We interview a first time contractor in Project Management who shares his experience of moving into contracting for the first time.
Q) How long had you been in permanent employment before going contracting?
8.5 years in the credit card industry and 10 years before that in the Royal Navy.
Q) What are your skills?
Q) Any dislikes about permanent employment that made you consider contracting?
Giving 100% commitment to a role was not mirrored by others “empire building” and/or networking for their next promotion.
Effort was not rewarded. The only way to get a decent pay rise was to leave!
Q) How long did you consider contracting before finally making the leap?
I’d be thinking about it for a while. Rather than making the leap myself circumstances pushed me forward.
Shortly after joining a new company my position was dissolved with no attractive alternative. Luckily an agent phoned me out of the blue for a contract position which was perfect for me. After an interview I was offered the role and started 10 days later.
Q) What concerns did you have about trying to enter the contracting world?
The main concern was the continuity of work. Still, even though the first contract was for only 3 months it has been extended twice and it will probably be extended again.
I was a little worried about not being renewed in the first 3 months since my savings could only stretch 6 months without work. This is no longer a concern now though.
Time away from family was a real pain for the first 3 months, but I then rented a flat and moved my family closer. It reduced net income, but was much better.
Q) Why did you want to switch from permanent employment to contracting?
Mostly for the money and the ability to invest for the future to avoid working until retirement age.
Q) How do you compare working now as a contractor to before?
Surprisingly I’ve received some interesting projects and am treated as an equal to a permie, but without the bureaucracy and endless personal development plans!!
I’m also amazed at the quality of the experience I have gained. Rather than carrying out the mundane day to day activities, I’m getting some good projects.
Q) Did you use agents to find work, and if so, how did you find it?
I had my CV on a number of sites previously, but removed it when I secured a previous permanent job. It was lucky that one agency had downloaded it to their database and contacted me out of the blue.
Q) How did you address IR35 issues?
My wife (a qualified solicitor) and I poured over the contract for ages. My accountant also reviewed it and confirmed it was outside IR35. He stipulated the point about being able to sub-contract someone to do your work.
Q) How did you feel when you finally made the switch from permanent to contracting?!
Scared! Insecure! Vulnerable.
I felt I didn’t have enough experience in Project Management but there are lots of people with less experience. It really was a horrible feeling, particularly in the early days, knowing that the rug could be pulled from under my feet at any time. This was made worse because my wife had given birth to our son only 6 months before, so mine was (and still is) the only income. With savings and confidence built up this is no longer a concern.
Q) Did you use an umbrella or limited company, and why?
I set up my own limited company for the tax advantages that I had read about on the Contractor Calculator website, amongst others. I choose the company route to have more control, which I prefer.
Q) How much ‘hassle’ was it to get everything set up: banking, company etc?
Not much of a problem at all. Setting up the limited company was the hardest thing as the forms came back from Companies House, but we talked it through with someone. Setting up the bank account was easy with HSBC who offered 18 months free banking.
Q) How long have you now been contracting, and would you consider going back to permanent employment ever again?
It’s been 6 months now and I feel much more confident with money behind me.
I’ve paid for a training course, which I may have got for free in a permanent position, but then again I may not have got it, or had to wait. As I paid for it, I could attend it when I wanted and it is another relevant qualification for my CV.
I’ve been approached a few times for permanent positions, including one time to interview stage, but I decided not to go ahead with it because at the moment contracting is the best option.
Q) What do you see as the advantages of contracting?
Money is the main one, followed by freedom to choose when to work or not. It is definitely the best move I’ve made so far.
A nice surprise was that taking holidays is much easier. If I ask them, they just say take it when you want, you’re the boss! I have no concerns about taking a month off at the end of the year to go away.
The experience I have gained over the past 6 months would have taken a couple of years in my last company.
Q) Are you financially much better off?
I suppose I’m approx 50% better off for contracting. This would have been 100% but I’m paying rent for two houses whilst I have moved my family with me.
Q) What advice would you give to others looking to enter the contracting arena from permanent employment? (e.g. Preparation, applications, finances, etc).
It’s definitely worth taking the plunge!
My industry (finance) is very buoyant at the moment and the rates are fairly good, so pick the skills you can turn your hand to quite readily and will give you the broadest income options. In my case this was Project Management, although I needed to get up to speed quickly.
Q) Anything else you think might be useful for others thinking about contracting?
Keep on top of your skills & qualifications. By keeping up with industry expectations at least you’ll be considered for all opportunities. I’ve sat 9 exams in the past 7 years, which I don’t like doing but I know that it’s a way of life in business, and more so for a contractor.