your contracting business.
How do you grow your business as a contractor?
The proven ways to up the growth ramping up a successful builder as a contractor are the following.
1. Building diversified channels-
Now that the contracting business is at its peak, many opportunities are available through recruitment agencies, which has kept most contractors busy in the past years.
Of course, putting all your eggs in one basket is never a wise idea. Most organisations have different sales channels, which opens an opportunity for many contractor businesses.
Recruiters as one reliable sales channel; besides that, we would suggest -Direct sales, LinkedIn outreach and social selling, networking, websites and SEO, CRM email marketing
2. Looking out for new streams of revenue-
Having only one sales channel would not be wise, so having only one money source is something to avoid!
Most businesses provide more than one product or service, and any astute business with trouble within a shrinking market will look for diversification opportunities.
Therefore, the contractor should answer the following questions first-
• What are your plans for diversification?
• What other income streams can you derive from your core contracting business?
• Can you write an eBook or video instruction about some area you know and market it online? (Note: Information products are one of the most significant and accessible places to start when creating some side streams.)
3. Keeping Your Eyes Open for Repeat sales and upselling opportunities-
Most companies spend as much time chasing new business from existing customers as winning new business. Why not in your contracting business?
As a contractor, you must reflect on the following –
Do you network while working in a client house, investing time seeking new opportunities within the same company?
• Are you building relationships with important decision-makers while you are in their building, and can we meet face-to-face for coffee and conversation?
• Are you adding decision-makers and customer contacts to your LinkedIn profile so you can stay in touch and be well-positioned the next time they start a project in your field of expertise?
4. Be less of a manager/ employee but more of a leader-
As a contractor, it's essential to understand that you are not a regular employee and therefore cannot afford to coast or just meet basic expectations. Your role demands that you be a self-starter, taking full responsibility for your work and consistently delivering top-quality results. Unlike employees, contractors are often assessed directly on their output and the value they bring. To thrive in this environment, you must lead by example, showing initiative, accountability, and a strong work ethic. This proactive approach not only ensures your continued success but also sets a benchmark of excellence for others to follow.
5. Get the word out (Use WOM)-
Most contractors rely on word of mouth, or WOM, as their primary marketing approach. So, impress your happiest customers with their good work and ask them to recommend your company and your work.
6. Quality has always been the king -
Quality work is the cornerstone of a successful contracting business. Always prioritise upholding the highest standards and avoid any shortcuts that could compromise the quality of your work. Remember, your reputation for delivering quality work is only as good as your last job. This commitment to quality should make you feel proud and committed to maintaining high standards in your contracting business.
Congratulations! We believe you are now equipped with all the fundamental knowledge to test your hands in contracting and building a great contracting career. Just remember to weigh all the pros and cons of the field and look for possible ways to manage your lifestyle accordingly. Trust us, you’ll love it.
Which industry are you contracting in?
IT & Tech
Finance
Medical
Other
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