From Business to Business: Building boats
From Business to Business is a new series that will profile how entrepreneurial contractors are moving into new business areas whilst the market remains empty for their traditional skills. In the first of the series, UKTECH interviews an experienced email server specialist who has turned his attentions to boat building, 400 miles from home.
Alec Jordan had been an IT contractor for 13 years. He was proficient in rolling out MS Exchange email systems for large clients across the country. He lives in Chancellor Gordon Brown's constituency, Fife, and as well as lobbying the Government over IR35 in Westminster, had also personally presented his case to the Chancellor in one of his open surgeries.
Alec recounted the meeting.
He said: "Gordon Brown spent almost the whole time reading a totally unrelated fax about the European Union while I was telling him how my business was going down the tubes because of IR35; he didn't seem the least bit concerned. I explained to him the fact that I was a real business and was not just working for the same client all the time, but had a number of different clients and demonstrated that not everyone was on the fantastic contract rates he had been led to believe we were all on. I showed him an advertisement from Jobserve with a rate of £7 per hour, and how the least well-off contractors were going to be affected most. I felt that the point had hit home, but the Chancellor did not appear to care.
"I was absolutely disgusted that as an MP, Mr Brown could have cared so little about my case and of the plight of contractors generally. As I left, he remarked that there had been consultation regarding IR35, and I don't think that I was imagining there was a smirk on his face as he said it. I replied he knew very well that the consultation with contractors had been a sham, and his face seemed to say: 'Well, it was worth trying'.
"He had been caught out and he knew it."
Alec has since joined a growing number of contractors who have continued the entrepreneurial spirit that spurred them to set up as limited companies in the first place, but in new professions hopefully less likely to be hounded by the Inland Revenue or affected so severely by the economic downturn.
Alec Jordan: "I'm going self-employed in a manner where there won't be any questions over my status"
He explained: "I'll be taking a local non-IT job while I sort my finances out, then I'm intending to do a nine-month boat-building course in Dorset, finishing in December 2003.
"I'm going self-employed in a manner where there won't be any questions over my status - I'll carry my own toolbox with me that the Inland Revenue can physically see rather than the toolbox of skills I used to carry around in my head as an IT contractor.
"Finding work has been almost impossible over the last year. My most recent project, an MS Exchange consultancy contract only lasted six weeks. The one before that was an MS Exchange 5/5 contract that lasted for two and a half months and ended last Christmas.
"I took out about £10,000 in a loan to pay for training in the US last April to update my skills sets for MS Exchange 2000 and Active Directory, but I've had only one short contract off the back of it.
"I'm fed up with having to re-skill every three to four years. It is a total myth that contractors don't have to re-skill themselves regularly to stay competitive. I've worked on Novell Groupwise, Lotus cc:Mail, Lotus Notes, MS Exchange 5.5, and Exchange 2000 email systems since I specialised in 1992. Learning how each new system works is essential to avoid getting left behind. Now I will have to sell some property and move out of my house to rent it out and keep things ticking over.
"Now, I'll close down my company and leave the IT industry for good once this has all been wrapped up. Even if things pick back up again in the marketplace, I wouldn't return to it after all of this."
Alec said the ongoing economic downturn has been the biggest single problem for his business.
He continued: "Rates cuts have hit hard and clients are taking advantage of the fact there is precious little work for contractors at the moment. When there's oversupply, the prices go down: what more evidence does the Government want that we are real businesses trading in a real marketplace! It goes to show how different we are from permanent workers."
Alec also admitted his geographical location had become a major factor in being able to find work since lower rates had meant unworkable profit margins for his company if he had to travel large distances.
He said: "I can't compete with contractors in London because I don't live there. When rates were good I could afford to travel to work anywhere, but this is simply not the case in the current climate. The highest rate I have ever worked for was £1,500 per week, which was only for a short time but I could cover my expenses and travel where the work was."
If the ongoing economic or regulatory conditions mean you have swapped your contracting business for something entirely different, we want to hear from you. We are looking at entrepreneurial contractors who have moved from one business to another and have demonstrated that, far from being 'disguised employees', they have taken the risks involved in earning the rewards of running their own business email UKTECH
The exact number of highly skilled contractors in the IT sector who have left to start new businesses in the UK and abroad is still not known, though a recent UKTECH poll showed that the number of contractors who have closed their businesses to go permanent has doubled since June 2000.
Alec concluded: "I would definitely have stayed in business up until a month ago and continued to put my energies into growing it, but now I have different ideas. I had plans to work with other local businesses and employ other people to help me operate it. Everyone I know in the (IT) business is struggling badly at the moment, apart from the likes of EDS on Government contracts, which they usually foul up in any case. I am too tired with the IT business and Government interference to carry on.
"If there's one message I would want to pass across on my way out it would be: "Keep out of what you don't understand!
"There are an awful lot of unhappy people out there."