Starting out in contracting can be challenging, but we’re here to help with some practical tips and points to keep in mind, making the transition into this new way of working a little smoother.
Define and focus on your niche: A great first step is to define your offering clearly to understand your competitive edge. Defining your niche early on helps you to know how and where to market yourself to attract the right clients and work that seamlessly matches your skills and experience.
The benefit of niching is that it provides the opportunity to be more distinct amongst your competitors, giving you an edge over competitors offering more generalist services.
Build and showcase your portfolio: now that you have a clear view of your niche, consider bringing this to life through a professional online presence. Much like a digital storefront, this will help you sell your expertise and offering by showcasing successful past projects and even sharing customer testimonials.
Collaboration tools to invest in: with today’s rapid AI advancements, investing in a set of tools to help you collaborate and work in the most efficient way is a must. While these tools will be dependent on your niche, connecting with a community around these can help you quickly identify which tools work best for you and your clients.
For example, author and entrepreneur Chris Donnelly has built a fantastic community where he regularly shares insightful tips and tools. Check out one of his posts where he shared 12 free websites to bookmark.
In addition, there are a number of freemium platforms to check out to help streamline some of the more admin-intensive parts of working as a contractor, here are some to get you started:
- Trello – a project management tool to help organise ideas, lists, and workflows with simple boards.
- Canva – a user-friendly graphic design platform that supports templated and custom design for content creation.
- Otter AI – a useful note-taking tool.
- Notion – a handy way to stay connected with your team members, workflows, and ideas.
- Wave – an accounting tool to support billing and invoicing.
- Toggl Track – a great way to track time across projects.
- 1Password – a useful tool for secure password management.
Set your rates: typically contractors charge a higher rate per hour than their permanent peers. While this seems advantageous, it’s key to remember that paid benefits, such as sick leave or holiday pay (received by permanent staff) are not provisioned for contractors. Being self-employed also means registering for provisional tax and ensuring you’re accounting for tax payments throughout the year across your projects.
Other points to keep in mind when setting your rates and establishing your rate card, include considering:
Your level of experience.
The complexity of the work requirement for the budget and timeline.
Local market demand.
Level of project management involved in servicing the client and project.
Tools such as adtalent or Glassdoor salary calculator are great starting points to get a sense of the standard industry rate benchmarks.
Legal and financial considerations: South African independent contractors are required to set up a formal business structure. There are a few popular models to consider, each with its respective pros and cons, be sure to research which business structure best suits your needs:
- Sole proprietorship – ideal for individual contractors but offers no legal separation between you and the business.
- Partnership – similar to a sole proprietorship but involves two or more people.
- Private company – a legal entity that’s separate from you as an individual.
Once you’re set up, it’s important to prioritise the security of your hard-earned income. As an independent contractor in South Africa, you are responsible for managing your own invoices and payment collection. This means you’ll need to invoice each client separately and accept payments through their preferred method.
There are a variety of payment collection methods available, but be sure to consider international and domestic implications. If you work with international clients and transactions, it’s worth investigating PayPal and Wise. While for more local options consider looking at services like Payfast and Ozow.
Contracts and agreements: setting up a clear contractual agreement with your clients for each project is essential. Be explicit about your service level along with details such as project expectations, timelines, payment terms, and agreed deliverables. This goes a long way to protect both parties and ensure mutual understanding of the project scope.
There are a number of free templates available online you could customise for your own needs, or if you’re looking for something a little more formalised, connecting with a legal advisor to assist in generating one for you is a great option to consider.
Continue learning to grow: ongoing investment in your professional development is a great way to stay ahead of the curve and stand apart from your competitors. Staying current and continuously improving your skills is a great way to better your offering as well as attract a variety of clients.
There are a number of free courses and qualifications options out there, popular platforms such as Coursera, Udemy, or Google Courses make acquiring new skills not only affordable and easy, but also allow you to do so at your own pace.
Remember, being an independent contractor isn’t just about the work you do, it’s about the resources you use and the connections you cultivate along the way.