Increasing number of people uses contracting as a path to transit from being a permanent employee to starting your own business. In the latest survey conducted by a London-based business consultancy firm Eden McCallum, 39% of under-40 contractor responded their most likely next move after contracting is starting own business. So what are the excitements and challenges coming along the way? iContract’s co-founder Amanda Cai shares her experience here.
From Perm to Contracting:
I have started contracting in 2013 following my investment banking corporate roles in Deutsche Bank and Mizuho Corporate Bank. I’ve always known that one day I want to establish my own business. However, I didn’t want to jump straight into it after university without any real business experience. I have learned a lot through my corporate roles and have built a solid network. However, the long hours, fixed location and unnecessary politics in the office only enhanced my belief that I want to escape and “create something real for the society”. From time to time, I look out of the window and think there must be a better way to work productively without the feeling of being prisoned for the next 25 years or more. So contracting came into my mind. After 5 years in a permanent role, I thought to myself: you dislike office politics; you have limited intention to keep your mask and game on to climb to the top of the corporate ladder; you do like the intellectual element of your work and you don’t mind working hard and taking responsibilities, perhaps contracting independently is a better alternative.
It proves to be 100% true. Even if I haven’t started working on my own start-up, I would have never gone back to the permanent role. As a contractor, I have more flexibility to choose the projects I want to work on and the time schedule according to my needs. The best part is you go into work, you get the job done and that’s it. No more face time, politics and I feel I have the control. So how about stability? I find that if you are good, there are always projects and positions open. The key is to build up and maintain those relationships and always keep an eye on the market. Going for that extra mile when you contract pays off. Some contractors I’ve worked with are very much focused on the now – how much I get paid for now and whether if I work too much now, my contract will not be renewed because there will be no work left. My view is to be a long-term thinker always. Companies want qualified and hard working contractors who can deliver. If you go for a bit of extra work without focusing too much on the payment, the clients can see it and they feel you are aligned. You have to proof yourself first before asking for more. Once you’ve done a fantastic job, you can then proudly state what you have achieved and ask for a higher day rate. Your client will be more likely to give you this raise willingly and to keep you for longer.
From Contracting to Start-up business:
Ultimately my goal has always been to create something new. I had this idea to establish an online platform to connect contractors with recruiters very early on since I start contracting. It is completely born out of my own frustration that the information and services for contractors seems to be scattered across difference places, and there is limited support overall especially on marketing, networking and admin. Therefore, the idea of iContract – a one-stop shop to connect contractors with recruiters for job matching and to provide quality services and information is born. I want to create a sense of community for contractors, knowing you are not alone.
Setting up a start-up business is exciting but also extremely challenging. Like many other early start stage entrepreneurs, I have to keep my income coming to fund the business costs. Working 7 days a week and investing the majority of my contracting income into a business that you cannot foresee in the near term requires huge amount of commitments. For anyone who is considering setting up a start-up, my advice will be only to do it if it is something you truly love and believe in and you will do it even without any financial compensation. Things never go smoothly with a start-up project. It takes much longer and costs much more than originally estimated to reach our target and after 3 years of hard work, we are stilling working to complete the version 1 product. I’m not saying you can’t launch something into the market quicker. With the lean start-up model, a lot of people choose to launch a minimal viable product in a relatively short time period and then adjust it along the way. All I’m saying is planning for longer and budgeting for more.
The income from contracting really helped me to keep the project going. To give myself a bit more work life balance, I managed to cut down my contracting schedule from full time to 4 days. If you can proof yourself to be efficient when you are at work, you will find a lot of employers will be willing to consider part time work arrangement. In the end of the day, who doesn’t like to pay 4 days’ rate if you produce the same as other full time staff? Using your contracting income to fund your project also pays off from a tax saving point of view. Depends on the type of project you are working on, you could even be entitled to R&D tax relief which further reduces your tax bill.
The government has been very supportive on start-ups with programmes such as government backed start-up loans, incubators to SEIS and EIS investment scheme. Go to as many events as possible and get to know these programmes will help you assess whether and when you will be ready for full time entrepreneurship. Google Campus and WeWork host a lot of these events. You can also find some useful groups to join on Meetup or set up your profile on AngelList or Crunchbase to attract some seed investors. For me, it was when we raised funding through SEIS scheme allowing me to finally come out of contracting and to devote myself to iContract.