Dear Contractor Doctor
I am very keen to leave my permanent job and take the leap into contracting. However, I am finding the actual decision quite daunting as I am concerned about losing the security of my full-time position.
I’m worried that I won’t be able to find a contract because I don’t have the right skills and experience. I feel need someone to confirm that I will have a chance if I make the choice to become a contractor.
Am I good enough for contracting?
Contractor Doctor says:
Not being ‘good enough’ is a contracting myth. Supply and demand is what drives contracting careers. If a contractor has transferable skills that are in demand, then they will find clients who are prepared to pay them to supply their services.
The key to contracting success is to identify the target market that requires those contracting skills and for the contractor to carefully time their transition into contracting.
Some clients need highly skilled and experienced niche workers, whereas others might only require someone with fewer skills and less experience to cover an employee’s absence. There is a role – and demand – for both.
The simple ways for a contractor to determine whether they are ‘right’ for contracting are to ask other contractors and professional contacts, as well as looking at advertisements for contractors to identify what skills are required.
Gauging supply and demand
Clients who are seeking contractors with 20 years of experience or more might find their choice restricted, as there are likely to be fewer of this kind of contractor. As a result, the contractor will most likely command a much higher rate when their skills are in demand.
Alternatively, a client may be seeking someone with only five years of experience and have a much greater choice of candidate. The contracting ‘lifers’ could be priced out of this market.
In a market where there are a lot of contractors with 20 years of experience, but the demand is for those with that amount of skill is small, the 20-year veterans will still most likely take these smaller roles at a lower rate.
In this buyers’ market, it is a great opportunity for clients to obtain first rate skills at a lower rate, but it is not so great for contractors.
Carefully time your move into contracting
Timing is everything. During the 1990’s when many IT skills were in short supply, someone with only two years of programming experience could be hired as a contractor.
At that time, demand was huge but supply was small. But within ten years, rates had halved and only those developers with experience were winning the best contracts.
When the oil price crashed in 2014/15, many oil and gas contractors found themselves out of work, or forced onto the payroll by skills hoarding clients. But those with the niche and specialist subsea, engineering and geosciences skills still found work.
What type of contractor are you?
Broadly speaking, contractors can be segmented into four types. This can be a useful exercise, as it will drive a contractor’s marketing strategy and sales process.
A high end contractor stays at the bleeding edge of their profession, constantly learning the latest skills and techniques. These contractors are highly attractive to clients that need the latest skills for new projects.
Other contractors will become a contracting ‘category killer’. This means they focus on a very specific and niche skill that is in high demand but short supply. They benefit from this demand/supply imbalance.
A standard contractor is typically there to cover for a permie, or to assist with capacity management. They essentially have the skills that the employee has and fill short-term roles when hiring a new employee cannot be justified or when an employee is away for a set period of time.
Low end contractors don’t maintain the latest skills and often find themselves doing the tasks that permanent employees don’t want to do. These contractors can be at risk of being inside IR35 if they become a ‘tail end Charlie’, taking any work that comes their way.
Moving into contracting – the process
First time ‘newbie’ contractors need to be available within a maximum of four weeks, so those with three months or longer notice periods need to plan their exit carefully.
Choosing when to make the leap is also crucial. There are contracting ‘seasons’ when projects typically start and contracts are more readily available. Equally, there are times when projects are less likely to start and contracts are thin on the ground.
Good luck with your contracting!