ICP works with a lot of contractors. As such, we have enough experience with contractors to feel fairly confident in advising those thinking of leaving permanent work in favour of contracting before they actually make a choice to do so.
You see, contract work is not right for everyone. Before deciding to move, you need to consider all of the implications. What are your skills? Do you have any experience in finding contracts? Are you capable of effectively being your own boss? These are all questions that need to be answered before stepping forward.
To point you in the right direction, below we have laid out the process of moving from permanent to contract work. If you find that contracting still interests you after reading this article, you are probably in a good position to go for it.
The very first step is to evaluate why you actually want to become a contractor. Let's face it; permanent employment offers a measure of stability you cannot get from contracting. That means your reasons for transitioning are important.
Some people make the move because of the potential to earn more money. Others are looking for new challenges. Still others are just tired of being tethered to an employer. The question to ask yourself is whether your reasons for transitioning are important enough to take the risks associated with contract work.
Next, you need to evaluate your skills to determine whether you actually have anything to offer or not. An IT contractor, for example, would need at least a few of the latest certifications that can be offered as evidence that he or she is qualified to do the job. If you do not have skills employers need, finding contracts will be more difficult.
Evaluating the marketplace is the next step in moving from permanent to contract work. This exercise is designed to do a couple of things. First, a proper evaluation should make it clear how much work is available for someone with your skills and experience. Second, it will give you an idea of whether you can start out contracting on the side while you continue in your permanent position. Third, evaluating the market is an opportunity to learn what you are actually worth.
Evaluating your worth will require you to find and start talking to people who already have experience doing what you want to do. They can tell you how much certain contracts are worth; they can give you a good idea of how much to charge for the skills and experience you bring to the table.
Hand-in-hand with evaluating the market is evaluating your financial needs. You need to know how much money you need – BEFORE TAXES – to maintain your current standard of living. If the information learned from evaluating the market indicates that you will have no trouble earning what is required under normal conditions, then you are ready to go at this point.
Getting this far means it is time to hand in your notice and start looking for contracts. This is the riskiest part of making the move to contracting. You'll also have to decide whether to set up a limited company, work for an umbrella company, or operate as a sole trader. This should be decided before you accept your first contract.
From there it is a matter of landing that first contract and beginning to develop connections within the industry. Most contractors start out slowly and gradually build their businesses over time.