Successful contracting in the credit crunch
There is little doubt that contracting or freelancing has advantages over being employed. Firstly you have flexibility, a choice of contracts to undertake, control over what periods you do and don’t work and the decision of how much you earn. What more could you ask for?
But is contracting really successful for everyone?
With market conditions as they currently are and the credit crunch biting hard; contracts may not be as readily available as they have been in recent years. End user clients can afford to be selective and literally ‘pick’ the best of the crop. Due to current changes many clients are more likely to negotiate rates downwards, saving them money. Agencies will not want to lose their slice of the cake so the rate cuts may come off your contract rate.
Many contractors are unable to ‘sell’ themselves when conditions get tough and end up trying to go back into permanent employment, if the jobs are available. So it’s a time when professional freelancers and contractors need to be looking at making the most of the market conditions.
How to be the pick of the crop
The website Contractor Calculator states that
“the most successful contractors acknowledge the importance of a professional sales approach, and learn and apply good sales technique and process throughout their career.
As a contractor you are selling a product – your knowledge. And despite what some people say, even the best products do not sell themselves.
Training yourself to use a professional sales approach will ensure you minimise or even eliminate any downtime between contracts regardless of market conditions, and also ensure you maximise your revenue by commanding and securing market rates”.
Make the word “honesty” your mantra
Your curriculum vitae is the first introduction of you to an agency or end client. If it is not up to scratch, will it even be considered? It may be tempting to "embelish" your CV in order to gain a competitve advantage in the marketplace but this is a risky strategy. If you're found out you almost certainly won't get the job.
One option to consider is having your CV checked professionally so that it will stand up to the scutiny it will be given and ensure that your reader can see and appreciate the professional approach you take.
CVinsight provide a CV screening service which include Financial & Identity checks, Secondary Education check, Higher Education check, Professional Memberships, Contract verification, Character & Personal References, Criminal Bureau check, Right to Work check, Driving license check as well as a few others.
Stating professional affiliations may mean you're taken more seriously and project a first class image. Consider becoming a member of the Institute of Business Consulting who are an organisation focussed on raising the standards of professional practice in support of better business performance. They offer a career development path supplying resources and a recognised qualification route.
Become a member of the Professional Contractors Group, a professional organisation who support the freelancer and contracting industry. The PCG are highly respected in the industry and have challenged and suceeded in changing some government policies. They have represented clients and won over 1450 IR35 cases.
As a member of the PCG you are entitled to many savings from subscriptions; you have access to the ‘partners’ that they are affiliated with. They also have accrediation programmes to advise you of their accredited suppliers in the industry.
Make the most of what you earn
With the uncertaintity of not knowing where the next contract and pay cheque might be coming from, it's crucial that you have control of your money. This means having an accurate picture of the money in (what you're invoicing) and out (what you're spending on expenses) of your business and a good idea of your tax liabilities.
Having a good accountant and/or accounting software system can really help you to get a clear picture of your finances so you can budget your income and make it last between jobs.
This article has been taken from the Blevins Franks' Guide to Running a Micro-business, although it may have been edited slightly from its original form.You can download the full guide at the Blevins Franks website.
- FreeAgent wins at the Software Excellence Awards
- Turning over a new leaf: tips for organising your bookkeeping in autumn
- MTD for Income Tax: next steps for sole traders
- Hack to the future: how hack days inspire creativity at FreeAgent
- Video: self-employed business expenses by HMRC