Overcoming Obstacles: 3 Challenges faced by IT Contractors

The pros of contracting are flexibility, freedom, and increased earning potential.

Many contractors have been able to significantly earn more money for our families to save for a down payment, pay bills, or save for a future purchase through contracting.

Many have also been through the downturn when looking for the next IT contract opportunity.

Here are 3 challenges you’re likely to face and how to prepare for them:

In today’s ever-evolving tech landscape, the role of an IT contractor has become increasingly vital.

However, the path of an IT contractor is not without its challenges.

Before we get started, if you’re not familiar with IT contracting. Take a quick read at our Intro to IT Contracting guide.

In this article, we’ll explore three significant obstacles that IT contractors often encounter and discuss strategies to overcome them.

Table of Contents

1. Securing Consistent Contracts

One of the primary challenges faced by IT contractors is securing a steady stream of contracts. The nature of contract work is inherently temporary, and gaps between assignments can be unsettling.

Typically when factoring in rates, I like to account for some leeway between contracts (ideally 1 month).

Here are some strategies to overcome this obstacle:

Networking:

Build and maintain a strong professional network: Attend industry events, join online forums, and connect with peers on platforms like LinkedIn. Networking can help you discover new opportunities and receive referrals.

Stay in touch with past clients: Maintaining relationships with previous clients can lead to repeat business or referrals. They may have new projects or know of other organizations seeking your skills.

Diversify Your Skill Set:

Continuous learning: Invest in expanding your skill set by staying up-to-date with the latest technologies and certifications. Being versatile and adaptable can make you a more attractive candidate for various projects.

Work with Recruiters:

Leverage recruitment agencies: Partnering with specialized IT recruiters can provide you with access to a wider range of opportunities. Recruiters often have insights into upcoming projects and can connect you with relevant clients.

2. Managing Finances and Benefits

As an IT contractor, you are responsible for managing your finances, including taxes, healthcare, and retirement savings. This can be daunting, but with careful planning, you can navigate these financial challenges effectively:

Financial Planning:

Create a budget: Establish a budget that accounts for your business expenses, taxes, and personal financial goals. Stick to this budget to ensure financial stability during slower periods.
Consult a financial advisor: Consider seeking guidance from a financial advisor or accountant who specializes in working with contractors. They can help you optimize your finances and plan for the future.

Taxation:

Set aside for taxes: Since contractors are responsible for paying their own taxes, it’s essential to set aside a portion of your income for tax payments. Consider working with a tax professional to ensure compliance.
Explore tax deductions: Be aware of potential tax deductions available to contractors, such as home office expenses, travel costs, and equipment purchases. These deductions can help lower your tax liability.

Benefits:

Healthcare coverage: Explore healthcare options, including private insurance plans or joining professional organizations that offer group coverage. Evaluate which plan suits your needs and budget.
- We receive no sponsorship from Mira, but they’ve been a great asset to small business owners looking for supplemental health coverage.
Retirement savings: Open a retirement account, such as an Individual Retirement Account (IRA) or a Solo 401(k), to save for your future. Contribute regularly to ensure financial security in retirement.

3. Maintaining Work-Life Balance

The freedom and flexibility that come with IT contracting can be a double-edged sword. Many contractors struggle to maintain a healthy work-life balance due to the demands of multiple projects and the pressure to continuously secure new contracts. Here’s how to address this challenge:

Time Management:

Set boundaries: Establish clear boundaries between work and personal life. Define your working hours and stick to them to prevent burnout.
Use productivity tools: Utilize project management and time-tracking tools to efficiently manage your workload and meet deadlines.

Plan for Downtime:

Save during peak periods: During lucrative contracts, set aside savings that can support you during periods of lower income. This financial cushion can alleviate stress.
Take planned breaks: Schedule regular breaks between contracts to recharge and spend quality time with loved ones. I suggest factoring in 1-2 months of vacation when factoring in your charged rates.

Seek Support:

Delegate tasks: If possible, delegate non-work tasks to free up your time and reduce stress. Consider hiring help for household chores or administrative work.
Lean on your network: Don’t hesitate to seek advice and support from your professional network or peers who have faced similar challenges.

In conclusion, while IT contracting offers numerous benefits, it comes with its share of obstacles. By proactively addressing these challenges through networking, financial planning, and effective time management, you can build a successful and fulfilling career as an IT contractor. Remember that each obstacle is an opportunity for growth and learning, ultimately contributing to your professional development and success in the dynamic world of IT contracting.