As a carpenter, rooftop contractor, electrician, or any trade business owner for that matter, you’re probably used to being “hands-on.” Your work relies heavily on commission-based work and you know your job and expectations inside out. While working for others is safe and reliable—not to mention you’re stellar at what you do—you’re ready to branch out. You clearly already have the experience, connections, tools, and training.
So, what’s next?
Building a small trade business isn’t as smooth-sailing as you may think. However, what is in your favour is that construction isn’t going anywhere. Though it can be seen as a high-risk industry, there are ways that you can plan for and achieve a successful trade business.
Consider these 4 tips when making the big move from employee to starting a trade business:
1. Focus on planning—starting with a business plan
The very first step to starting a trade business, or any business really, is to develop a business plan.
The U.S. Small Business Administration provides solid tips to developing your first trade business plan, which essentially serves as the building blocks of your business.
The key components of a business plan are:
Your executive summary should summarize your company’s mission statement, basic information about the leadership team, employees, location, and your product or service. If your goal is to achieve funding/financing, then be sure to provide your company’s financial information and high-level growth plans—both short and long term.
Include a detailed description of your company. Detail the problems that your company solves (or plans to solve), as well as any competitive advantages.
Conducting research on industry and market trends is key. Know your competitors in the trade business industry as well as any prospective competitors who are competing for the same clients as you will be.
Organization and Management
Detail how your business will be structured and who will run it.
Service or Product
A description of what service you offer or what product you will sell.
Marketing and Sales
This section represents both your marketing and sales strategy. It defines how you plan to attract and retain customers.
The more “specialized” your skills or “targeted” your niche is, the more profitable you can be in the long run. Honing in on these specific skills and niches can also help give you a competitive edge against your competitors.
Include information on balance sheets, income statements, and cash flow statements for the past three to five years. If you’re just starting your business and have no statements to include, don’t forget to list any collateral you could put against a loan.
Appendices (if any)
Include any supporting documentation for your trade business. These include reference letters, credit histories, product patents, licenses, permits, and any other documents applicable to your trade business.
Find out more on how to get started on developing a bookkeeping business plan for your business.
2. Focus on building reputation at first
Business development and the ability to acquire new business all comes down to reputation in the early days. Whether you’re prospecting for new clients for your trade business, or simply looking to garner more visibility around your brand, you need to earn the reputation in order for clients to seek you out. Remember to work hard, but keep it consistent.
💡 Trade business tip
One way to gain visibility on your brand and make it appealing to potential customers is to build relationships with early clients and with the media. According to Gemma Godfrey, founder and chief executive of Moola, “home in on what your target audience reads and watches. Identify the key journalists and producers, then reach out with stories about your brand that tie into their interests, with a personal note.” In the trade business world, one way to do this is get in touch with your local media that produces content regularly on general contractor news. Alternatively, Fieldlens sums up a range of resources for general contractor news. Subscribe to one and get in touch with them to build those relationships.
3. Stock up on tools!
Investing in solid tools is a key investment that you don’t want to neglect when starting your business—no matter which trade. By getting the best ones available, you can become the best trade professional possible in order to provide great work for your clients.
Be sure to conduct research. The data collected can inform your cost/benefit analysis so that you make sure you’re also getting “the best bang for your buck.”
4. Get insured to protect your trade business
Starting any small business comes with risks, but especially working in construction which, at times, can be seen as a high-risk industry. You’ll want to cover your assets with the appropriate insurance protection.
Areas that you should get insured include:
Injuring others external to your trade business: Protecting your trade business if someone that’s not an employee gets hurt as a result of your business
Property damage: If someone’s property is damaged as a result of your business or services.
Employees: As your trade business grows, so will the need to grow your team. If you have employees, you’ll need to obtain workers compensation insurance. In the United States, workers compensation insurance is required by law. If you don’t have it on-hand, you can receive hefty fines or worse—criminal penalties for not carrying it.