Contracting is a great opportunity to help you develop your portfolio career. This is due to the better flexibility, great income and lifestyle it can provide. However, it is not all sunshine and rainbows. There is more that you need to get to grasp with.
This is important because I fear that contracting is becoming a glamorized route, when in fact it’s one of many routes. People are entering it blindly, which may be a good thing or bad thing.
If people jump into contracting, and jump out quickly, it’s because they are not suited for the path, or were not prepped for what could have come.
With that said, let’s get started!
Pain creates Purpose…
Pain is necessary. It allows us to determine what we want and what we don’t want.
However, how much pain can you endure? Contracting can be glorified, but it can involve a lot of pain. Here is what will be discussed:
- At times, it’s a Glorified 9 to 5…
- It can be a lonely road.
- The market goes up and down… A LOT.
- Imposter syndrome likes to linger.
- You realize the money is still not enough!
So, with that said, let’s get started!
At times, it’s a glorified 9 to 5…
Contracting can be great for providing accelerated financial growth and an element of flexibility, but there are many contracts that are glorified 9 to 5s…
It’s clearer if you work under IR35, meaning HMRC considers you to do a role like a permanent employee of the organization.
Remember this is from a tax perspective, but it can translate into your hiring manager treating you like “part of the gang”. This can also mean that you draw into the fabric of the potentially toxic culture.
As you can imagine, there are some fake outside IR35 roles that are truly inside IR35 roles. These exist to entice prospective contractors on the market who only work outside IR35.
Getting back to the point, this culture can curate a pattern of waking up at a specific time and going to bed at a specific time. You get into a mundane routine called ‘box life.’ You wake up in a box, you go to work in a box, you come back in a box, and you die in a box…
Regardless of the box life, routine is required for good productivity. But it is not necessarily what people imagine…
The take home message here is that dependent upon your personality, relationships and experience, your hiring manager may treat you like an employee. This is more likely to be the case if you are working inside IR35 and have opted in the conduct regulations.
The solution to this is either:
- Find true outside IR35 roles.
- Find contracts working for companies with a great ethos and set of values.
- Provide as much value as possible so that you create what I call “The Sigma Effect.”
Please note: The sigma effect is where you create so much value, you are viewed as a leader regardless of your role or rank. People trust you to deliver and leave you to it.
It can be a lonely road.
It’s a fact that not many people around you are contractors. It’s a career understood by the few. Even if they are, not all of them are in the same profession as you. Therefore, you end up naturally being a lone wolf.
Contractors are expected to get on with things relatively quickly, compared to the months and years a permanent employee may have. With this in mind, professionalism is fundamental to perceived value. It just needs to be shown as soon as possible.
As you’re chopping and changing all the time, moving from assignment to assignment, it can be hard to maintain relationships.
However, this is not everyone’s reality; if you’re good with relationships, you won’t have a problem with this at all. Even still, bear this in mind as it is something to note.
Don’t be afraid to get semi-personal with people, and share personal contact information if there is a good fit.
The market goes up and down… A LOT!
As aforementioned in a previous newsletter, there are opportunistic times and threatening times, so it is pivotal to know your generalist role and specialist role. The reality is, when times get rough, it’s hard to stay calm and hopeful that you’ll get a new contract.
This is where resilience and practicality needs to kick in. All the motivational videos you have watched need to mean something in these moments. Understand that there are cycles, factors and markets at play. You can use these things to your advantage, or ride a scary ride.
Needless to say, it is fundamental to always have an emergency fund and to at least save your day rate every week, or what you need for the month to survive (expenses for 6+ months if you can). This will help you better weather the storm. Of course, there are credit options, but why use those options if they could be avoided?
Create an environment that protects you against these eventualities.
Imposter syndrome likes to linger.
I still have conversations with some of my contractor friends where I feel like “the gig is up.” Sometimes you still feel like you’re in a honeymoon period! … And I’m saying all this 2 years into contracting!
There may be times when you are given tasks on your assignment, and your mind goes blank, or you go quiet all of a sudden due to a lack of confidence.
The solution to help you tackle this is to be clear of the task and confirm the following in this order:
It will definitely serve you to utilize frameworks, read policies and papers, and talk to as many people who are part of the business. This builds your knowledge base and creates a reference point when tackling solutions.
Rather than focus on imposter syndrome, focus on tackling the solution as robustly as possible.
You realize the money is still not enough!
Would it surprise you to say that the money may still not be enough?! What does enough even look like? A study done by Warwick university showed that the happiness “bliss point” is £75,000 – which to me does not seem right.
According to the Institute for Fiscal Studies, the top 1% of earners in the UK in 2022 had an average income of £167,540. Can you do this as a contractor? Yes, it is possible, but this is commanding a big day rate or multiple contracts on the go. Most conservative contractors are likely to make less.
If I was to guess a well-paid contractor is likely to make anywhere between £75k to £150k per annum. Of course, this is dependent upon market conditions, their niche and their circumstances.
Even if you do make crazy money, lifestyle creep (Parkinson’s Law) kicks in. So, essentially, it becomes a creature of habit and behaviour.
You are likely to become more ambitious with how you spend your money. But realistically, most people need to be sensible with their expenses and not overreach.
I would caveat this by saying if you do not feel awkward handling risk, then that is on you. I have certainly been in this situation and may talk about my experiences of this in the future.
The message here is, you can make double what you made before, but that is dependent on many factors. Essentially, you need to be in the right market and industry to make it work. Also, knowing the right people and adopting and maintaining an entrepreneurial mindset is important.
The key takeaways are:
- At times, it’s a Glorified 9 to 5… But that’s OK if the culture is good.
- It can be a lonely road, but there are ways to maintain relationships.
- The market goes up and down… A LOT, but you have to be smart to prepare for it.
- Imposter syndrome likes to linger, yet clarity beats it always!
- You realize the money is still not enough! But this can be managed with smart habits.
If you think about it, this article laid out fears that people have when it comes to contracting, but they all have mitigations. Managing this game comes down to the mentality you have. Have a winning mindset and you will win. Fall into the trap of losing and you will lose. Simple.
Whatever you decide to do, think about these different pain points, and think to yourself: “How would I deal with this situation?” Your response decides your direction.
If you want I can help you in the following 3 ways:
- The Life Navigation System: A comprehensive guide on how to manage your life, helping you set goals, set routines and journal like a boss! Comes with a complete walkthrough video and Notion template!
- Secure the Job: The step-by-step course that unveils systems, strategies and success when it comes to progressing your job and applying for new roles
- The Independent Consultant UK: A guide to becoming a contractor in the UK. This is a step-by-step walkthrough of my experiences, hosting exclusive information to help you transition into the space of contracting.
- Book a call: Let’s have a chat to focus on your life areas and where you can have the biggest impact. If it makes sense, we can progress towards procuring coaching or mentoring.