Many tradesmen reach a point where going solo seems like a no brainer. Just look at all the benefits: You can choose your own clients, enjoy greater flexibility, have a better work-life balance, and earn more money. If you have a practical set of skills and the ambition to work for yourself, then launching your own tradesman business could be the perfect career move. For one thing, you wouldn’t be alone in doing so — over a quarter of self-employed men in the UK work in the construction industry.
However, this isn’t something you can jump into head-first. To help you take your first steps into the world of being your own boss, we’ve put together this guide, which runs through all the main considerations, helping you begin your solo tradesman career in no time.
Ensure you’re qualified and experienced in your trade
Not just anyone can become a self-employed tradesman, and it takes a certain level of experience and skill to be able to complete jobs by yourself and satisfy your customers. An apprenticeship or other qualification is essential for becoming specialised in your field of work. NVQ qualifications are a great way to gain the skills you need, and these courses can be taken from levels 1 to 5, giving you more expertise the higher the level you study at.
If you are already qualified but have limited experience, gaining some temporary or contract work will stand you in good stead. Furthermore, it’s a good idea to develop some general business skills. For example, it will be helpful to learn about accounting so you can handle your finances and taxes, market research to successfully promote your business, and HR management to help you manage the people you employ.
Establish your business structure
The next step is to decide upon your business structure, which will affect things like your tax liability, the insurance you’ll need, and the amount of administrative work involved. There are four main types:
A sole proprietorship gives you complete ownership and responsibility over your business, and allows you to keep all profits as income, though you will have to pay income tax and national insurance on it. This is a simple, low-risk choice for those who want to try their business idea out before committing on a more formal basis. However, unlike other business structures, proprietorships do not create a separate business entity, meaning you will be personally liable for any business assets and liabilities.
You can launch either a private or public limited company, the difference between the two being whether or not you allow the public trading of shares. The former does not, and restricts you to a maximum of 50 shareholders, while a public limited company trades shares on the stock exchange, giving you greater capital (the cash and other financial assets held by a business), but less power over the company itself. This structure gives enterprises professional status, a tax-efficient income and more ways to raise capital. In addition, limited companies operate as distinct legal entities to their directors and shareholders, meaning you will only be liable for company debts up to the value of the shares you hold.
Here, two or more individuals share the responsibilities, risks and costs of running a business, though tax and national insurance are paid on each partner’s share of the company’s profits during a tax year. Ownership and control is shared equally between the partners with fewer legal obligations, as a corporate tax return isn’t required.
Limited liability partnership
Similar to the limited company structure, a limited liability partnership safeguards your private assets and limits liability to the value of the shares you and your partner hold. This structure can have any number of partners, but at least two must file annual accounts. Unlike standard partnerships, each partner must file their own personal income tax, self-employed tax, and estimated taxes for themselves.
Take out the right insurance
Your self-employed business needs the right type of insurance to protect you if anything goes wrong. Considering your jobs are potentially high-risk — just think how many daily hazards are faced by builders, roofers and electricians — you’re more likely than most to encounter issues. By having cover in place, your business won’t be financially impacted by any workplace mistakes, accidents, theft, damages, or legal fees from a claim made against you. Insurance may also be a legal requirement, and could help you attract customers, and many will actively decide against working with businesses that don’t have it. Below are some of the most important types of insurance you should consider — we also provide a full list of who we cover, so be sure to check that your business is eligible for our cover
Employer’s liability insurance
A legally required cover, employer’s liability insurance is mandatory for businesses who employ any staff. This could be a full-time employee, a contractor, or a temporary worker, and protects you from any compensation claims made due to illnesses and injuries sustained by your employees at work.
Public liability insurance
Another incredibly useful cover to have in place is public liability insurance, which protects your company in the event that anyone suffers an injury or has their property damaged as a result of your work. All it takes is an incident small as somebody tripping over your equipment for your business to face a costly pay-out you may not be able to afford. However, with public liability insurance in place, your insurance provider will cover these costs for you, as well as any legal fees.
Professional indemnity insurance
Similarly, professional indemnity insurance protects you from the financial fallout of a customer being physically or psychologically harmed as a result of bad advice or poorly-delivered services you’ve given them. This can cover numerous situations, from professional negligence and the loss of documents or data, to third-party financial losses and defamation.
Buy quality tools and equipment
As the saying goes, “a workman is only as good as his tools”, which is why you can’t start a business without investing in quality equipment. Without them, your work may not be as good as you hoped, and your business could struggle to get off the ground. We recommend looking to suppliers like Jewson, Builder Depot and TradePoint to buy your tools.
Once you’ve got your hands on your brand new gear, it’s essential that you do everything you can to keep it safe. Your tools are your livelihood, so it would be very bad news for your business if they were lost, stolen or damaged. Some basic protective methods include stashing your equipment away from your vehicle if possible, marking it so it’s harder to sell on, and purchasing a tool tracker GPS to help track down stolen goods. The best thing you can do is get tools insurance, which will entitle you to quick replacements in the event of loss or breakage.
Market your business
In order to make a name for your business and attract customers, you’ll need to get the word out, which requires a solid marketing strategy. This means embracing a variety of techniques, like placing adverts in local papers and directories, taking part in trade shows, and speaking at events. However, you also have to make sure you market your business digitally, which starts with setting up a website and social media profiles, and keeping them regularly updated with information about your company, recent customer reviews, and industry-related content.