You’ve worked as an employee and reaped the benefits of a secure, permanent role. Now, however, you’ve decided to dive into the tide of contracting and explore the potential opportunities that being self-employed can offer. I have seen first-hand how competitive the contracting landscape is in New Zealand and there are often more contractors than work available. Before you take the plunge, there are misconceptions to be aware of and below are five of the biggest that exist in the contract marketplace.
It’s a Way to Make More Money, Right?
Not quite. You can set your own hourly rate, however it is wise for the amount to be reasonable enough to entice clients when you’re first starting out. It’s not uncommon for many contractors to discount their rate when they initially dip their toes into the water, at least until they build their reputation in the market.
While contractors do tend to be paid a higher rate than permanent employees, the financial benefits are often hosed down by all the expenses and hidden costs that go with the territory, such as sick leave, public holidays, annual leave or retirement scheme savings to name a few. And that’s not including the upfront costs of setting up your business, for example, establishing your home office if you’re not office-based.
It takes time to land that first coveted contract and unforeseen delays in getting work can unravel your plans and burn a hole in your pocket. Have some money saved to protect yourself before the sojourn into the contracting world, especially if coming from a permanent role. In the long term, the ebbs of contracting will change into flows and you should benefit from opportunities that could just end up harvesting a healthier income than being in a permanent role.
Landing the First Job Will Be Easy, Right?
Not necessarily. Getting off the ground is often the most difficult part and a seemingly monumental task. The initial stages will see you decide on the best business structure, administering the set-up, directing the finances, managing the expenses and tax and applying for suitable insurance.
So, about that all-important first role, how do you secure that first contract?
- Reputation: The cornerstone of your success will depend on how well you perform. Employers tend to be more judgemental with contractors, so wear your skills like a badge of honour, roll up your sleeves and do a great job. It will come as no surprise then if this leads to your next opportunity.
- Networks: Throw open your Rolodex of contacts and get in touch with previous colleagues, friends, family, past employers or even industry associations. Use digital platforms like LinkedIn to further promote your business. Once connections have been established, be sure to keep in contact with people throughout the year and not when only looking for work.
- Qualifications: Companies expect that contractors possess a certain level of training to do the job they are awarded. Stay abreast of your industry’s developments and continue to up-skill when necessary, otherwise you could come off second-best if your qualifications are outdated.
- Previous experience: Businesses tend to hire contractors to wrangle an urgent job or fill a talent void. Show them that your previous tenures, skills and accomplishments mean you can fit in and adhere to any of their requirements. This will frame and augment your reputation in the market.
Moving From One Job to the Next is Simple, Right?
Not always. I’m constantly having conversations with people who are looking for a career reboot by switching from permanent to contracting roles under the guise that it will be easier and more flexible. In actuality, it can be quite unreliable; the wheels of job hunting can turn slowly, too slowly.
Something else to keep in mind is there is no guarantee of immediate work once your contract has run its course. Most non-contractors don’t realise that a contract can be ended with little or no notice through no fault of their own. Be prepared to be unemployed during those ‘ebbs’ and use the time to your advantage by networking and investing in yourself.
You could also use any unexpected spare time to take into account the impact of your performance and actions in each role on your reputation. Burning bridges will tarnish your industry standing and affect your ability to gain more roles. Remember, your reputation (and word of mouth) is vital in attracting more work so have a think about your interactions with a client and how you approached them. Could it have gone better?
It’s a Way to Gain More Experience, Right?
Not quite. This is one of the biggest misnomers. Organisations want someone who is already an expert and can hit the ground running with their work. These are the reasons why they have offered the contract in the first place. This allows a seamless transition into the talent gap.
Again, suitable qualifications and previous experience are the bedrock of success here. Contracting is not really a way to get a foot in the door of an industry, but it can be a great way to elevate your current skills.
It’s More Flexible Than Permanent Work, Right?
In a way, yes. While you do have more flexibility in that you get to pick your assignments, there are many contractors who still work 9-5 hours and often, longer. Hours are dependent on a role as well as your client’s preference.
As a contractor, you need to be a good written and verbal communicator. Intrinsic to the success of contracting is being a go-getter who values a high work ethic, especially if you’re not office-based. These qualities will aid the navigation of a flexible schedule.
If you’re working from home, be aware that it’s a very different working environment. People, who’ve never had the chance to work from home before, often believe that it is more comfortable and easier. In many respects, that’s true, but it’s also a lot easier to be distracted – that fridge with the chocolate sponge beckons, after all! You’ll need to be a dictator with your time to hammer out tasks and reach deadlines to ensure you build your reputation in the right way.
Choosing to launch a career as a contractor is a personal choice and dependant on circumstances and the state of your marketplace. For some it may not work out, but for many it has reaped rewards, offering a lucrative passage and a great experience in the long run. Are you thinking of exploring contracting and taking your career to the next level? Call us today and take advantage of our great roles.