So contractors, how’s your contingency planning coming along?
There are many benefits to contracting, from flexibility and a better work-life balance to -- in many cases -- a higher income.
But there’s one thing you can’t avoid as a freelance consultant: uncertainty. Freelance contracting is by nature insecure. You move from project to project and client to client, so there’s always more chance for the unexpected to happen. And you’re provided no safety net.
Fortunately, you can prepare for potentially unwanted bumps in the road by having back-up, or contingency plans in place, writes Chris Bryce, chief executive of The Association of Independent Professionals and the Self-Employed (IPSE).
There are all kinds of contingency plans to consider when contracting, such as:
- building a savings buffer to tide you through more difficult times
- upskilling so you can have a second, alternative field of expertise
- making sure an agency, location, or old contact can be trusted to help find you work.
One of our members, John, a freelance professional based in the north east of England, developed his own style of contingency planning almost unintentionally, ‘on the job.’ It’s so unintentional that even today, after 20 years as a freelancer developing and refining the strategy, he still prefers not to call it contingency planning; instead, to him it’s a “Simultaneous Rolling Back-up Plan”.
“All my contracts are established directly with my clients, not through an agency and this lets me have what I call my SRBP. These simultaneous, rolling back-up plans come about because when I complete one contract, it doesn’t just put me out of work. Instead, I can just put more into my other projects until I get another commission.”
A few years ago, John was working on a range of different retail developments, including big names like Bluewater and Braehead, as well as many major hotels. It was the diversity of the projects that was important to John: they were spread across a wide range of different sectors.
“Afterwards, I moved out of the retail sector and established another wide range of client contacts, this time in the data centre sector. This was -- and still is -- growing rapidly. Since then I’ve had contracts with many organisations involved in the design, construction and operation of data centres.”
Like about one in ten freelancers, much of John’s work has been international. And although that may not be an intentional part of his SRBP, it’s something the 72-year-old has come to enjoy. “Projects in the UK, Germany, Netherlands and Eire have all ensued,” John says. “So far, I’ve been fortunate, and have been able to find new work after completing each project. I don’t recall being short of work for any length of time.”
Another useful aspect of John’s SRBP is that it helps to stop him getting unfairly caught out by the IR35 regulations. “For peace of mind, I’ve kept up my IPSE membership as an additional insurance in case HMRC wants to investigate. But having several contacts here there and everywhere, in sectors that aren’t natural bedfellows, is my bold ‘In Business On My Own Account’ (IBOMOA) sign to Hector.”
He adds: “I’ve never had any tax issues because I’m operating legally and well within the scope of what the Revenue indicates to be a genuine, bona fide consultancy business. I’m very definitely and very obviously running a business. So, let it be said that a SRBP helps prove another acronym -- ‘IBOMOA,’ which will roll off the tongue even better if a status inspector ever calls!”