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Tradie Going Into Business? Here's 10 Useful Tips To Get You Started

Starting a business can be daunting, especially for tradies who are used to working on the tools. But with our 10 tips, you'll be well on your way to success.

RightWay

Mar 14, 2023

Going out on your own as a tradie is a big, exciting step. There’s many benefits - not least of all the earnings potential and more control over the direction of your career. Of course, running the show means having to think about more than just the job at hand. If you’re planning to join thousands of other Kiwis in running your own business - whether it’s building, plumbing, working as an electrician, tiling or any other trade - we’ve prepared 10 tips to get you started.

1. Research your competition

There’s a real balance to be struck when it comes to how much you check out what others in the same industry are doing. Too much, and you’ll become distracted from making your business the best it can be. You could mistakenly make the same mistakes that, on the outside, seem to be the ‘done thing’. There are plenty of opportunities for improvement and changing the way things are done for the better. 

On the other hand, we still think it’s important to know what the landscape looks like in your industry and region. Who are the bigger players, who are the solo tradies? How are they reviewed and are there insights from these reviews that present opportunities for you to fill a gap in the market, or improve upon a common gripe customers have? 

You should also research your competition to figure out what they’re changing, and the way in which they charge (i.e. time and materials, flat rates, payment plans etc). This stuff might seem straightforward, but when you’re running the show, you’ll want to know that you understand the intricacies of how other tradies within your discipline get paid. 

When you do some research, also make sure to look for common certifications or selling points on your competition’s websites. These could be clues that there are requirements to meet or points of friction that if removed can improve your chance at turning a lead into a sale. 

Researching your competition needn’t go overboard, but you might want to capture notes on each of your competition and collate in a spreadsheet -this should include details around the price of each, their services, the types of customers they appear to target, their advertised selling points and any insights from those reviews. 

From this research, you will have some valuable insight into ways in which your business could bring something different, improved or more convenient. Many of the most successful Kiwi owned businesses have got to that point not by any grand revolution, but simply making improvements in areas that truly matter for customers. Now you’ve collected some data to help work out what those improvements might be. 

2. Write a basic business plan or outline

A business plan is enough to make even the most seasoned entrepreneurs take a deep breath. A business plan or outline doesn’t need to push you outside your comfort zone, it’s purely there to capture some of your thoughts and feelings about the nature of the business you want to create and what it should achieve. 

The good news is that a business plan doesn’t need to represent a best seller - it should be viewed in this early stage as a practical, functional document that simply sets the course for your journey. 

Most businesses will refine or completely rewrite a business plan a number of times over, as time progresses and the owner’s vision evolves. 

At its core, having a business plan will simply commit your plans into writing, and ideally hold you to account later when you have to make important decisions. 

Here’s just a few elements that you might include in your basic business plan:

  • What does the business exist to do (purpose)?
  • Who is in the business and what do they do (roles)?
  • Define the main customers of the business
  • What are the big pain points or needs the customer has?
  • What is the research or market opportunity that’s been identified making this business a feasible model?
  • What makes this business a preferred option over others in the market?
  • What are the set up costs and steps required to start bringing income?
  • What equipment, vehicle, premises will the business require at different stages?
  • What suppliers will the business rely upon to deliver the job?
  • What are the specific services the business offers to the market?
  • How long do these services take?
  • What skills are required to deliver these services?
  • How much does each service cost (per hour, in total etc)?
  • What is the end financial year goal? Year 1, Year 2, Year 3?
  • How will the business market its services to the target customer?
  • How will the business manage its financial, accounting, tax obligations?
  • Are there any parties, such as board members or coaches that are involved in helping the business realise its success?

These are just some of the questions that can form sections in a business plan. You may also wish to cover things like risks, one-off costs, and expansion plans. 

Ultimately, the business plan should feel like an accurate reflection of the business you have and want to build. The moment your business plan feels like the work of someone else, you’ll lose connection to it, and it becomes redundant. 

If the business plan is done properly, and resonates with exactly what drives you to grow and improve, then this document becomes a foundational element of your success. Combined with a coach or guide who can keep your progress against the plan to account, you should start to see good things happening. 

3. Make use of digital tools for running your business

The digital era we live in is truly remarkable for the 500k small businesses in New Zealand. With every year, technological advancements make their way into more business operations to free up our time to work on things we’d prefer. In the realm of building and trade businesses, there can be a bit of a slow adoption to the benefits of new technologies, with many businesses only recently unlocking the opportunity of a good accounting system like Xero

As a tradie going into business for yourself, you’ll want to think about all the functions of your business and how to best manage these so that your time doesn’t get eaten up with admin. 

Consider the following

Emails and website enquiries: Do you have a reliable email host/customer and devices to field queries? Are there automated replies you could set up to ensure that potential new customers are responded to straight away and not waiting for a reply for too long?

Project management: Are you expecting to have work at multiple sites throughout the week and month? Perhaps look at a good project management software where you can view progress, track tasks and see overlap of jobs across a calendar style view. There are many great tools to help workflow and project management - some of these even integrate into your invoicing software. 

Accounting and invoicing: Excellent software, like Xero, do so much to take the manual bookkeeping out of the business. Having software that can code your bank transactions against customers, expenses and anything else occurring within your business is a total game changer. Trust us, accountants love this technology too when it comes to GST and tax time, that's why at RightWay we have a dedicated bookkeeping team on hand, to assist with all client enquiries. 

Getting set up on trade portals: Building material suppliers will typically have portals where you can browse, order and purchase wholesale materials for your projects. If your supplier doesn’t have this function, you should still talk to them about their pricing and account terms for trade businesses. Streamlined ordering can remove a whole lot of manual admin meaning more billable hours free.  

4. Keep your outgoings under control

Getting set up as a tradie business can be exciting, but we see many first timers make the mistake of taking on too many expenses too early. This is a misstep as often the business will return a loss for longer than it needs to. Rather than conquer the world straight away, we’d suggest building a business gradually (such as one project at a time, getting upfront payment for materials, and using a basic vehicle), as opposed to entering the market fresh with no experience but all the bells and whistles. 

We encourage every tradie business to reinvest the earnings from projects back into the business’ equipment, vehicles, people, marketing etc - only as that money comes available. Trying to run before you walk is only going to put you under undue pressure. 

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5. Starting small and growing steadily

And with that said, it’s always better to start as a small (often solo) business and grow steadily. That means not saying yes to every project and then being stuck having to find subcontractors to help or working every hour of the day. Running too quickly has many drawbacks, but one really important one to note is that rushing your growth means you’ll miss valuable lessons along the way. The slow, steady tradie business, takes on each new project with full attention and gains the most learnings from it. Our skills in the trade, customer communication, administration, marketing and so on, can all naturally evolve at a pace we can keep up with. 

Rampant growth might seem exciting in the (very) short term, but when it all comes off the tracks, it can be ugly. You’d rather have 2-3 really happy clients in your first month than 10 who will never recommend you.

6. Make customer care a selling point

Speaking of clients - customer care is something we can’t understate the importance of in this era. Many businesses have looked to ‘optimisation’ of their operations, ‘maximising profit’ and ‘digitisation’. None of these are inherently bad concepts, but we’ve observed a fair share of organisations that chase these at the cost of great customer service. 

It’s our belief in any industry, but particularly the trades, that a customer doesn’t just want a perfectly tiled bathroom or impressive new 3 car garage - they want the process maintenance or additions to their home or business to be enjoyable too. Many clients won’t know exactly how to ask the right questions or what they want - and great trade businesses have mastered the art of customer communications to ensure every client feels listened to and respected. 

So, whether you’re becoming the next high-demand plasterer or rewiring houses, make customer care something you never sacrifice. It’s a long term approach that will pay off in the reputation you enjoy - and the income your business ultimately enjoys from repeat and recommended business. 

7. Don't underestimate or undercharge your work

You may be an experienced tradie who’s worked for someone else, but are finally going out and charging your own clients directly. Perhaps you had a good working knowledge of what your past employer was charging, or may’ve been somewhat unsure. Either way, don’t make the mistake of believing that simply because you’re a new business owner, you automatically have to give giant discounts compared to the market. 

Your pricing should reflect the quality of the job you do and the overall experience a customer has in dealing with you. If you can confidently say that your finished work is as every bit as good as your competitors - why charge less? Sure, you may have a strategic goal to beat out the competition on price, which is fine - but don’t give your work away simply to win it. Customers expect that trade work comes with a cost - and grossly undercharging may even have the opposite than desired effect where the market believes you’re simply low value as well as being low cost. 

8. Build strong relationships with other tradies

Just because you now run the show and will be vying for work with others in your sector, doesn’t mean you need to be hostile to anyone. Speak to any well-established trade business, and they’ll happily talk of all the great relationships they have with other trade businesses - both in complementary trades and even in the same discipline. The demand for good trades is still far outstripping supply, and it’s normal for tradies to refer potential customers to other trusted businesses when they don’t have the capacity to take them on.

All this is to say, you should try and maintain good relationships with tradies across the board. Those that you’ll end up adding to your stable of trusted suppliers you can refer your clients to, and those that you can trust to do a great job on something you’re simply unavailable to do.  

9. Consider insurance for the business

Getting insurance as a business is a really important part of the administration side of things. The peace of mind that you’ve got cover, in the event of accidental damage to a client’s property or other incidents that could otherwise bring costs or legal action, is well worth getting sorted before you even do your first job - or as early as you can. Insurance isn’t typically a big line item on your monthly expenses, but it is an important one. 

10. Think carefully about the structure of your business

One of the more common mistakes we come across is when tradies set up a limited liability company when their model makes far more sense as a standard self employed business. There are certainly advantages to a company, especially if the long term plan is to run a large organisation with many staff. The reality is that for thousands of tradies across NZ, their goals make simple self employment more straightforward. We’re not able to tell you what’s best for you, but don’t rush into setting up a full company if there’s no need - it comes with a number of additional complexities and administrative requirements. 

Bonus tip - outsource the stuff that makes sense

Doing everything yourself is often a short-sighted attempt to save costs - but it almost always costs you more in the long run if those jobs aren’t what you’re knowledgeable about. If you could spend an hour at your full billable rate working a client’s job or reconciling accounts - what’s going to give you the best return on that hour? Work out the functions of running a business that if outsourced to trustworthy partners could unlock a whole new level of growth opportunity. This takes some practice, and you need to keep actively practising ‘staying out of the weeds’, but staying mindful of how your day is spent is worthwhile. 

RightWay provides a range of business advisory services through our Business Partners, who act as your ongoing guide through the various stages of business ownership. Together with our bookkeeping and accounting teams, we can remove all that time-consuming admin from your business so you can run a streamlined, profitable business.

Let us help you! 

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