Reply to: Market research

[Alan @ BroomeAffinity]

@BobHarper: I've run accounting firms in both "traditional" and contractor markets. What I can tell you with certainty is that the Adding Value model which is en vogue in the traditional markets will not work with contractors. Generally (and I accept there are exceptions) all the contractor is interested is in getting the compliance done and keeping the tax bills low. Business development, IT, coaching etc are the traditional sell-ups that accountants provide and they are irrelevant or obsolete to the contractor market. IMO. If you are in doubt, ask Simon Dolan or anyone from Nixon Williams.

Compliance is the bread and butter of an accountant in this sector and if you can get the systems right you can do very nicely thank you without diversifying. I estimate that each client returns c£700 per year profit on compliance alone so it doesn't take many clients to make a very nice living. But if you want to augment that further then pairing up with an IFA can also be fruitful.

It looks to me like you are trying to bring something to the market that the market doesn't want.

[cojak]

WSES, I've had a website for years and the only mail I get from it is spam.

And don't forget, you're talking to IT contractors who (generally) know how to use the web and get advice for nothing (although it doesn't seem like it when reading some of the 1st post questions on these boards ).

However if you can offer something not easily found this way - go for it...

[SueEllen]

@Malvolio - is there any value in contractors setting up a Website, explaining this and helping businesses get direct access to talent?

Bob

Lots of contractors have websites. However most of the websites aren't visited.

Also there are people around who offer free social media training to other freelancers/small businesses even though this isn't their main area of work. I haven't met an accountant who offered it though.

You have to go and physically talk to people to get work which if you do something that only big businesses use is a problem. (I don't by the way.)

[Bob Harper]

Joint marketing/education

@Malvolio - is there any value in contractors setting up a Website, explaining this and helping businesses get direct access to talent?

Bob

[malvolio]

Before I propose anything I thought I'd do some research.

@Malvolio - seems like the agencies really control the market.

Bob

Ignoring MF's interjections, yes they do. Most clients have been sold the idea that the agencies have these stockpiles of skilled individuals available for work at any one time*, that managing myriad invoices is expensive and time-consuming (it isn't and most companies manage it with their other small suppliers anyway...), that the only way to take on temporary staff is via HR - but making sure you don't accidentally give them any employee rights (not that they want them in the first place) - and that the agencies manage the contractors on your behalf. Noe of which is actually true

The agency business model is strcitly commercial and built on best ROI, so the quicker you get your candidates in the better, the more you can block your competitors the better and less cost you incur doing so the better. Hence using inexperienced knuckleheads and word-search algorithms to vet CVs, selling one-size-fits-all contracts in convenient three month chunks and using double-glazing sales techniques on what are usually very uniquely skilled people.

Agencies control well over 80% of the jobs market, making it very difficult for a one-man contractor to market their skills effectively; there are many tales on this board about people getting direct work and being routed through an agency for no obvious commercial reason other than HR don't want the hassle (not that there is any). And that makes it very hard for someone like me to find work and build a business in a niche that will almost certainly dry up in a year or two, since I can't compete with the offshore bodyshops who are taking up more and more of the steady state grunt work. Hence it's just as profitable for me to stay small and efficient. I mainly work for the big consultancies who charge me on at at anything up to 300% markups: the clients would save a huge amount by taking me directly, but they don't, they're frightened off by the agency FUD on taxation liablilites and employement rights.


*The reality being, of couse, than almost all jobs get Broadbeaned across the jobs board and the ifrst three CVs that match the reuiqment are it.

[MarillionFan]

Sorry, can't let that go unchallenged...

While there are a lot of "contractors" filling seats on a temporary basis, that's because that's what the client wants to have; permies are expensive and have to be fed and wartered when the work dries up, contractors don't.

Also, I'm not the only one out there with pehaps 30 years expereince in the whole spectrum of my profession who can add serious value to an organsiation but who either doesn't want to be subject to the ministrations of corporate minnows (most of my supposed managers are way less experienced than I am) and Human Remains teams, or who are deemed too old and frail to even be considered for permanent emplyement. I work as a freelance because I choose to: I may look like a BoS pretend permie to the inexpert eye, but I'm a hell of a long way away from being one.

As for the rest, I agree: you can be a freelance one man band with no asprirations to be another Branson - and that's not a bad thing.

Why did you challenge that? You agreed with him.

Regardless of your 'opinion' of yourself you are still a cog in the corporate wheel.

It would be interesting to know of those who 'contract' who have ever gone any further than just employing themselves or spouses.

[malvolio]

Without wanting to sound derogatory, a very large proportion of freelancers/contractors are "bums on seats" within the large employers - they are "employees" in reality, but are deemed "self employed" for tax/employment legislation purposes. Likewise their accountancy needs are different.
.

Sorry, can't let that go unchallenged...

While there are a lot of "contractors" filling seats on a temporary basis, that's because that's what the client wants to have; permies are expensive and have to be fed and wartered when the work dries up, contractors don't.

Also, I'm not the only one out there with pehaps 30 years expereince in the whole spectrum of my profession who can add serious value to an organsiation but who either doesn't want to be subject to the ministrations of corporate minnows (most of my supposed managers are way less experienced than I am) and Human Remains teams, or who are deemed too old and frail to even be considered for permanent emplyement. I work as a freelance because I choose to: I may look like a BoS pretend permie to the inexpert eye, but I'm a hell of a long way away from being one.

As for the rest, I agree: you can be a freelance one man band with no asprirations to be another Branson - and that's not a bad thing.

[Bob Harper]

Research

Originally Posted by MarrilionFan - As opposed to asking questions which I believe are slightly disingenuous why not outline in detail what you are proposing if of course you are not of the top drawer ilk.

Before I propose anything I thought I'd do some research.

@Malvolio - seems like the agencies really control the market.

Bob

[MarillionFan]

post above

WWS.

The vast majority of contractors are disguised employees trying to eek out a higher return than permanent employees. Only a handful go on to do become greater than themselves or implement Plan B's of any note.

As opposed to asking questions which I believe are slightly disingenuous why not outline in detail what you are proposing if of course you are not of the top drawer ilk.

[malvolio]

Any ideas how to identify "entrepreneurial" contractors/freelancers? My first thought is to produce some guide/resource for them covering more than the basic stuff - what do you think?

If we knew that, life would be much simpler...

Start from the PCG website, Resources, Market Research. But one set of numbers might be illuminating - the average spend by PCG members (who are probably better informed than the average) on accountancy services is £1500, for insurance is £100 and for marketing less than £100.

With contractors who supply specialist knowledge/expertise is there an opportunity to help them create more profit with more sophisticated pricing strategies?

Doubt it. Ours is the only market where you have to set the price before knowing the job to be done. You need to understand the stranglehold the current commoditised agency model has on the market; it is the single biggest inhibitor out there. It's also worth £27bn a year, so is not going to be easily diverted. Then again, on the current gig my pre-tax profit is around 94%, the one before that it was 83% but for the four months in between them I wasn't earning anything.

As I said, you need to do some reading. It's way more complex than you seem to think

[philip@wellwoodhoyle]

Bob, I think you'll find that freelancers/contractors are in general terms, a very different beast to your more typical small business entreprenneur.

Without wanting to sound derogatory, a very large proportion of freelancers/contractors are "bums on seats" within the large employers - they are "employees" in reality, but are deemed "self employed" for tax/employment legislation purposes. Likewise their accountancy needs are different.

When I worked in a "normal" accountancy practice, we hated one-man freelancer companies because they were different - they didn't fit into our checklists and work programmes, etc., often because of poor record keeping, trying to claim for things they couldn't etc.

When I started my own practice, I accidentally fell into becomming a contractor specialist, and as such have designed strategies for them which make their and my life easier with simple systems and structures.

I've had hundreds of contractor/freelancer clients, and very few (literally only a handful) have gone onto becoming a "proper business" - most stray between permanent jobs and freelance works. They are employees at heart and only stray into self employment either for tax reasons, or because they have to due to the agency requirements. The work they do isn't much different to that of an employee. Many are so disinterested in "business" that they can't even do their own invoicing or book-keeping or write up their own expenses claims - they are happy to pay for others to do this for them. However much help and encouragement, these are the kind of people that are unlikely to become "true" entreprenneurs.

Your challenge will be finding ways to identify the freelancers/contractors who really have what it takes to be entreprenneurs.

Don't be misguided into thinking that because there are hundreds of thousands of "self employed" freelancers/contractors, you are looking at a pool of hundreds of thousands potential entreprenneurs. You're not. You're looking at pool of workers, just like looking into a car factory, or a hospital, or a warehouse - some will have the ability and inclination to become entreprenneurs, many/most won't.

And I have to say again, that none of what I've said is meant to be detrimental to freelancers/contractors - I'm drawing the distinction between "entreprenneurs" and mere workers. Being "in business" doesn't make someone an entreprenneur.

[Bob Harper]

Thanks again.

@MarillionFan - thanks.

@Cojak - I accept a traditional accountant will not be able to help you find your next contract. However, what about if an accountant research this topic or even paid a specialist to produce some video training about using LinkedIn to win contracts?

@Malvolio - thanks and interesting to split the market like this.

Any ideas how to identify "entrepreneurial" contractors/freelancers? My first thought is to produce some guide/resource for them covering more than the basic stuff - what do you think?

With contractors who supply specialist knowledge/expertise is there an opportunity to help them create more profit with more sophisticated pricing strategies?

Bob

[malvolio]

I've heard that many contractors are looking for cheap.

Great that you are open minded enough to listen, what do you think are the important non accounts/tax issues facing contractors/freelancers?

Bob

Talk to the oracle - have a good look through www.pcg.org.uk and see the size of the problems we face.

Also there are two kinds of freelance contractors - those who supply specialist knowledge and/or delivery expertise and those who want to grow into some kind of small bsuiness, such as a specialist bureau service or website design business. You're after the latter group, the former won't be that interested.

[cojak]

Great that you are open minded enough to listen, what do you think are the important non accounts/tax issues facing contractors/freelancers?

Bob

Finding the next contract. And training from an accountant probably won't sort that one out.

[MarillionFan]

I've heard that many contractors are looking for cheap.

Great that you are open minded enough to listen, what do you think are the important non accounts/tax issues facing contractors/freelancers?

Bob

The difference between services may or may not include bookkeeping and either have the cost of your tax return included or not. That's pretty much it.