Starting a trade business in Australia is both thrilling and daunting. It’s an exciting opportunity to become your own boss and take complete control over how you want your business to run. Tradesmen consistently find themselves in high demand, with each day bringing new and varied tasks. Contributing significantly to aiding others, it's a fulfilling field to work in. Yet at the same time, working in trade is a saturated market with a need to stand out against competitors.
Starting a construction business, or plumbing, or landscaping, or any form of trades business, requires a lot of pre-planning and business set-up before executing and putting it in motion. So whether it’s a one-person business or a small business with multiple tradesmen, there are some key steps to take. It’s important you know how to start a contracting business. Before getting into that, let’s start with the meaning of a trade business.
Starting a trade business in 4 steps
You have your expertise and experience - now what? It's time to map out the flow and organise the structure of your tradie business.
Here’s how to start your own trade business.
Step 1: Write a Business Plan and Develop a Business Structure.
A business plan for contractors needs to summarise the key aspects and characteristics of your business in one place, while a business structure lays out how you will operate. It is common practice to include the following aspects in your business plan:
- Business Name: Your company name, your personal name or a 'trading as' name if you're a sole trader.
- Business Analysis: An overview of your trade and the industry landscape.
- Operating Plan: The logistics of where you will be providing your trade services.
- Financial Projections: The key forecasts for cash flow and profit.
- Marketing Strategy: How you'll identify and reach your target market.
Once you’ve established your business plan, you’ll need to define your business structure. Decide if you will be working as a sole trader, in a partnership or as a contractor, as these will impact both business and personal goals and objectives.
Each structure offers its own advantages. As a sole trader, you'll enjoy greater control over your schedule and decisions, while partnering with someone can provide additional startup capital, expertise and overall commitment. On the other hand, exploring contracts or subcontracts with multiple businesses can serve as a valuable learning experience in managing your own enterprise.
Step 2: Get your ABN, License, Permits and Insurance.
ABN
You cannot legally start a trade business or any other business in Australia without an ABN. An ABN identifies a business to the local community, government and its clients – it shows you are legally able to operate and that you are paying taxes. Make sure you apply for an ABN before you consider starting a trade business.
Licences and permits
You may need to apply for a trade licence or permit before starting. Licences and permits change depending on the type of business you’re starting and the state you operate in. If you’re unsure of which ones you need to apply for, you can find more information on the Australian Government License and Information Service website.
Here is a list of the licences required to operate in construction in each state:
- ACT: ACT Government Builder Licence
- NSW: NSW Fair Trading
- NT: Northern Territory Building Practitioners Board
- Qld: Queensland Building and Construction Commission
- SA: SA Government Work and Business Licences
- Tas: Tasmanian Government Consumer, Building and Occupational Services
- Vic: Victorian Building Authority
- WA: Western Australia Building and Energy
Insurance
Getting insurance is essential as you are now officially responsible for your work and the work of any potential subcontractors. Some business insurance options to consider would be public liability, income protection, workers’ compensation, and personal accident and sickness. A simple mistake can cost a lot with no insurance, so don’t forget it.
Step 3: Get Your Finance and Accounting In Check
Having your finances aligned when starting your contracting business is critical, so you don’t get overwhelmed in admin work. Develop a system of how you plan to store receipts, track business activity, and new customers. Accounting helps the business flow by streamlining quotes, invoices and orders. Doing the accounting yourself or hiring someone to do it for you, will make the biggest financial difference. Small business owners and tradies should set up a business bank separate from their personal one to track expenses as well as decide how to take payments from customers.
New trade businesses also need to be aware of the upfront costs for starter tools, equipment and vehicles required to fulfil the work. Having some cash on the side will help you to afford these.
As your trade business expands over time, your capacity will grow, necessitating capital to cover future expenses such as additional employees, tools, machinery, equipment, and software. Whether you're looking to hire more tradespeople or invest in additional equipment, you need a plan of where to secure capital from. There are government grants, loans and funds tradies can apply for or you can ask family and friends for help.
Step 4: Develop Your Branding and Marketing Strategies
When starting a trade business, it requires building your brand effectively.
Begin by developing a logo and designing a website with a personal domain. Then, draft up business cards and establish a presence on social media. Following that, initiate an advertising campaign to broaden your reach and ensure your business is listed on Google Business to maximise visibility. With a strong, identifiable brand, you will be able to differentiate your expertise from your competitors.
Once your brand is established, the next step involves conducting market research to identify your target audience, so you can optimise your website to cater specifically to them. Expanding your reach further can be achieved by attending industry events, where you're likely to encounter potential clients actively seeking your expertise, who can then potentially accelerate your path to securing work.
With your branding and marketing strategies set, you can begin to consider how to develop your digital presence and which platforms or channels to market your business on. When you research your target audience and their habits - you will be able to see what appeals to them. Consider what works best in your industry:
- Do painters acquire customers through websites or social media?
- Do people read blogs about carpenters to find one they want to hire?
- Do potential customers seeking landscaping services often rely on online directories or listing platforms?
Reflecting on how you gained your initial customers is another way to find your target audience.
Were these customers the result of word-of-mouth, referrals, or another method? Analysing how your last 10 customers discovered your services can offer insights into the most effective marketing strategies for your business. Generating feedback through social media, surveys or conversations to see how your customers feel about your service will help you grow too.
For prospective customers, it's crucial to provide multiple contact options for them to find you and to remain vigilant for new market opportunities to explore.
Put all your plans to action and get started!
After following these 4 steps, you will then be ready to start your own trade business.
Remember to develop your business plan, get the key credentials, market to the right audience, have a clear financial workflow, and check if customers are satisfied with your work, because from there, no matter if you’re a roofer or a bricklayer, you can have a successful business.