Top 10 tips for new contractors

Taking the leap from permanent employment to contracting can be a daunting prospect.

To ensure you are able to operate successfully as an IT contractor, heed my 25+ years of experience in the IT contracting market, and take a look at my top 10 tips for new contractors, writes Matt Collingwood, managing director of IT recruitment agency VIQU.

1. Get a good accountant

I’m a recruiter, but I know that it’s an accountant who should be your very first port of call in the world of IT contracting.

So before even looking at contract opportunities and contacting IT contract recruiters, you must decide whether to operate as a limited company or a sole trader. A good accountant will advise you on this.

Financial support, legal and compliance advice (including tax and VAT savings) -- these are all things which a good accountant will be in regular communication with you about, and will initially pare down these big issues down to the essentials you need to know about as a new contractor. If the accountant you choose does not come back to you with advice and insights into these areas, then you need to look elsewhere.

I also suggest caution when it comes to trusting everyone who declares themselves to be an ‘accountant.’ There will be those who promise the world, suggesting loopholes for a better take-home pay. If something sounds too good to be true – it probably is!

2. Take IR35 and other contractor company governance seriously

I’ve spoken with too many contractors who admit to living with wool over their eyes when they were first-time contractors. They can make this admission to themselves now, because of the consequences they faced as a result.

Too many contractors want to operate as a limited company (a personal services company) for the taxation benefits, but don’t act like directors. Don’t make the same mistake. Know your responsibilities in the Companies Act as a director, take out the necessary insurance, and get to grips with regulatory staples of contracting, like IR35.

The same goes for your contract. I think many seasoned contractors will agree with me when I say that skim-reading a contract will land you in hot water at some point. I would recommend having every contract reviewed by a legal professional, so that you are fully aware of the liabilities involved in signing it.

When it comes to IR35, follow the best-practice to a T. Although it is officially their responsibility if they are not a small company, some clients will say you can make your own IR35 decision. Well, don’t automatically default to outside IR35. You are a professional techy, and now a business owner – so act like it! Otherwise it’ll come back to bite you, eventually.

3. Prepare multiple CVs

With the extensive exposure contracting gives, some contractors are generalists, and can turn their hand to a number of different roles. If this is going to be you, make sure you have multiple CVs at your disposal.

It’s so easy to cram everything into one CV, but that won’t get you noticed. In fact, it’ll do the opposite!

Have separate CVs for each skillset you have. This will make it far easier for the recruiter to identify that you have the necessary skills and experience to match the role they are trying to fill.

Cram everything into one, and the recruiter will move on to the next CV.

4. Network, informally

I’m not necessarily suggesting that you attend every tech meet-up and business networking event going – although that certainly wouldn’t be a bad thing if you enjoy those kinds of events!

Instead, I’m recommending that you socialise with your peers. Go out for lunch with your contractor (and non-contractor) colleagues. Even take your manager for a coffee!

Some contractors get into contracting because they think there’s less socialising, which I completely understand. Some people don’t want to be part of a team and feel forced to socialise when they just want to work and then go home.

But I would say that the most successful contractors I know (and yes, the ones who earn premiums) are the ones who take the time to do a bit of integrating themselves into a team,. This may simply mean learning about your colleagues and getting to know how they like to communicate – just so you can work towards the best results for the client.

Once you leave a contract, keeping in touch with old managers and colleagues is a fantastic way to generate future opportunities. You never know if your friendly text to an old manager could prompt them into remembering you and offering you a contract.

5. Keep a Brag Book

Start collecting written references from every contract you work. In the weeks before you finish a contract, request a written reference on headed company paper. It should include your start and end date, the scope of work, and any further details another client might be interested to know.

Some contractors I’ve spoken to about this about say that there’s no point because they have contact details if a new client does want references. This is laziness. Managers move on, they retire or become uncontactable due to ill health or death.

I’ve spoken previously about how having a ‘brag book’ of references, and case studies will give you peace of mind that you have a backup of your work history.

6. Use LinkedIn to your advantage

Some people love LinkedIn, others hate it.

But what you can’t deny is that LinkedIn provides contractors with a fantastic platform to reach recruiters and potential clients.

Start by ensuring your profile accurately and succinctly lists your key skills and experiences. Make sure your contact details are included -- you won’t believe the number of contractors my team finds on LinkedIn and want to contact by phone/email, but can’t!

If you’re currently available, select the ‘Open to Work’ option on your profile. This will notify your connections that you are available for opportunities -- another reason why it’s important to be social and to connect with your colleagues and managers.

Finally, I implore you to keep your profile updated. If you’ve just gained a new experience or skill, make sure it’s on your profile. Recruiters aren’t mind-readers!

7. Get selective with recruitment agencies

Recruitment agencies might seem like much of a muchness, but with 27,000 recruitment agencies in the UK alone, volume doesn’t equal quality.

Unfortunately, in my 25+ years in the industry, I’ve seen more bad recruiters than good. So once you’ve found a set of recruiters that you trust and who have a good selection of opportunities, keep in touch with them. You might have just last week taken a 12-month contract, but there is no harm in updating the recruiter on your situation so they’re aware of when you will be available again.

If you’re wondering how to separate the good from the bad, I would start by asking the recruiter about the extent of their client portfolio and what IT vertical they specialise in. If they have just a small number of clients that they do big volume work for, they’re less likely to have something to suit your skillset and individual requirements. Likewise, if they are super general, they won’t have the knowledge to represent your profile accurately to prospective clients.

8. Think about the long-term

I have seen talented contractors get left behind because they have just ‘taken contracts as they’ve cropped up.’ Now, there is nothing severely wrong with this, but it is short-sighted. With the fast-moving nature of our industry, it is important to think ahead to where IT is going and how your skillset will need to adapt.

Contracting is unlike a permanent career. In a permanent position, you will become extremely knowledgeable in the areas the business requires of you. Whereas, in contracting, you need to be self-aware of gaining skills and experience that are going to keep you in-demand in the long-term. Maybe even ahead of the technology curve.

9. Always keep learning

Connecting with my last top tip, you should never stop seeking training and the transfer of skills and knowledge.

Some contractors choose to take on contracts with lower day rates so that long-term, they have skills and experience in emerging technologies. There will be less supply of contractors with similar skillsets, which will mean they command much higher day rates.

10. Know your worth

Do not undervalue yourself. When it comes to negotiating a new or existing contract, do your research to work out the average market rate. Then do yourself justice by understanding the art of negotiation. Do it well and all parties can be satisfied.

I’ve spoken previously about the importance of ‘flying your flag.’ There are too many contractors who go above and beyond, yet their clients remain unaware of their actions, only the end result.

You know what you bring to a project, so let your client know it too. I highly recommend writing a weekly email to your manager, where you highlight the work you have done. By doing this, you are showing the client your value, and this will impact the decision they make about the quality of reference they provide you with and the potential for a contract extension and rate increase. Good luck!