Becoming a tradesperson can be very promising financially. Business Advice explains that, though trades are crucial, not everyone can take them into their own hands. As a result, if you fare well in your own choice of trade, you could amass a pleasantly surprising financial haul.
Indeed, the world of trades can be full of surprises, albeit not always positive ones. You could find that certain expenses seem to pop up out of nowhere and drag on your financial efficiency. The good news, however, is that you can tackle such shortcomings to oil your operations effectively.
Necessary industry experience and training
There are many different trades from which you can choose to forge your career path. Whether you want to work in plumbing, painting, decorating, construction or one of the many other trades for which we offer insurance, you can go for it – if you gain the right experience and training.
You should carefully look up the requirements for your chosen trade. Qualifying as a plumber via the NVQ method would cost you roughly £1,500 – but, as you can work while studying for this qualification, you can quickly recover some of the loss you might incur from the course itself.
Failing to compile a realistic business plan
Once you’ve got the right qualifications and experience under your belt, you should turn to thoroughly planning the future trajectory of your tradesperson journey.
However, to minimise the chances of nasty financial surprises being sprung upon you, it’s crucial to keep this business plan realistic. You need to know, for example, what money to pour into setting up your business and how you will spur its growth.
That plan could also shed light on what resources you need, says Startups.co.uk.
Not opting for the most cost-effective legal structure
When setting up your business, you can choose from a few different legal structures for it. You need to tread carefully here, as which option you settle on will have implications for your tax and VAT responsibilities. Many people in this position opt, at least initially, to be registered as sole traders.
However, although this can certainly be a cost-effective and simple solution, you still cannot afford to neglect acquring the relevant certifications, permits, and licenses required. The trade association most relevant to what you do might be able to provide you with the right advice, on this.
Spending money on the wrong things
As a tradesperson, you will have various expenses, but where exactly each of them lie could elude your ready notice. As a result, you could end up too easily spending money on things you don’t really need while missing payments that can actually be crucial to your firm’s future success.
Naturally, you should be careful to prioritise meeting those latter payments, including invoices and bills to help keep your suppliers happy. Important start-up costs, meanwhile, including those of equipment, fees and travelling. Don’t buy anything non-essential until it becomes… essential.
Not keeping close track of regular outgoings
While this is a cost that everyone could beneficially watch out for, it can warrant especially close attention from self-employed people, says Move Your Money.
These days, thanks to direct debits, it can be very easy to set up many regular, automated payments about which you later forget. You might have had this issue with, for example, gym memberships or Netflix subscriptions. You may be tempted to set up direct debits for your corporate outgoings, too.
However, doing so would naturally run the risk of leaving that money flying out of your bank account when no longer required, so be careful to audit outgoings to help prevent superfluous charges.
Not holding the right business insurances
However careful you might be when carrying out work, you could still take significant comfort from putting in place a “safety cushion”, so to say, for your firm’s finances. After all, your work could inconvenience a client in a way that gives rise to a successful claim for compensation.
Should your work for a client lead them to suffer injury or damage, public liability insurance – one of the covers we provide as standard here at Tradesman Saver – could help you to fund a compensation payout. You could then augment that cover with others from our selection to meet various needs.
Not using the right tools and equipment
The mantra that “a workman is only as good as his tools” holds particular importance when you are endeavouring to impress new clients. Without tools and equipment appropriate to your work, you could be hampered in your efforts to deliver that work to a high standard.
When you source insurance from our team at Tradesman Saver, you can add tools and equipment cover to your policy. However, it would be best to avoid those tools getting damaged or misplaced in the first place, which is why we would urge you to store them securely when not using them.
Sticking to the wrong phone and internet package
Communication is crucial to your firm’s success; after all, you need to allow an easy way for people to contact you to utilise your services. However, your current phone and internet package might not be the most cost-effective for your business.
For this reason, you should research various providers and deals to investigate possibly switching, such as to a business package which could provide a higher standard of service in case your line runs into unexpected problems. Such a package could, therefore, save you money in the long term.
Paying more tax than necessary
Yes, completing a self-assessment form can be tedious, but resist the urge to simply plough its various sections without looking carefully at how you can save on tax and claim back expenses.
Really, saving money at this stage is something for which you can prepare well before you even clap eyes on the form itself. For example, you can closely track your expenses so that, come form-filling time, you can more quickly assess which of them are possible to claim back.