If you’re a tradesperson, it’s likely that you’re no stranger to a bit of graft. This is a good thing if you want to start your own carpentry business because working for yourself is by no means a walk in the park.
Your expertise and knowledge as a carpenter or builder will help you get started, but as a business owner, you’ll need to learn new skills as well.
This tutorial is designed for carpenters who want to start their own firm or operate as a self-employed building contractor. It contains all you need to know about converting your hands-on talents into a successful and profitable carpentry company, including information, templates, and methods.
We’ll cover the following topics:
- The importance of having a business plan
- How to secure financing for your carpentry business
- Your responsibilities as an owner of a carpentry business
- Marketing your carpentry business
- Growing your business
Owning a Carpentry Business
Some tradesmen may be hesitant to establish their own business because of the uncertainty that comes with it – most notably, obtaining enough employment. Finding new work and finishing tasks, on the other hand, is the least of trade firm owners’ concerns.
For many tradesmen, running a carpentry company is about much more than simply making money. They see branching out on their own as an opportunity to improve their lives and provide high levels of customer satisfaction.
What about the downsides of working for yourself? Many established carpentry business owners cite finding the right workers and dealing with difficult clients as the biggest challenges. The costs and risks also change when you move from working for a company to going alone. Before starting on the journey to starting your own business make sure to get online quotes for carpenters insurance to protect your new business venture.
So what makes a carpentry business successful? The same characteristics that make any other business successful: Profit, smooth operations, and satisfied workers.
The Impact of COVID-19
The impacts of COVID-19 will undoubtedly be felt for years and years to come. In recognition of this, governments all around the world are fast enacting new regulations to help the construction and building industries.
Here’s an overview of what various nations are doing to help the economy:
Australia: In Australia, similar ideas are in the works as those in place in the United Kingdom. In addition to the Supporting Apprentices and Trainees pay subsidy, which tries to keep apprentices in work, billions of dollars have been set aside for new apprentices. More money will be put into the National Housing Finance and Investment Corporation (NHFIC), ensuring the construction of more new homes.
New Zealand: The NZ government has announced intentions to fund massive, shovel-ready infrastructure projects that may begin immediately or within six months. Investments in residential, transportation, institutional, and renewable energy projects are predicted to help the industry recover with an average annual growth rate of 3.8 percent between 2021 and 2024.
Learn more about the government’s apprentice hiring incentives.
With support programs such as these in place, you can rest assured that you do have some form of safety net that can help you start your own carpentry business during times of uncertainty.
So let’s delve into some of the steps you will need to follow to make your dream a reality.
1. Write a Business Plan for Your Carpentry Business
It takes some time to write a business plan, but it’s an important step in establishing your carpentry business. As a carpenter, you understand the importance of laying a sturdy foundation. You must set the foundations of your business with a comprehensive business plan in place to offer yourself the greatest possible start. This can assist you in defining your objectives and determining how to attain them, as well as more practical issues such as finance and marketing.
While things don’t always go as planned, having a business strategy in place may help you avoid pitfalls.
2. Secure financing
You must spend money to make money while starting your own carpentry business. The cost of getting started will vary depending on your business structure (self-employed contractor or registered firm) and the targets you’ve set in your business plan.
So, where are you going to acquire the money to start your new business? You could already have enough money in place. If that’s the case, kudos to you! However, if you don’t, there are some financing options that may be available to you.
You may need a loan to get your business off the ground. You might start a company with a partner, collaborate with a private investor, or join a franchise. Your contracting business’s first set-up cost will be determined by this.
Getting a Loan
You have a few alternatives if you need to borrow money.
- A loan for a small business
- Government-sponsored lending program
- An unnamed private investor
Regardless of who you choose to borrow money from, you will need to demonstrate that you are a strong investment potential. Before you approach anyone with your cap in your hand, make sure you have the following in place:
- A break-even analysis that demonstrates your company can break even before turning a profit.
- A cash-flow projection that shows how much money is coming in and going out of your firm, as well as when it is coming in and going out.
- A sales forecast to estimate future income by anticipating sales on a weekly, monthly, or annual basis. When you’re just starting out, this isn’t simple, but there are options. This will assist you in determining whether your company concept is financially viable.
Government-sponsored Lending Programmes
Your municipality may potentially offer a financial assistance program for new enterprises. If your carpentry business qualifies, this might be a terrific method to get money that doesn’t need repayment.
United States: SBA offers limited grant money to qualifying carpentry firms.
United Kingdom: Business start-up loans ranging from £500 to £25,000 are available to help you start or expand your business.
AU: Some states offer state-specific sponsorship programs to help start-ups.
NZ — Depending on your business, government incentives, assistance, and mentorship are available.
Investors
Approaching an investor is your third choice. Successful entrepreneurs who contribute funds for prospective company start-ups are known as angel investors. Rather than receiving a return on their initial investment, they frequently receive convertible debt or a part ownership stake in the county.
That’s it for part one of this guide to starting your own carpentry business. In part two, we’ll progress to examine some of the practicalities, such as sourcing equipment and finding customers.
Starting Your Own Carpentry Business: The Ultimate Guide (Part Two)
In sections one and two of this guide to starting a carpentry business, we looked at the need to develop a business plan and secure financing. In Part Two, we will not share insights into some of the more practical aspects of running a business you will need to take into consideration.
1. Purchasing tools and equipment
Unless you already have your own equipment, this is likely to be the most significant upfront expenditure you will face when beginning a carpentry business – but they’re also an investment. You can’t work without your tools since they are your livelihood. Be sure to get dependable, high-quality materials that will last you as long as possible (with the right level of maintenance!).
A work vehicle may also be required. You don’t need the most up-to-date truck with all the bells and whistles to get your business off the ground, but you will need something trustworthy with enough space to safely store all of your gear while you’re on the road.
The good news is that you may deduct the cost of your business-related tools and equipment, including automobiles, from your taxes.
2. Insurance
You should also consider safeguarding your tools and equipment. They are your most valuable asset. You’ll be up the creek without a paddle if they go missing or are stolen (which regrettably occurs frequently).
Two additional types of insurance that carpenters typically put in place are general liability (in case you mistakenly damage someone else’s property) and income protection (if you suffer an accident and are unable to work) insurance. You may not have the finances to purchase all of your insurance policies at once, so seek a trustworthy small business insurance provider that can assist you in developing a strategy.
3. Taxes and accounting
It’s critical to keep your books in order. When you stay on top of your admin, you’ll be paid fast for all of your time and supplies, and you’ll avoid any late fines from the tax man when he comes knocking.
Using an established accounting software package can also be beneficial. Reputable providers are Sage, Xero, and QuickBooks.
4. Set your prices right
You generate money by charging your clients for the time, talent, materials, and labor necessary to execute a project, not by inventing a number.
Here are some things to consider while determining your prices:
- Variable expenses – These prices change from project to project, such as the hourly rate for your labour and the cost of materials.
- Fixed costs – These are the expenses that come with running a business, such as vehicle payments and insurance. They’re dubbed ‘fixed costs’ because they tend to remain consistent.
- Other considerations – Your price should take into account your talents, expertise, and credentials, as well as the quality of your goods and the location of your target market.
5. Understand your obligations as a carpentry company
Remaining within the realms of the law as a business owner. Aside from providing outstanding work, treating your employees well, and staying on top of your financial duties, you must also follow any carpentry and construction industry standards. This red tape may not earn you money, but it will most certainly cost you a lot of money if you ignore it.
Keep in mind the following:
- What impact your firm will have on the environment, and how you can offset it.
- Local laws that govern the operation of a business, including the employment regulations that apply when you recruit employees.
- Regulations governing health and safety, as well as what you must do to comply and keep yourself and your team safe.
6. Join a professional trade organization
Joining a local professional organization is a fantastic way to keep up with what’s going on in the field without having to go through pages of boring government documentation.
You’ll almost certainly need to fulfil minimal qualification criteria to join; find out what they are and whether you qualify before applying. Trade organizations frequently provide possibilities for training and professional growth, which can give you a significant competitive edge in the long run. If you do opt to hire an apprentice or employee, it’s a good idea to stay up to speed on certification requirements.
Some of the professional trade organizations that are available in various parts of the world are as follows:
- The Institute of Carpenters in the United States and the British Woodworking Federation in the United Kingdom are both affiliated with the Institute of Carpenters.
- Carpentry Australia (AU)
- The New Zealand Institute of Building (NZIB) is a non-profit organization based in New Zealand.
7. Manage the day-to-day operations for your carpentry business
Carpentry business management involves more than just talent and expertise; it also necessitates commercial sense.
Managing the day-to-day operations of a business might feel like juggling an excessive number of balls at first. The key to overcoming this feeling is to get rid of the balls you don’t need to juggle in the first place.
You’ll need to focus on each stage of your workflow to figure out exactly what’s necessary. Outsource any aspects you can. You’ll be able to simplify your job, become more efficient, and speed up your turnaround times from there.
Starting Your Own Carpentry Business: The Ultimate Guide (Part Three)
In Sections One and Two of this guide to starting a carpentry business, we looked at the need to develop a business plan, secure financing, and run your business on a practical level. In this section, we’ll share top insights into how you can secure work and market your services to the right people.
Marketing your carpentry company
You won’t be the only carpentry business operating in your area, so keep that in mind at all times when you’re launching your own carpentry business. You’ll constantly be up against the competition, but here is where all of your previous efforts will come in handy.
The key is to try and differentiate yourself from your competitors. Consider what sets you apart or what you can do differently or better than anybody else in the industry when marketing your carpentry business. Yes, some clients will look around for the best deal, but the majority will be more concerned with why they should select you out of the various deals that are on the table. If you can communicate this clearly up front, pricing is unlikely to be an issue – and you’ll be far ahead of the competition.
1. Identifying your target market
While it’s tempting to want to be everything to everyone, this isn’t the best strategy. With tens of thousands of carpentry enterprises and self-employed contractors across Australia, discovering your expertise can help you generate not only a constant stream of cash but also a loyal client base.
Consider how you may give value to your ideal consumer while defining who they are. This may be anything as simple as making your services available to a new set of individuals (think new housing developments or subdivisions) or something more substantial you can give to get an advantage over the competitors.
Every decision you make when you create your carpentry business should be tailored to the sort of client you want to attract.
Here’s what you should do to figure out your niche:
- Choose the area(s) in which you wish to work. Consider if your clients will be homeowners, business owners (or both), or other contractors.
- Examine your competition to see if there are any service gaps in your area that you may fill.
- Check to see whether market prospects match your skills and interests.
- Based on your experience and the market gaps you’ve found, narrow down the services you’ll provide.
- Collect data on your rivals’ gross margins to estimate the profitability of your niche.
Consider the following factors while studying local competitors:
- What you might be able to do differently or better
- How you can set your carpentry business apart from the rest
- If there are any businesses you could partner with to form a relationship
- If there are any current firms that could be interested in forming a relationship
2. Define and implement a marketing strategy
There are numerous alternatives for getting the word out about your business in today’s digital era, and it may be overwhelming at times. But keep in mind that every company choice you make revolves around the consumer; as such, you should always go where you’ll find members of your target market.
To begin, consider the following:
- Putting together a webpage to showcase your work, reviews, and contact details.
- Establish and maintain a presence on social media platforms such as Facebook, Instagram, and YouTube.
- Add your business to all local business directories.
One of the most effective – and least expensive – ways of marketing is still word of mouth. Tell your friends and relatives about your new business, and ask them to help you spread the news. All it takes is a few new clients to get the ball rolling.
3. Once established, start growing your company
Starting your own business is a tried and tested approach for most tradespeople to live a better life. You make the decisions about how long you work, what jobs you take on, and how much you charge. It entails spending more time with your loved ones and doing activities you enjoy. While taking those first tentative steps to going it alone isn’t always about the money, it is a nice side benefit.
Building a business from the ground up isn’t easy. There’s a lot to think about, but a planned, step-by-step strategy, similar to how you’d approach a new construction project, can have your business up and operating in no time.
Working your way through this course will ensure that you have a solid company strategy. Keep your goals and objectives in mind as you work to improve your competitive edge and expand your reputation. Set yourself up for success by using job management software that will grow with your company. It will pay off when your company expands, and you add employees.