7 Common IT Contractor Mistakes And How To Avoid Them

With each passing year, the cyber security threat landscape continues to diversify and worsen. This evolving landscape has led to a huge demand for IT security professionals, with nowhere near enough available contractors in the market to fill the estimated 3.5 million vacancies that the market will see by 2025, as estimated by (ISC)² in its most recent Cybersecurity Workforce Study. 

Moving from corporate to contract IT work

The situation has paid dividends for skilled IT technicians that want to move away from corporate infrastructure and delve into ?freelance terrain. The ever-growing demand for IT contractors means that many people with the right expertise, capabilities and qualifications can build a lucrative career fulfilling jobs on a contract basis. There are certainly plenty of personal and professional benefits that such a career move can bring. 

However, as with any startup contract-based business operation, there are going to be hurdles that you’ll stumble over along the way. Not only that, but there are essential security practices you should be cautious of when it comes to protecting your new business venture in order to avoid common mistakes.

Therefore, if you are considering embarking on an IT contract career, you should be mindful of some of these common pitfalls and obstacles, which this guide will highlight. Furthermore, there’ll also be guidance you can follow about avoiding these entirely, or at least minimizing their impact, so you’ll be best placed to start your IT contracting pursuits with confidence and optimism. Every project you fulfill will present a fair share of risks, ranging from safety and data protection issues to payment disputes and timescale challenges. 

Being aware of the seven common mistakes is a crucial first step to avoiding them in the future.

1. Lacking industry knowledge

With any contract work, it’s crucial to understand the niches of your services and the market(s) you’ll be operating in. 

IT and tech encompasses a broad range of specialisms, including (but not limited to) consultancy, training, web development, tech support, hosting, among others. There are also further niches to consider, ranging from IoT, incident response and DevOps to social engineering, vulnerability management, data security, and many more. 

As a contractor, it’s vital that you pinpoint your chosen industries or sectors after thorough research. If you are aware of your industry’s up-to-date news, emerging trends and developments – such as artificial intelligence and machine learning, for example – this, along with your key skills, will ensure you’re best prepared to tackle projects from clients in need.

2. Misjudging costs and capital

Setting up any freelance business requires a lot of projections for income, expenses, cash flow, and other finances. Quite often, these are misjudged, with contractors easily falling into the trap of spending more than they are earning.

Therefore, it’s vital to ensure you account for all your resources, including office space, equipment, insurance, taxes, inventory, website and marketing costs, utilities, software and tools, and so on. 

3. Relying too much on certain clients

When you are self-employed as an IT professional, you will encounter situations where prospective clients choose alternative solutions or competitors. This could be for various reasons, but often the reasons are outside of your control. Therefore, it’s wise to be prepared in case such a situation develops.

Over time, clients will come and go, but you should aim to avoid putting all your eggs in one basket. As long as you can handle the workload, you can branch out to new clients and work on multiple projects. After a while, you may find yourself busy, so you may feel less stressed if a client decides to take business elsewhere.

4. Settling for lower rates

Contractors regularly make the mistake of not charging enough for their services. It’s essential to set the right price, whether it’s an hourly fee or a price per-project, because you want to avoid encountering a situation where the ends do not justify the means (i.e. overworking and undercharging). 

Charging less can sometimes be a good thing when you’re just starting out and need to build a foundation of reliable clients. However, this isn’t feasible or viable in the long-term. As you hone your craft and develop your skills, you can justify charging higher fees.

5. Not networking and marketing enough

Building long-term, mutually-beneficial relationships is vital to growing your business. Whether this is through LinkedIn, industry events, or attending structured networking meetings, you need to actively source those business opportunities. Referrals, recommendations and word-of-mouth go a long way when you’re just starting out.

In addition to this, it’s vital that you get the vital components of your offline and digital marketing nailed down. Without these, how can any prospective client have any trust in your services? 

Make sure you also set up a website and social media accounts to market yourself, and don’t forget about your essentials like branding and logos. If you plan to bid on projects using freelance sites, ensure your profile is professional and engaging. Remember business cards to hand out at networking events. Consistency is everything, and you may need some external guidance on how you construct these components. 

Remember that professionalism and online reputation can’t be overlooked these days. However, contrary to popular belief, you don’t have to pay through the nose to create some professional images and photos which you can use across all your deliverables. 

6. Accepting all projects

It can be tempting to find clients as quickly as possible to kickstart your IT contract business. However, all clients are different and you will likely encounter ones you prefer working with, as well as those that you don’t. 

By finding a specific type of client or project to target, you’ll avoid having to hastily and haphazardly apply for projects that don’t fill you with enthusiasm, or working with clients that don’t share the same ethos or values as you. 

By avoiding projects that aren’t suited to your skillset, and carefully selecting those that complement your expertise, you’ll build a portfolio of happy clients that respect and trust you. 

7. Poor accounting and bookkeeping

Accurate bookkeeping and accounting can be a real challenge to get right. The best way to ensure you are above board and more tax-efficient is to invest in a dedicated professional accountant. 

It can be tempting to avoid delegating your tax and expense obligations to a third party, and save yourself some money in the process. However, as a company owner, you have several mandatory taxes and deadlines which many freelancers aren’t always aware of when they first branch out. If these aren’t met, you could be liable for penalties, which can have a knock-on effect and, if not addressed, could spell financial disaster. 

Therefore, it’s in your best interests to hire a professional accountant and bookkeeper who can advise you on everything you need to know, and how you can retain as much cash as possible.