The nuts and bolts of going out on your own
Setting up a trades business seems at first to be as simple as deciding on a name, registering for tax purposes and spreading the word about your new venture. But if you’re planning on going solo or have recently made the leap into self-employment, you’ll already know it’s not quite so straightforward.
Whatever trade you’re in, there are some business fundamentals to consider first. In this article, we’ll provide you some advice on how to get your business moving in the right direction, right from the start.
For more advice on your specific trade, check out these articles:
- How to start an electrical business
- How to start a plumbing business
- How to start a landscaping business
Your start-up to-do list
- 1. Planning and setup
- Write a business plan
- Get registered
- Qualifications & training
- 2. Financials & forecasting
- Work out what to charge
- Cash-flow calculations
- 3. Get more work by marketing
- Business name & website
- Market research
- Marketing tools
- 4. Streamline systems & admin
- Accounting software
- 5. Industry associations
1. Planning and setup
One of the hardest parts of running a trade business is getting started. You probably have a picture of your future business in mind, but you’re starting fresh and likely without experience. So before you come up with a witty name, fancy logo or catchy slogan, take a step back and think about why you’re starting the business in the first place.
- Do you want to be your own boss, grow the business, and reap the rewards?
- Do you want flexible working hours so you have more time for family or hobbies?
- Do you want to make a difference by helping your local community?
Maybe it’s a combination of all three. Whatever your end-goal, getting clear on your motivations will give you and your business essential purpose and direction.
Write a business plan
So you’re dead set on starting your trade business. Congratulations!
Now it’s time for planning.
The more comprehensive your business plan the better, but comprehensive doesn’t mean long. Keep it simple, straightforward, and easy-to-read. You’ll want to refer to it a lot in your early days, and that won’t happen if it’s the length of a novel.
A good business plan will move your business forward with financial projections, growth opportunities, marketing strategies, finances and short/medium/long-term goals.
Learn more about writing a business plan, or download the template below.
Time to make it official — the next step is to register your business. Read the points below for information on registering a business in your region.
- In the UK, most people register as sole traders or limited companies.
- For companies in the UK, be prepared to pay at least £12 (depending on company structure).
- In Australia, you’ll need to apply for an Australian Business Number (ABN).
- Registering a company in Australia ranges from $417 - $506 (depending on company type).
- In New Zealand, you’ll register as either a sole trader (Ministry of Business) or a company (NZ Companies Register).
- It costs $10 (+GST) to reserve a company name in NZ and $114.39 (+GST) to apply to incorporate a company.
Qualifications and trainingMake sure your education and training are up to date and you have the qualifications and certifications to operate without supervision. This is critical for health and safety compliance as well as securing clients.
Think about qualifications and training you may need to look at in the future, including:
- Upskilling through training courses.
- Courses to retain or update necessary qualifications.
- Needing to train or qualify staff.
2. Financials and forecasting
You’ve got to spend money to make money, sure. Just don’t go spending more than you need, before you need to. First, sort out the finance for setting up your business. Do you need new tools, vehicles, or other equipment? Make a list and figure out how much money you need to get started. This is called your capital. Now, can you fund the start up capital yourself, or do you need to apply for a small business loan?
Note: Your tools, equipment, and vehicle are assets – not liabilities – which means you can claim the tax back after your first financial year in business.
Planning to approach a bank or lender? They’re going to want to see your complete business plan, so lucky you got that sorted already right?
Many countries offer loans for new small businesses. Check with your local government to see how they can help you out.
- UK - Start Up Loans of £500 to £25,000 are available to start or grow your business.
- AU - Check if you’re eligible for a variety of grants that vary between states.
- NZ - Government grants, advice, and mentoring are available, depending on your business.
Angel investors are people that provide capital for new businesses and startups. They often receive convertible debt in return, or a percentage of ownership. They are often more willing to provide money than traditional lenders.
Get covered by insurance
When starting or running a business it’s essential to prepare for unexpected situations. A business insurance policy will cover your work vehicle/s, equipment and essentials like general liability. You may also want to consider income protection insurance in case you’re forced off work for an extended period.
Do your homework to find a reputable business insurance provider.
Working out what to charge
What you charge for your services can have an effect on not only your bottom line but also on your reputation. Your hourly rate should cover any overhead expenses as well as your target income.
Use Tradify’s Billable Rate Calculator to determine your optimal charge-out rate.
Ensure you’re cash-flow positive
Positive cash flow indicates that your business is adding to its cash reserves, and you can settle debt, invest in new assets and pay yourself a living wage. It’s really important, especially in the early days, that you learn how to forecast your cash flow.
Once you have a clear picture of your cash flow forecast, here are a few ways to improve your cash flow:
- Invoice quickly to get paid on time. “It’s definitely making me money. When I send out an invoice or quote, they look professional. I don’t get phone calls anymore from my regular clients about my invoices – and they’re paid within a couple of days.” - Lee Fisher
- Speed up payments with online credit card payments. “It’s been a game-changer: “Setting up bank payments was always a pain. Now I can take credit card payments, all I need to do is send an invoice and they can pay securely online.” - Dan Seaber-Shinn
3. Get more work by marketing
While a lot of work can come through word of mouth, it can’t be relied upon exclusively.
For more ideas marketing your trade business, download the Tradify Marketing Toolkit for Tradespeople.
Your business name, website, and logo
If you don’t have a name for your business yet, start with your own name, trade, and the location/s you service. Start brainstorming from there. Remember to keep it short, but descriptive. It’ll also be worth checking if the domain name for your business is available.
Finally, create a logo and a website. If you’re as hands on with computers as you are your tools, you can do it yourself. Otherwise, hire an expert. It doesn’t have to cost the earth either, you can find freelance IT professionals on sites like Upwork.
DIY website builders:
Identify your ideal customers
You can ask everyone you know if they need a pipe unclogged or new wiring installed, but to create a network of repeat customers you first need to establish your target market. Then, figure out exactly what those people want from you. Is one of your services in more demand than the other? Focus on what your ideal customer wants.
Reach your target market with the right marketing tools
The number of things you can do to market your trades business can be overwhelming. Rather than dipping your fingers in too many buckets, take what you know about your ideal customers, and use marketing tools that speak directly to them. Test and measure what’s effective in winning new work.
Here are some suggestions:
- Google My Business: Essential if you want people to find your business on Google.
- Instagram: Build connections with friends, supporters, and past clients.
- Facebook: Broaden your reach, engage with potential customers, drive enquiries and promote your business.
- YouTube: If you’re confident in front of the camera, showcase your work and personality through video.
- Photography: Good photography can help set you apart from your competition by effectively showcasing you, your business and your work..
- Reviews: A massive 72% of people are likely to trust a local business based on a positive online review. So, always ask for a review once you’ve finished a job – and then share it.
Capture new enquiries
Setting up a system to capture and manage new enquiries will help you keep track of new leads. With potential customers able to contact you through your website, text, phone, email or your social media channels, you’ll want a tool that can store all of that information in one place so you can track your progress with each lead.
4. Streamline systems & admin
Advice from trade business owners who’ve gone out on their own is to get your admin under control right from the start. Too many tradespeople spend long nights playing catch-up on paperwork.
Speed up your workflow using job management software, so you can spend as much time as possible on the tools – just like Daniel Simpson: “I learned a few tips and tricks to grow and improve business efficiency. One of the top things was to get job management software.”
Tradify has a number of features that support new business operators:
- Capture and manage new enquiries: “When we get an enquiry, because all of our jobs are scheduled, I find a day when we’re close to where the job is and log it for then – that’s why we’re often booked out three weeks in advance.” says Luke Lange.
- Generate professional quotes: “Quotes are done in half the time. I think I save about five hours a week on admin. That’s time I can be on the job, actually making money, or at home with the family,” says Eddy Kendall.
- Schedule and manage jobs on the go: “…because there is a job management tool in place to manage things, keep things on track and show you where things are,” says Nick Foley.
Sync Tradify with cloud-based accounting software
Managing your books probably isn’t your favourite part of running a trade business. You can make it a lot less painful by using a cloud-based accounting package like Xero, Sage, QuickBooks, or MYOB. You’ll save time while removing double-handling, manual data entry, and human error.
All four accounting options listed above will help you keep track of your tax requirements and your cash flow in real-time. They also integrate with Tradify, so you can manage your suppliers and customers all in one place.
5. Industry associations
We also recommend that you join an industry association. These associations offer knowledge, resources, and ongoing support. It should be a relatively easy process if you have the right training and qualifications.
Here are some links you may find useful:
When you look at all the requirements for setting up a successful trades business, it may not seem like the easiest path to take. And you’re right, it’s not...but it’s not impossible. A better salary and improved work/life balance can be yours if you set up your business for success.
Take a step-by-step approach, tick everything off the list, and leverage technology to make sure you can spend as much billable time on the tools as possible — especially in the early days.