Contractors, can Plan B ever become your Plan A?
With high levels of flexibility and autonomy, plus a great work-life balance, there are significant upsides to the contracting industry. There are, however, still cons. Uncertainty over the next contract and the need for financial safeguarding during quiet periods dictate that many contractors deploy a ‘Plan B’ to alleviate these insecurities.
A ‘Plan B’ is typically actively pursued to supplement a primary business, writes Chris Bryce, chief executive of The Association of Independent Professionals and the Self Employed (IPSE). But, it can also develop naturally as first, as a back-up plan before eventually being unturned to potentially become the successor to a contractor’s main source of work.
A case in point is IPSE member Paul Allington, an Essex-based software engineer who set up his business The Code Guy, in 2015 when he was forced to close his previous venture. He runs The Code Guy (henceforth ‘TCG’) to facilitate the growth of a second venture, Skwish, which he hopes will one day establish itself long-term as his primary business.
“I’m a software engineer and founder of TCG which produces software and provided web-based solutions,” the 34-year-old says. “The company specialises in rapid prototypes, data manipulation, management systems, websites, e-commerce sites and mobile apps.
“Alongside that, since December 2016, I have developed my own software called Skwish. It’s a freelance-specific project management tool which was designed to help simplify the process of managing clients, billing, quoting and feedback. It was originally built in to my main business, but it has since spun itself out and now operates as a completely solo business.
He adds that the evolution of this second business, co-worked on by fellow freelancer Chris Williams, came about because the two ventures do two very different things, so as Allington says, “splitting it out into its own business made a lot of sense.”
Both are operated as a limited company. And in 12 years as a software expert, the last six of which were as a contractor, Allington has not once encountered any tax complications -- something that can arise with two businesses on the go at once.
“Presently, in terms of the time I spend working on each, TCG must take precedent, but I try to commit 15– 20 per cent of my time to working on my ‘Plan B’ software business. Only five per cent of my income is brought in through the latter, but this will grow as I commit more resources and time to it.”
During its nearly three years in operation, TCG has built up a retained revenue, the value of which cannot be underestimated. In achieving this financial security and prosperity the company has established itself to such an extent that Allington doesn’t need to work 100 per cent of the time to pay his overheads; in turn freeing up time to spend growing his Plan B.
“I’d like to get to the point where I can work on Skwish fulltime but first I have to earn money through TCG so I can get to that stage. The former’s my long-term goal in terms of building something that can see me through to retirement, and TCG is my way of facilitating that by investing time and money to get it off the ground and allow it to really grow.”
He adds that while his Plan A still takes up the majority of his time now, in some ways it is “simply filling in the gaps in the immediate future until Plan B is ready.” At present, the latter doesn’t bring in much income or command as much of his time. Yet he sounds determined this might not be the case forever. “Hopefully with time and dedication,” Allington says, “ it will promote itself from being my back-up business to being my main business in the long-term.”
