Six important steps to take before becoming a contractor

Considering giving up permanent employment to become a contractor? Before you hand in your resignation letter and print those business cards, it’s vital that you have looked at every aspect of your decision.

1st Contact Umbrella offers this useful guide to help ensure your decision to become a contractor is highly informed and that you are fully prepared when you do make the move. We suggest you use a notebook so that you can record your responses to questions, and have references on hand when you get to Step 6: Writing your Action Plan.

1. Understand your motivation

Why do you want to be a contractor? Do you just hate your current job, or have you given working for yourself serious thought? Make sure that you are motivated by a drive towards something and not simply away from your current situation.

Are you drawn to the idea of setting your own hours and spending more time at home? Or are you motivated by the possibility of making a lot more money, even if it means you work longer hours? Or are you excited by the prospect of working on different projects with different people, and at the same time possibly enhancing your skill-set? Spend some time figuring out your true reasons for wanting to be a contractor by answering these questions:

  • Why is working for myself important to me?
  • How will it influence my life?
  • How might it influence others around me?
  • What do I ultimately hope to gain?

2. Assess the scope of opportunity

If you have ascertained in the first step that you definitely want to be a contractor (and for all the right reasons), you are ready to put some energy into checking out the marketplace. Search job portals, join forums and speak to people to find out how much opportunity there is out there in your industry or field of expertise.

Ask yourself: are there contract jobs on offer that I could apply for right now, if I were already in the market?

3. Assess your readiness

If you have sufficient evidence to suggest that there are ample opportunities waiting for you, it’s time to gauge just how ready you are for the world of contracting. Make sure you understand the pitfalls – for instance periods of uncertainty between contracts, more administrative work and nobody paying you when you take a sick day. Spend some time answering the following questions:

  • Am I financially prepared, with money saved up to tide me over while my business takes off?
  • Do I have the personality traits necessary to become a contractor – am I adaptable, helpful and personable?
  • Am I reliable, organised and self-disciplined?
  • What do I have to offer prospective employers that’s unique to me?
  • Do I have the positive, can-do attitude necessary to drive my personal success?

4. Define your goal

Now that you are confident about the opportunities that exist, as well as your reasons and readiness for contracting, it’s time to define your goal. Loads of people want “to be a contractor”, but what specifically, do you want?  You might want to refer back to step 1 for guidance. A “goal statement” that sums up exactly what your goal is, in 10 – 20 words. This statement should be positive, inspiring and personal. A few examples might be:

  • “I am a highly sought-after tax consultant, earning £8000 a month, with the lifestyle I always dreamed of.”
  • “I am a deeply fulfilled freelance graphic designer, constantly working on interesting projects, and with plenty of time to spend with my family.”
  • “I am so successful an IT contractor that within 2 years I can start employing people.”

Now work on your own goal statement until you feel it perfectly sums up your goal / dream. You might want to put it up somewhere as a constant reminder of what you are striving for.

5. Anticipate the obstacles

It is important to be honest with yourself and foresee any obstacles that may arise – both outer obstacles (what happens if your equipment breaks or gets stolen?) and inner (what happens if you become demotivated and never find the courage to resign?)

Try to anticipate any situation that may arise as an obstacle and then – most importantly – find the solution in your mind. Every problem has a solution!

For instance, in the case of equipment concerns, the solution could be to insure your equipment/vehicles/tools from the word go. If you are scared of tax and legal issues, partner with a reputable and knowledgeable umbrella company.

Ask yourself:

  • What are the things that could stand in the way of me achieving this goal? (And how would I overcome them?)
  • What inner obstacles (fears) could prevent me from achieving my goal? (And how might I overcome them?)

6. Write your action plan


If, after completing the steps above, you still feel that contracting is absolutely the next logical step for you, it’s time to take action. Simply answer the following questions and then from your answers, formulate a realistic timeline with actions for you to take to get all the way to your goal.

  • How much time do I need to save enough money to resign?
  • Where will my leads come from?
  • Who else can/should I involve in this decision?
  • What resources are available to me to help achieve my goal?
  • What resources do I still need?
  • What are my support systems?
  • How am I going to market myself?
  • How else will I need to prepare?
  • What inner changes will I need to make?

Come up with specific actions that need to be taken by you, add realistic timings to each action point and then start ticking them off one by one.

Contracting is not for everyone, but if you are properly prepared and have the right attitude, it is possible to become a highly successful contractor and enjoy the freedom and financial rewards that contracting can bring.

If you need help with your decision, or any information regarding contracting, umbrella companies or contractors’ tax issues, please visit