Leaving your good job with decent pay could be considered risky business. The salary of your current job could cover your family as well as any monthly payments such as a mortgage, car payments, and other debts. However, the attraction of being your own boss and the benefits that come with this such as freedom and flexibility made you want to run your own business.
Choosing this style of working means you will have to take on responsibilities of a boss and for a lot of employees-turned-freelancers, they may not be entirely clued up on everything. Here are the top 3 most common mistakes new contractors make:
1. Not coming to terms with your needs
Each month, you might have payments such as a mortgage or rent payment, a car loan, student loan payments, and other monthly expenses. As a permanent employee, a fixed salary will give you a predictable source of income that will allow you to budget your money to ensure you have enough in the bank to cover these.
When choosing the contracting route, your income may no longer stay consistent. In order for you to pay all these outgoings, your income must be more than your spending’s. However, if this isn’t the case, you may be required to use your savings to pay these. Taking a monthly salary from your Limited Company and planning ahead is important.
2. Not knowing who your first clients are
If you have just left fulltime employment, you will have the mind set of turning up each day and getting paid regardless of this.
This is the incorrect mind set for new freelancers if you do not have any clients to be doing work for. Hiring a lawyer to write a contract, opening a business bank account, creating a business plan, and designing that perfect website can seem like progress within your business at first, but all are pretty pointless at the beginning if you don’t have customers.
To begin to build a client base, you should be working on the following things:
- Make your employer your first client – You will have a lot of experience and expertise within your company’s business therefore why not consider whether they would be open to converting you from an employee to a contractor? This may not be what you were hoping for, but it is starter income whilst you build a client base. Most likely, your employer will want to replace you with a full-time individual, but they may agree a contract with you for short term period while they search for the correct candidates to replace you.
- Promote yourself via contact – We all have a network, whether it’s just our friends and family or potential clients. You should make as many people as possible aware of your change in work-style and what sector you will be locating yourself in and what types of jobs you will likely be doing. You should aim to spread the message to gain customers.
- Build up relationships with agencies – This technique can get you work quickly. Many agencies have projects in a queue but do not have the candidates to complete these. You should build a strong relationship with the individual in charge of hiring subcontractors, and make them aware of your intentions to start contracting and when you will do this.
- Networking Events – You should attempt to attend as many local networking events as possible. This doesn’t mean skip work to attend these. You should preferably attend these after work and embed yourself in the local business community, talk with whoever will talk to you, and give advice in your area of expertise. You won’t find immediate clients at these events but you are planting your name in the community and this could hopefully lead to referrals.
3. Not taking full advantage of your new flexibility
Contracting should be more rewarding than your current job as it allows you to have the flexibility, freedom, and financial independence that you expected from working this way. To ensure this is the case, you must create a strong foundation with your clients.
- Set the right expectations with your clients – It’s easy to be treated like an employee when contracting. Many clients usually have employees, and might even treat you similar too. It is up to you to ensure that you provide your service to the highest quality. You should take charge in determining how requirements will be prioritised, time planning surrounding these requirements and how your clients will test and approve your work.
- Charge more and work less – Contracting allows you to increase your salary and work less hours. This is a key benefit of contracting as you can earn just as much as you did in permanent employment although you are working less time. This does not necessarily mean you should try to work the same hours as you used to and earn more money than you did in your previous employment. Although that sounds appealing, this causes exhaustion and does not allow you to create time for their happiness and health.
If you’re a new contractor and looking for some help with your accounts then let Gorilla be your contractor accountant. Here at Gorilla, you will have your dedicated accountant to provide unlimited support to any queries you may have under our client service guarantee. This is included in our all-inclusive accountancy package and is just £85 + VAT per month. To learn more, get in touch with us on 0330 024 0406.
