Starting a trades business can be fulfilling if you deeply care about your profession and intend to build the rest of your career around it. Learning a trade and pursuing a skill has a lot of benefits for young people who are exploring career options.
Being an electrician, tiler, plumber, decorator, or anything else that’s considered a ‘trade’ is lucrative – and often tradesmen (or women) are self-employed so they get to be really flexible with when they work. There’s no shortage of work.
Like any other business, starting a trades business requires preparation, registration of business and getting the right documentation to back your profession and legitimacy. Laying the groundwork is simple if you have a solid plan and stick to it.
Do you need a license?
Going from an employee to self-employed or business owner can be extremely rewarding, but there are several things you’ll need to do before you are up and running.
One of your first jobs should be to find out what licenses (if any) you require, and to ensure you are eligible for that license. You can usually find more specific licensing information through your relevant government website. On their website, you’ll find a comprehensive list of licensing requirements for every trade – from bricklaying to wet plastering.
Which legal structure is best for you?
A business structure refers to how you intend to run your business. The popular ones include:
- Sole trader: a single individual responsible for the business.
- Company: a legal entity distinct from its shareholders.
- Partnership: a group of people or entities operating a business together.
Whichever you choose, you will have to register your business activity. Operating as a sole trader is the simplest and cheapest legal business structure, and is arguably the most popular among tradesmen and women. Find out, the pros and cons concerning things such as taxation. Get advice from a professional if you are not sure yet.
Managing your finances
As a business owner, you will be responsible for your personal and business finances. You will have to Keep consistent and accurate records of your transactions, income, and expenses. This will help you get a clear view of your cash flow.
Many tradesmen and women do little in terms of marketing. If you work directly with contractors you know as a subcontractor, you probably won’t have to market your services.
If on the other hand, you’re chasing direct business from residential and business clients, then you definitely need to put some effort into marketing. Local trade directories and job sites are quite an obvious place to start advertising your trade business.
As a trade contractor business, your business depends on the contracts you acquire and the future clients you attract and keep. Examine all the details necessary to keep your business rolling, including how you price your services to the tools you need to work and supplies you buy.
At some point, you have to think about growth strategies. If you are happy carrying on as a single-person subcontractor you don’t have to worry about getting hundreds of customers you can’t manage. But if you want to grow into a genuine business with a team of tradies working for you, think about expansion options.
As a self-employed tradesman or even when you register a company, you’ll be responsible for all of your actions, as well as those of anyone you employ. It pays to consider insurance.