14 Aug 2023
Thinking about setting up on your own?
Whether you’re currently in a larger firm and want to go alone, or you’re new to the industry and want to be your own boss. Having your own trade business can give you the opportunity to make more money, choose your working hours, work with family, and do things the way you want.
But it can be a daunting prospect, and you may even be asking yourself, ‘how can I set up a trade business?’
Below is a guide to things you will need to do, and things to think about when setting up your own trade business.
Ensure you have everything you need to be legally compliant in your trade. If you already have the appropriate qualifications and certificates, make sure you keep on top of any changes in building regulations or legislation, and stay on the right side of the law. Double glazers, by law, should all have a Minimum Technical Competencies certification, which we can help you with.
Create a business plan with a list of everything you expect to spend. Have a clear idea how much you need to make to break even, and when you are likely to turn a profit. If you are taking out a loan to start a contracting business, a bank will expect to see a business plan.
You will need to register your business with HMRC. To do this you will need to decide if you want to register as a sole trader, or as a limited company.
As a sole trader you can keep all business profits after tax, but you are personally responsible for any losses. As a limited company you draw a salary from your business, and you are not personally liable. However, being a limited company is more complicated and you will likely need to hire an accountant.
Do not forget to get VAT registered too.
Becoming a member of an accreditation service such as the CPA gives your customers confidence in what you do. Having an accreditation gives the customer trust that you are reputable, and are backed by insurance should things go wrong.
Being a member also means you are sent up to date information about legislative changes in your trade, so you will not miss anything and have access to ongoing advice. It is invaluable support for your business. CPA members win more business at higher values than those businesses without accreditation.
Make sure you have insurance to cover tools, vans, and liability insurance. This is important to cover yourself and will also be something potential customers look for.
Becoming a member of an association like The CPA gives you access to an Insurance Backed Guarantee (IBG) as well as deposit protection which are absolute must-haves in today's competitive environment. CPA members also have access to in-person support and advice since our advisors are at the end of the phone. And your customers can rest assured they are in safe hands as only vetted tradespeople can obtain membership. You can find out more about becoming a CPA member here.
When buying supplies for your business, consider buying in bulk. Also consider where you buy from, and if you can get a trade account and trade discount.
Invest in quality tools as this will save you money overall.
It is important to have a cash reserve for your business for unforeseen events and circumstances. And do not forget to set aside money from every job to pay your tax bill.
Headed paper and business cards can easily be overlooked in today's tech world. But having your logo and business details on all quotes and invoices makes you look professional and reputable. Set up a business email address and ensure your logo and contact details are in your email signature.
Printing business cards is low cost, and a simple thing to leave with your customers. You could also think about leaflets as promotional material for doorstep drops.
If you do not feel you can create a logo yourself, there are plenty of budding graphic designers out there looking to build their portfolio.
It is important to have the time and money to promote your business. Think about where people are going to look for trades. Set up a business facebook page where you can promote what you do and show off your skills. Join relevant local Facebook groups. Get your name on trade databases. And remember promotion is always important for your trade business, not just when you are starting out.
Hiring an apprentice can be a brilliant time saver. Two pairs of hands mean getting more done in less time. It is about creating efficiency. For example, they can be prepping for a job whilst you are getting materials.
Whilst your main job will be the ‘doing,’ it is important to stay on top of administrative jobs such as invoicing and quoting. Keeping track of your finances will save you a huge headache when it is time to do your self assessment tax return. Set aside a few hours each week specifically for paperwork and make this time non-negotiable.
Talk to other trade business owners. Build your network. What better source for advice for new trade business owners than those that are doing it already?
Doing all the above will put you in a great starting position to build a good reputation for your business. Your reputation will be based on the quality of work you produce, your communication with your customers, fair pricing, and timeliness.
70% of trade jobs come through word-of-mouth recommendations, so having a good reputation is essential for your business to succeed!