As a contractor, it can be easy to get caught in a cycle of finding a client, completing an assignment and getting paid. Although specialised knowledge can be lucrative, narrowing your field of experience by constantly repeating the same work cycle can be risky. Economic changes or new legislation can heavily impact on market demand in a particular sector, while certain niche markets can become obsolete. Looking for ways to diversify your contracting income could not only bring you extra revenue, it could increase your stability and therefore your sustainability in the contracting sector.
Upskill to upsell
Up-skilling is an effective way of adding value for the client while also making yourself instantly more marketable. Most clients prefer to deal with as few contracts as possible, this means that contractors who represent the most comprehensive solution will be in demand. Upskilling could be as simple as highlighting a skill that you already have. For example, experienced contractors could think about marketing themselves as project managers or consultants. If you specialise in social media strategy, you could add the option to create social media content or run ad campaigns. If you specialise in website design, maybe there are other design services you could offer. Contractors can also upskill by taking courses that will enhance their professional credibility. Upselling to clients is often a win-win situation as the contractor is able to increase their daily rate, while the client actually saves money through combined value contracts. Increasing your services can also give you greater agility to move between sectors, opening up new opportunities.
Diversify your income sources
Unlike most freelancers, contractors usually work for one client at a time on a project by project basis. Although contractors should be conscientious when it comes to project work, there’s nothing to stop them benefiting from additional sources of revenue when they’re off the client’s clock. One of the main advantages of contracting is that you can choose how much you want to work. This gives you the flexibility to accommodate other part time work that can offer stability, extra revenue and possible networking opportunities. Contractors may have any number of personal skills or interests that they could develop into a sideline career; however, their specialised knowledge in a particular field gives contractors several ready-made options:
- If you’re a skilled writer, you could write an industry blog and explore the possibilities of affiliate marketing. This is where you can earn a commission by mentioning other services and products related to what you write about.
- Contractors who express themselves well verbally could consider speaking engagements at industry events, holding workshops or part-time lecturing for an educational institution.
A note for limited company contractors: In theory, there’s no limit on running different business activities through your limited company, especially if they are affiliated with your contracting activities. However, limited company contractors should consult a specialist accountant on this issue to avoid anything that could confuse their tax liability in the current climate of IR35 reforms.
With the UK’s imminent departure from the EU and further off-payroll reforms set for 2020, there’s little doubt that whatever your sector, contractors can expect several years of change as the economy adjusts. In many ways, it’s impossible to predict the effects that legislative changes will have on the service sector. However, contractors who have a business strategy in place will have the competitive advantage. Thinking strategically involves asking yourself questions such as:
- Depending on your sector, would it be advantageous to start working with smaller, private sector clients who won’t be immediately affected by the off-payroll changes in 2020? (Smaller businesses don’t necessarily mean small budgets).
- Could you take advantage of the need for specialist skills that will be in demand to navigate through the departure from the EU or from the implementation of new legislature?
- If you work on a project that goes well and can see other areas where you could be useful to a business, could you take the initiative and suggest this to the client?
Speculate to Invest
Although it might seem counterintuitive to speculate in an uncertain economy, if you have the benefit of being able to invest capital, then now could be the right time to do it. Investing in a buy-to-let property could be an excellent way to give your self a secondary income that’s also likely to hold its market value. Our friends at CMME offer expert advice on mortgages for independent professionals. If you don’t have the funds to invest in a residential property, commercial property is another good option. With smaller mortgages possible on parking lots, garages, workshops and retail units, these can offer excellent sources of rental revenue, particularly in areas where there’s a high demand. Contractors can also use their business savvy to invest in businesses that they feel have growth potential. If you’re not in a position to invest money, many independent professionals consider offering start-ups reduced rates or free expertise in return for a share percentage. This can result in a significant pay-off if you spot a start-up with potential, as today’s start-up can be next year’s Facebook.
At Contracting Wise, we offer assistance with every aspect of contracting – to speak to a member of our team, call 0203 642 8679