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Becoming a contractor

 
#1 Becoming a contractor
26/10/2009 19:08

Ed

After 8 years as a consultant I am considering going down the road of contracting. Primarily this appeals to me for the greater flexibility around commitments, increased salary and being able to take significant chunks of time off to travel.

Are there any contractors that would be kind enough to share their experiences, wins, pitfalls and general experience with me?

Right now I see it all as a positive and I know I do not have a balanced view.

Thank you in advance,

Ed

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#2 RE: Becoming a contractor
26/10/2009 20:54

Anon2 to Ed (#1)

Are you planning on giving up a perm role? Neither have you said anything about your skill set?

Have you actually applied for any contact roles to test the water, it is hardly a good market with some roles having 200+ CV's submitted.

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#3 RE: Becoming a contractor
27/10/2009 10:12

Mr Cool to Ed (#1)

Ed, see my response to thread 57909. I also suggest the discussion forum on www.contractoruk.com which gives valuable insight into the negative aspects of contracting (being out of work, being messed around by agencies, false job ads, not getting paid by bad clients, finding your rate undercut by offshore code-jockeys, etc).

Contracting is a business just like any other.

You need to look after your clients (most businesses generate 80% of annual revenue from existing clients)

You need to have multiple sales channels (contract direct to old clients, through agencies for new ones, and direct through mates where you can)

You need to respect agencies who get you work and happily let them take their margin. Accept that there are also time-wasters whom you should simply shrug off and ignore

You need to remember that contractor day rates are calculated to allow for bench time – too many contractors get used to the good times and forget to keep something by for a rainy day. The worst are those who start to believe that their day rate is high because they are geniuses and will be in work for ever, twelve months a year. They’re they ones that end up mortgaged to the eyeballs based on assumptions of 100% utilisation.

You need to be good at what you do (although god knows there are some garbage contractors making a living because of client apathy)

You need to do something that agencies routinely place at their clients, or else you’re going to have to sell direct (not easy).

In the short term most people who try contracting like it because of the money and the freedom to take time off between contracts, but you need to be a certain type of person to enjoy something that has no career path.

Finding the first contract can be hard when you are in a perm role. Most contracts are for "immediate" start and so if you are on a months notice, few agencies will wait around for you. They will simply put forward existing contractors, unless you have hard to find skills.

What sort of work do you do at the moment?

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#4 RE: Becoming a contractor
28/10/2009 09:11

Tony Restell to Mr Cool (#3)

We've just published a lengthy article on the topic of becoming a freelancer, submitted by a consultant who's made the move from perm to freelancer themselves:

<a href=http://news.top-consultant.com/UK/news_story.aspx?ID=6241>So you’re thinking of becoming a Contract Consultant?</a>

Hope this helps

Tony Restell

Top-Consultant.com

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#5 RE: Becoming a contractor
28/10/2009 21:14

Ed to Tony Restell (#4)

Thanks Tony, very useful.

Mr. Cool - I am a strategy consultant with experience in FMCG, retail and manufacturing. I work for a strategy division of one of the big '5'.

Many contractors that I have spoken to are on rates of c. £900 a day. Is this average for strategy / operational work?

Thanks again for your help

Ed

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#6 RE: Becoming a contractor
29/10/2009 13:28

Mr Cool to Ed (#5)

Ed,

I’m afraid I don’t have much knowledge of day rates for good freelance strategy consultants but would not be surprised if 900 was achievable. For Ops work I would think that this would be too high – for example I can routinely find very good change management/lean/six sigma freelancers from 500 upwards. At the moment 900 would be the rate for a very good, very experienced Program Manager looking after a major business transformation program.

However, it all really depends – if you find your own work you can raise your rate by 10% as there will be no agency fee for the client to pay and a premium/discount for short/long term engagements is also normal to reflect cost of sale and down time between projects.

One thing!!! Beware existing contractors who tell you their rates - ego means they almost always exagerate. Much better to have a look at the main job boards and see what rates are being advertised....

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#7 RE: Becoming a contractor
29/10/2009 15:34

Tony Restell to Mr Cool (#6)

I've heard from a number of sources the rule of thumb that your realistic contracting charge-out rate is half the day rate your permanent employer has been charging you out at on recent assignments. So if your firm bills you out for say £1,500 for strategy assignments then ~£750 is what you might secure going it alone...

Tony Restell

Top-Consultant.com

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#8 RE: Becoming a contractor
29/10/2009 16:23

anon to Tony Restell (#7)

Tony's right... 50% of corporate rates does sound about right.

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