8 common mistakes to avoid as a contractor

Thursday 17th July, 2014
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Contractor Info

There is no doubt that operating as an umbrella company contractor or limited company contractor can be highly beneficial, both with its added flexibility and potentially higher pay rates in comparison to that of a permanent employee.

However, PayStream have identified some common mistakes that contractors make during their professional career and this is our guide to try and help you avoid making those same mistakes.

  1. Failure to negotiate
    The ability to negotiate effectively is a key skill for any contractor. It can lead to a noticeable difference in your pay rate. Do your research on industry averages alongside average pay rates for contractors with a similar skill set to yourself and use this as a benchmark. Remember, you should aim high but expect to compromise.
  2. Being financially irresponsible
    One of the biggest pulls into the world of contracting is attractive pay rates. However, this also comes hand in hand with uncertainty. There is no guarantee that you will always have that next contract lined up, especially as the competition for contract positions increases. You should always ensure that you set aside a portion of your salary each month for a rainy day, because you never know when that rainy day may come.
  3. Not customising your CV
    Many contractors will send out the same CV to all potential vacancies in the hope that theirs will stand out from the crowd. If you want to increase the chances of your CV getting noticed, what you should be doing is tailoring your CV for every job application, highlighting the relevant skills that meet that specific job specification.
  4. Not playing the numbers game
    Applying for one vacancy and waiting around for that one opportunity to come in can be a risky business. We would suggest that you apply for multiple contract opportunities, that way you stand more chance of getting numerous interviews which should hopefully lead to numerous contract offers. The more offers you have on the table the greater leverage you will have to bargain for those higher pay rates.
  5. Interview preparation
    Good preparation can be the difference between a good and a bad interview. Being poorly prepared is not only obvious to the interviewer, but it also gives the impression that you would be unprepared for the contract at hand.

    Do your research before any interview:

    - Look up the company's history, what are their goals, mission statement, and values? How do these factors relate to the role you are interviewing for?

    - Research the role. Make sure you know what skills the client is looking for, how you meet those skills and what aspects of your personality suits the role over your competition.

    - Always show your enthusiasm for the job, it could help you stand out from your competition.

    - Prepare answers to standardised interview questions. Make sure they highlight your skills set plus any previous experience. Following the 'STAR' approach can be very useful in this situation, structure your answers according to the following model:

    Situation - Describe a previous situation you were involved in

    Task - The task you had at hand

    Action - how your skills set and attributes solved the task

    Result - the result you attained from this scenario

  6. Failure to network effectively
    Keeping in touch with not only fellow colleagues, but with previous and potential employers is essential in the world of contracting. The onus of sourcing your own contracts means that your ability to network is crucial. Social media websites such as LinkedIn are tailored towards professional's looking to connect. Build yourself a targeted list of professionals that are key in your industry and build relationships with them.
  7. Poor understanding of the industry
    As a limited company or umbrella company contractor, a lack of commercial awareness can reflect badly on your professional image. Clients want to know they can place trust in their contractors. A strong understanding of your chosen industry can give you greater leverage when it comes to pay rate negotiation.
  8. Failure to build up your skills set effectively

When operating as a limited company or umbrella company contractor, it's important that you maintain and continually improve your skills set to keep up to date with industry changes. Reading up on such changes and participating in online courses are simple ways of doing this, however sometimes it may be worth your while to attend heavily focused training sessions. Remember, increasing your skills can also help to boost your pay rate expectations, lower competitor threats and once again increase your leverage to negotiate on those future contracts.

Remember, as an umbrella company or limited company contractor, being aware of these simple mistakes can mean the difference between more attractive pay rates and securing your next contract.



The ability to negotiate effectively is a key skill for any contractor. It can lead to a noticeable difference in your pay rate. Do your research on industry averages alongside average pay rates for contractors with a similar skill set to yourself and use this as a benchmark.