Big Question

[try-one]

Ok, So...aparently being a contractor is a lifestyle desicion, you do it for the freedom and flexibility....
My question is directed to those contractors that have crossed the 50-55 years old line....How do you see your prospects?
We know young guys get awful salaries as permies and contractors; do you really see significant salaries due to your experience?

Why I'm asking? easy, my current job (permie) is a senior one, and I know that with time I will have access to more senior roles where salaries are guarenateed to increase, is it similar in the contract world?
Are many of you planning to go from contracting to permie once you cross the 50-55 line? is it possible?

I'm planning my long term strategy and I want to know more about the experiences other people had with their retirement....based on the feedback, they don't have that much additional revenue due to the 4-5 months off work every year.....
thanks
Try-One

[oraclesmith]

I reckon interim management has got to be a good bet for people with good management experience and some consulting/contracting mixed in. It's got the freedoms associated with consultancy but the status/work content associated with a senior permie job such as an IT Director. That's were I'm headed anyhow - that's if I can't develop my limited company enough so that I have numerous consultants/staff working for me and I can just be Director !

[try-one]

Oracle,
That was one of my plans....starting as a contractor, building the brand/relationship/name and then hiring people to work for me.....but, is it even possible? junior people won't have the experience/expertise....senior people would want the brand/money associated with larger companies?
My key asset is using my brother in law and wife (they have a background on the same market as I work and they could be trusted emplyees with decent salaries).....

I'm really planning to change a senior role on IT ...100K for a contract role....500 day?, save on taxes, build reputation, work 11 months, save money.....cash out early....

[oraclesmith]

Of course it's possible - there are lots of smaller consultancies out there as well as the big ones. It just might take a while to achieve.

If you know some potential employees/partners and you're able to get sales leads on the strength of your personal network or reputation (or because you service a niche area) then you're halfway there. Once you start getting work for yourself and your team, you can bring more junior staff in under your top team. The big move is to step out and just do sales, relying on your team to make you the profits which fund your Directors remuneration. Don't expect to get your £100k in year one though !

An example is Rocela, a fast growing consultancy formed by a group of former Oracle managers who based their business on knowing Oracle licensing inside out.

The interim management idea is probably best done on your own as it depends heavily on your personal qualities.

[malvolio]

I'm planning my long term strategy and I want to know more about the experiences other people had with their retirement....based on the feedback, they don't have that much additional revenue due to the 4-5 months off work every year.....
thanks
Try-One

Big Question in return - what have you got to sell? At a senior level, you will be competing with people like me with a 10-15 year record of success in delivering solutions to business problems, working as an independent consultant and diving into a whole range of environments and poltical regimes. Interim management is actually harder, since you will be on your own.

Not saying it can't be done, but if you want to walk away from a solid career, you had better be bloody sure you know what you are doing. So impress me, why should I give you a £240m programme to play with?

[try-one]

Malvolio,
In the past 11 years of working in my field I have undertaken more than 600 projects worldwide; I have worked as a subcontractor for the big four, managed big projects and proven to customers that my solutions are relevant. I'm a permie...just for 1.5 years, but for a large integrator....the previous 10 years I have been a director for my own company (founded in another country)....I failed to transfer my company to the UK, plain and simple, I trusted a gentleman's agreement with several UK companies and they never delivered....I flopped....but I can start again...or I can just save some money and retire to the caribean....

I have writen a book, more than 12 white papers and more than 17 magazine articles....I know my stuff.

But, again, is it part of the UK employment culture to join tiny consultancies? If you become a contractor on a niche area, your customers are very satisfied with delivery, would you be able to bring more people onboard and grow your company? (Wouldn't they be looking to become self employed themselves????)

Much better.....are you stuck with the 500 pounds a day payment even if you are 50 and you have 30 years of experience?????
or are you all 45-50-55 contractors moving back to permie???
You have said you haven't really got that much money compared to permies (due to TAXES, HOLIDAYS, LIFESTYLE, SEARCHING FOR NEW CONTRACTS)....
so what is the future like? you are already there or quickly getting there.......

[malvolio]

Hmmm... That doesn't really answer the question posed.

Nevertheless, the problem is getting work, not getting income. 99% of freelance work in the UK is via some kind of intermediary and 90% of that is via jumped-up double glazing salesmen pretending to be recruitment consultants. If you have the skills to build a network of contacts or bring your existing network to bear then you can probably get direct work through board-level contacts and build from there. Alternatively if you are a good salesman with a good product, you might be able to create your own niche. Reality is, the market is very hard to get into, which is why most take the line of least resistance and hang on to the coat-tails of the existing small businesses who have the work but not the resources. It's all about netowrking.

As for income, yes you can make a lot of gross, but with the tax regime in the UK at present, hanging on to it is difficult - around 70% for a higher-rate taxpayer is about it. Personally I'm comfortable and money is not the motivator, but the average for someone seriously good working for themselves is around £600-£700 unless you have a niche skill. Compared to the average senior manager at around £80k plus package and bonus and there really isn't a lot of difference - except that anyone over 45 in a technical industry is not going to be offered, or even considered for, a permie role unless they are already doing it for someone else as a permie.

And by the way:

In the past 11 years of working in my field I have undertaken more than 600 projects worldwide;

so that's either a typo or an average one project a week.... Sorry, not impressed.

[oraclesmith]

To build a small consultancy you might have to take a few risks :- for example offering shares in the company to your top team so they share in the profits they make for you. Or offering well-paid permanent employment, which is a risk if you haven't secured large contracts yet.

What people do in their 50's has surely got more to do with personal circumstances and earning potential than any standard pattern. For example, someone who has been working for 30 years in a dying programming language may well find it more and more difficult to get a continuous stream of short term contracts so they may decide to go permie to update skills and get some stability. Conversely, a consultant who has done well out of the contract market may decide that he can afford the risk and challenge of a business startup.

If you have a well paying niche and you are highly skilled then you should be able to market your company and get sales direct (no agents). Then you can obtain larger projects from these clients where you bring in assistants/other professionals either employees or sub-contracted. They don't have to be about your niche particularly, they can be general projects centered on your niche. Build it from there. It sounds like you might have to establish yourself in your niche in the UK first though. You also have to be a good people person - if not you'd be better off staying 'single'. In my opinion.

600 projects in 11 years ? That's one a week. They must be tiny projects.

Also £500 a day is a pretty good contract rate, but you can charge more than this for genuine consultancy providing you and your staff will handle variable, short or fixed price work in your expert field. Be prepared to invest lots of time and money in marketing and pre-sales. But if your consultancy only averages 50% utilisation on a £1000 a day fee, then you're back to your £500 a day contract rate!

A word about interim - it doesn't have to be board level in FTSE 100 companies you know ! There are several interim management consultancies who provide interim managers/directors to medium to large firms, local authorities, charities, colleges etc. Some interims do this more for the challenge and variety than the money and it's the sort of role where a 50-60 year old wouldn't look out of place.

[try-one]

Yes, In my previous company I had a team of consultants and I lead one project a week average (18 people working on testing).....made some mistakes, gamble a little and all went down the drains (lesson learned, got the T-shirt...) I was not a one man show, I had people working for me in three countries, growing 70% revenues each year, controlling several projects at the same time.
I'm not trying to impress anyone; I have a tangible portfolio that I can use for any interviews.

Thank you for the feedback, this is helping my clarify some ideas about OP experiences....each case is different, each market would evolve differently, but comments always help.


The main issue with creating a consultancy company (been there) is growing; people are the only asset, and they leave too easily, the only thing the want is money, competitors will buy your team easily (IBM, PWC, KPMG) so you can loose your assets....the ammount of effort to keep the company going is huge.....but a contractor working 10 months with GBP 550 a month and a very tax efficient model can save and go!

As an entrepreneur you will invest every pound back into your company....they one day something fails and you loose your investment....if you are a one-man-show it will be safer...smaller returns and savings...but not all of us need millions to be happy.

[oraclesmith]

Maybe the big consultancies could buy your team. But the one thing they can't buy easily is.....you. Your contacts, your personality, your leadership skills and your vision. People follow people, not money. You can't just pull any bunch of people together to be your staff - it doesn't work like that. People will only be 'bought' if they think they'll get a better all round deal with someone else. Also..... if a big consultancy wants to buy you out, you must be on to a good thing. There are many startups nowadays who's only business plan is to build something that Microsoft wants to buy !

As to your original question, it might be possible to go back to permanent employment in your 50's after a period of contracting, but in my opinion it will depend on your attitude, skill-set and ability to evolve from maybe a technical discipline into a senior manager or an internal consultant role. I believe many firms won't take on ex-contractors because they think they'll always have their eye on leaving for another lucrative contract once they've upgraded their skills (at the firms expense).

As to whether you will be better off as a permie or contractor, you just need to do the maths. Look at the expected utilisation for your particular niche by viewing the job boards and looking for matches. Remember to factor in pension requirements, expected retirement date, holiday requirements, personal circumstances (need to support dependants, need for job security, regular hours, lifestyle etc), cost of keeping your skills updated, the usual stuff.