For many tradies becoming a sole trader can be a viable option, especially if you’ve got the ambition to become independent and branch out on your own. With some solid preparation, going in it alone can be hugely rewarding – especially for those wanting control over their business or flexible hours. Becoming a sole trader is relatively easy, but before handing in your notice here are five things you need to do to get yourself started.
Draft a business plan.
A business plan is essentially a rough guide that will help you to turn your sole trader dreams into a reality. A good business plan will help you to outline the value customers will gain from your services as well assist you visualising where you want to take your business plus it also can provide you with benchmarks in which you can use to measure the success of your activities as your business develops. A business plan is not concrete, it’s adaptable and can be changed to reflect the needs of your business.
Having a clear business plan will help you to avoid costly mistakes such as setting unrealistic goals, making incorrect assumptions about your customer base and competition. There’s no right or wrong way to write a business plan and there are plenty of templates out there to help get you started. We've got some tips for you here
Get advice.
As a sole trader, it’s an unrealistic to think you’re going to be an expert in all areas of your business and you shouldn’t have to be at the start. Talking to other sole traders in your field or simply talking to a business mentor can help you to avoid costly mistakes. There are many obstacles to tackle at the beginning and a mentor can advise you to get a better understanding of the licences and permits you need as well as the registrations that you will require for your trade.
Additionally, you’ll also need to tell Inland Revenue you’ve become a sole trader by either calling or sending them a secure email. It’s important to contact Inland Revenue because as a sole trader you’re 100 per-cent responsible for all taxes and debts, making it important to keep all financial records up-to date.
If you’re unsure or need help with staying on-top of the financial and legal matters it would be best to think about sitting down with an accountant to help you with your tax return or a lawyer to protect assets like the family home.
Open a business account
This may seem a little strange, especially when you’re receiving all the profits, but consider opening a business account. It will make running your business a whole lot simpler. A business account is relatively easy to operate and can be opened at most banks.
Opening a business account will help you to differentiate between your personal and business finances. And will help you to keep track of your overall financial position especially when it comes to doing a tax return
Tools and materials
Having the right tools, materials, licences and machinery is imperative to being a successful and independent tradie. No matter what your trade is, you’re going to have to spend money setting yourself up. Sure, you have some of the tools already, but you’ll need to consider what other equipment is needed to get yourself started such as transport, materials and business cards.
The initial start-up costs are quite expensive, however one way to avoid overspending is to create a list of what you have and what you need. This will assist in giving you an idea of what your start up and on-going expenditure could be. Doing this will also help you to budget and avoid over-spending.
Think beyond word of mouth
Finally, you’ll need to think about how you’re going to market your business. If you’re an independent contractor and you’ve got work lined up through other building companies marketing won’t be so important. However, if the majority of your business is going to be residential you’ll need to get creative with how you will market and promote yourself.
You don’t need to spend a lot of money promoting your business. Setting up a Facebook page for your business is free, and there are plenty of free website builders out there to get you started. However, you may need to spend some money promoting your business on Facebook and purchasing your domain name for your website.
Once you've figured out your plan to go solo, get in touch with us to sort out your business insurance.
