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6 classic barriers to starting contracting and how to beat them

Contracting is often seen by would-be contractors as having too many barriers to entry. But most of these barriers are perceived, not actual. And some are simply contracting myths with no real foundation.

Permanent employees considering making the leap into contracting often think they don’t have the right skills, won’t find work, can’t afford to start a contracting business, or are too young/too old.

However, as those already successful at contracting would tell any wannabe contractor, if you have a marketable skill that an organisation would benefit from using on a fixed-term or project basis, then you can become a contractor.

And sometimes, if you think of the worst possible outcome and how you would overcome it, you discover that the only thing stopping you making the leap into contracting is actually fear of the unknown and fear of failure.

1. Skills barriers – having transferable skills

Many employees don’t consider their skills to be marketable. In fact, there are some who would be correct in that assumption. To go contracting, you need to have a recognised and potentially niche skill that is in demand in the labour market, and which can be transferred from your employer to your first and subsequent contracting clients.

You can be too niche, in which case you may find yourself redundant. For example, you could be your employer’s foremost expert on its legacy IT systems, a highly skilled developer using its outdated code. But if no other organisation uses that IT system, then unless you retrain – which is always an option – you don’t have a transferrable skill, because there is no external market for it.

However, if a major element of your role is project managing IT projects and you have a successful track record of managing large-scale IT projects for your employer, then that is a transferable skill, especially if you have IT project management qualifications to go with it.

Many would-be contractors are put off contracting because they have heard that only skills that can be applied on a project basis are marketable. This is a contracting myth. There are plenty of contracts out there that need a contractor to help manage capacity, or to cover for an employee who can’t work for an extended period, perhaps because of an internal secondment, maternity leave or long-term sick leave.

2. Not having enough experience to go contracting

Some employees believe that they have acquired the transferable skills that would be suitable for contracting, but lack the experience in applying them. And many would be right.

When selecting a contractor for an assignment, clients are looking for someone who has been there and done it, and can hit the ground running. They want to know their contractor can run the entire project from start to finish without having to be told what to do.

So, if you have just been trained up in a new IT or engineering skill, stay a while with your current employer and work on a few projects to gain experience. That may only take months and not years, and will make you much more marketable.

Once you have made the transition into contracting, then you will find that each contract adds to your skills and experience. You can also keep your skills updated through formal training that you will choose and fund yourself. You may also gain ‘experience’ by applying these new skills on current projects, possibly for free as a gesture of goodwill to the client.

3. Marketing barriers – “I won’t be able to find any contracts”

If you have got the right skills and experience, then finding contracts couldn’t be easier. There are literally thousands of job boards, both broad and specialised, to search, and recruitment agencies that are looking for contractors with exactly your skills.

You’ll need to create a ‘killer contracting CV’ and hone your contract interview techniques, because they are very different from what you may have been used to as an employee. But there is plenty of help and advice on this website.

Many first-time contractors receive some knock-backs and rejections in the first weeks and months of their contracting career, but it is a learning curve. If you persevere and apply the help and advice that is available, then you will find a contract.

4. Financial barriers – “I can’t afford to start a business”

Starting a contracting business in the UK is incredibly cheap. All you need is to incorporate a company, open a bank account, buy some business insurance, get your life cover arranged, a mobile phone and some computer hardware and software, then find an accountant and you are in business. Potentially, that can all be done in a few hours.

Opening a bank account is free, and you’ll usually get a period with no bank charges. The start-up costs should be no barrier, and a few months of saving will cover these. In fact, many accountants offer ‘first three months and company incorporation free’ type deals, and insurance can usually be paid monthly and not up front as a lump sum.

The real financial barrier you may encounter is not finding work for the first few months that it takes to find your first contract, and you have to fund your living costs. Many self-help gurus say that, “The best time for change is NOW”. This may be true, but it is essential to have a financial cushion.

So, before leaving your job, you should ensure that you have at least two and preferably six months of living costs as cash savings in the bank.

5. ‘Age-related’ barriers – “I’m too old/young to go contracting”

Unfortunately, despite the obvious benefits of experience and the legislation in place to combat it, ‘ageism’ persists. If you are an older contractor, play to those advantages and strengths that come with your experience, rather than those that focus purely on cutting-edge skill.

You may believe that you are too young to go contracting, but this is no barrier. If your skills meet the demand curve at the right point, then you will get hired. There are times when demand is high and supply is low when knowledge workers with only a few years of work-place experience get hired.

For example, during the peak periods over the last two decades, financial institutions were hiring contractors on six figure sums with only a few years of programming experience.

Experience also depends on attitude and circumstance. A fresh graduate working in the right organisation on a cutting-edge project may gain more experience in a year than another will gain in two years within a different organisation.

Clients are increasingly recognising the benefits of experience alongside a fresh perspective, so there is a place for both older and younger contractors on project teams.

For example, in IT younger entrants tend to be very focused on the technical aspects of a project, and less on the practical realities of development and business success. That’s what older contractors bring to projects: deep knowledge of risk, quality, process and so on.

6. Other barriers – credit and security checks

In some roles, you may find barriers that you cannot immediately or ever overcome, but these will not be a barrier to you becoming a contractor. Typical examples include credit and security clearance.

If you have a poor personal credit history, perhaps because you had a business that failed leaving you with substantial debts, then it is unlikely you will win a contract with a financial sector client. You can work to improve your credit rating over time so that may get you to the point when your credit history will no longer be a barrier.

There are some assignments that require security clearance. This can be a protracted process taking many months, and you may ultimately fail to secure clearance for reasons that are completely beyond your control.

Neither of these are barriers to contracting. There are plenty of contracts available across all skills and disciplines that do not require credit checking or security clearance.

Would-be contractors can find hundreds of guides on this website, including entire sections devoted to becoming a contractor. There is also the Contractor’s Handbook, which has more than 600 pages packed with must-have information about how to start and maintain a successful contracting career.

Updated: 12 April 2017

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