April 19, 2024

Business Bib

Business & Finance Blog

The risks and the rewards of working as a contractor

3 min read

Whether you’re moving from full-time work to contracting or you’re considering consulting on a part-time basis to supplement your income, there are lots of things you need to think about before you get started. To give you a helping hand, we’ve put together some tips and tricks to ensure you’re prepared to make the leap into the world of self-employed contracting…

The risks of contracting

Perhaps one of the biggest risks of contracting is that you’ll have to compete for contracts. It is no secret that contractors earn more than PAYE employees, and as such, there’ll be a few people vying for the same position. As a result, you might have to drop your hourly rate to appear more competitive, or compromise to appease a company. Let’s face it: being out of work as a contractor can be expensive, so finding a way to really stand out is the only option.

Next up, it can be tough to develop your career. You’ll likely be pigeonholed into a role based on your skills and experience, so you must work hard to develop yourself and show that you are capable of more advanced services, like consulting and advisory positions, which often command much higher salaries or hourly rates. Show you mean business and you’ll make it.

Speaking of career development, companies are very unlikely to invest in your training and developing you, so you’ll need to be responsible for your own technical development. Stay on top of any industry trends and changes, and demonstrate that you’re always evolving.

Finally, contractors are disposable. You might deliver the very best services in the world, but as soon as you’ve finished the task, you’ll be out of the door. Therefore, you must work hard to build a good reputation for yourself and always have your eyes on the next opportunity.

The rewards of contracting

One of the biggest benefits of contracting is the variety, and your ability to dip in and out of different challenges and projects. If you’re tired of working in a particular industry or get bored of working with the same people, you can rest assured that your day will never be the same twice, working on exciting new adventures and pushing yourself into new directions.

Contracting is also more flexible, with you able to set your own workload and time off, though it’s often the case that contractors work harder to maximise their income. Knowing where to draw the line is important, and working with an umbrella contracting company can allow you to enjoy the benefits of being a PAYE employee with the benefits of being self-employed.

Another feature of contracting is isolation. Though some may find this a downside, you can avoid office politics, keep yourself totally focused on the project, and leave businesses as and when you want to; there’s no pressure to bust your balls for a boss who doesn’t care.

Finally, if you establish a name for yourself as a contractor, you’ll be paid a premium for your services, earning a higher salary than you would if you were employed. Sell the benefits of your services to businesses (cheaper than hiring full time, expert services, no long-term contracts) and you’ll find it easy to maintain a regular income; at least, if you’re good at it!

Still on the fence? Stay tuned for more advice on successfully working as a contractor.