12 Common Mistakes Of the Independent Contractor
When I first started working as an independent contractor, I tried to do everything right in my business and avoid any mistakes. But that is not easy for most of us, and mistakes are one of the ways that we can learn a better approach to improve our work and client relations.
Being a contractor is exciting, with both independence and potential for great income. The challenge is that you are the whole business, and accountable for every part of it from accounting to marketing to customer service.
I have made a list of common mistakes that many contractors make (including myself) so that you can try to avoid the same pitfalls, and work on solutions that will serve you long term.
1. Underestimating Your Value in the Market
Yes, you are worth it!
To succeed as a contractor, you have to know what to charge and your value in your market. Research the range of pay rates and assess your skills to see where you fit. When you start, it may be necessary to offer lower rates to build a reputation and attract clients, but have a plan for steady increases.
2. Unable to Effectively Negotiate
Ok, I’ll take it. When can I start?
Negotiating pay rates and contracts will determine your income as well as generate respect from your clients. Some contractors don’t have a background in negotiation, or they may feel hesitant to ask for what they are worth, but once the contract is signed it is more difficult to change it.
3. Dated Skills and Qualifications That Need Improvement
If you are not moving forward, you are stuck.
It is tempting to rely on the same qualifications that we used as employees, but as a contractor, you are in business now. You should look for opportunities to add to your skills to increase marketability and establish your unique brand. You can even consider acquiring new qualifications that add an element of professional status, such as training course certifications.
4. Failure to Stay Up To Date With Knowledge in Your Industry
Know the trends, and stay ahead of them.
No field is stagnant, so it makes sense to stay current with developments in technology, methods, legal standards and news events. It can be embarrassing if a client asks about some hot trend, and you have to admit that you missed it.
5. Non-compliance With Tax Laws
Paying taxes is part of your business.
No one likes taxes but everyone pays, including contractors. This should be a priority especially if you are working on a project in a foreign country since you could be liable for taxes without knowing it. That would lead to other headaches that you don’t need when there is work to be done.
6. Working Without a Contract
“I will start right away, just send me the contract when you have a chance.”
Verbal agreements are worth the paper they are printed on…in other words, not much. Even if you get assurances and are eager to begin work, wait for the contract to be finalized before you start. You won’t regret it.
7. Poor Financial Planning
In the end, business is money, and money needs a plan.
One of the challenges of contracting is irregular payments and gaps in work that can stress your finances. If you don’t have the background, it is worth it to hire an accountant to help with the budget, expenses and tax payments.
8. Not Customizing Your CV
Make your CV as cool as you are…
Your business should be unique to your skills, and your CV should reflect that. Be sure to customize the format to highlight your talents, and forget the standard ‘professional objectives’ section. Your CV is now your core marketing piece, and should not look like you want your old job back.
9. Embellishing Your CV
But don’t make your CV a work of fiction.
Don’t be tempted to add things on the CV that are exaggerations or simply not true. Sure, very few clients will check those items, but if it ever comes to light you lose both the client and your credibility.
10. Lack of Networking Efforts
Reach out and be noticed.
The hardest thing to do in a day is to put aside your current project and spend time networking. But, if you just commit to an hour a day on professional websites or social media, that time will bear fruit in terms of new contacts and clients. You might even make a few new friends.
11. Ignoring the Importance of an Online Presence
The internet is your portal to the future of your business.
Unless you are an Uber driver or construction sub-contractor, you probably spend a lot of time online interacting with clients, finding new projects and promoting your business. Don’t just do the basics, but seek out creative ways to use the internet across multiple platforms for networking and client contact.
12. Failure to Know Your Competition
Every contractor competes with other skilled professionals, sometimes located across the globe. It is essential to know how your competitors are bidding and presenting their services to potential clients. You can also learn from their branding, networking and online efforts, and then distinguish yourself in some way so that you stand out from others in your field.
Following these 12 tips will help you avoid the mistakes frequently made by both new and experienced contractors. The most common problems for contractors are long gaps between contracts, pay below-market rates and ineffective marketing of your unique brand. Fortunately, all of these can be remedied with a few best practices and staying aware of the most frequent pitfalls for a contractor.