Construction in Australia is booming. New building and home renovations mean qualified tradies are in high demand. It’s a prime time to start your own construction business to boost your paycheck.
There are many aspects to consider, from reviewing your personal finances to hiring professional help. Before becoming your own boss, take some time to consider these five small business essentials.
The demand for new homes and renovation of existing properties continues to push the entire construction industry forward. Despite the strong demand, it’s important to go through a research phase where you get an overview of the construction industry, identify your strengths and specialties and have a business plan in mind for the short-term wins and long-term sustainability.
Whilst building and renovations are happening all over Australia, certain areas may not be experiencing the same strong growth as other regions. Researching the suburbs where you want to conduct business can help you decide if this is the right area to target. You might discover that targeting a few suburbs away will give you more business.
Take a look at reputable local directories. There may already be too many tradies doing business in your area, and not enough work to go around. Online reviews help to reveal unhappy customers who are looking for an alternative. Knowing who’s out there, what their reputation is and how much they charge can help set your business up for success.
Starting any new business may mean leaving behind a steady paycheck for the first few years. It can take time to turn a profit, which may mean dipping into your savings during this time. Before you strike out on your own, a review of your finances needs to be in order.
There are several costs that go into establishing a business, such as getting appropriate licences and permits, legal fees and accounting. There are also ongoing expenses—such as marketing, business and liability insurance, superannuation and payroll—that will continue for as long as you’re in business. You may also want to consider emergency situations. Do you have enough cash on hand to replace or repair broken tools or equipment? If there’s a mistake with ordering or inventory, could you absorb the costs of correcting the error? Often, it’s the unexpected that puts business owners in the biggest pinch.
A close look at your personal finances could help you start your construction business on the right foot. Consider if you have enough money to start a business, pay for ongoing costs and cover your own living expenses during those first few years. You may want to save up first to help protect your personal finances, cover any emergencies that may occur or help you secure a business loan.
Rules and regulations
There are rules and regulations for operating any business in Australia. Additionally, there are different licences and permits required for the construction industry specifically. It’s a good idea to be aware of what paperwork might be needed and the rules you and your employees must follow.
Complying with tax regulation is one of the most important steps for any business. To do so, you’ll apply for an ABN and TFN, and learn if you need to register for GST. As your business grows, you may also need to consider things like Payroll and Fringe Benefits taxes.
Licences and permits specific to the construction industry are often required for business owners and employees. These may include licences for specific types of trades (plumbing, electrical, gas fitting) or to operate heavy vehicles. Building permits or approval to work on heritage properties may also be required in some instances. Even if it’s the property owner’s responsibility to file the correct paperwork, knowing the requirements can help you ask the right questions before starting a job to help limit your personal liability.
Protecting your or your family’s financial future may be especially important for business owners. A portion of your personal savings may be tied up in your business, or you may have business loans to repay. Life insurance might help you or your family financially if you become seriously injured or were to pass away unexpectedly.
Many superannuation funds include life insurance policies with their accounts. However, these policies may not provide enough financial protection for Australian business owners. A report by Rice Warner found that the median default of cover in super meets less than half of the basic household income needs for single adults and less than 25% for families with one child. These policies are not tailored to individual account holders and can be expensive to customise. There may be other downsides to these policies, including lengthy delays for payouts or not being able to choose your beneficiary.
A separate life insurance policy may make sense for business owners. You can choose a benefit level that fits your needs and make updates at any time as things change. Those in the construction industry should take extra care when reviewing and applying for policies to be sure they will cover their type of work.
It may be tempting to go it alone, especially in the early days of starting a business. The bills can add up fast, and it makes sense to save money wherever you can. However, cost cutting could potentially lead to expensive mistakes that may sink your business just as it’s taking off.
Depending on your cash flow, you may not be able to afford all the help you’d like when you’re first starting out. However, having a trusted accountant and solicitor are important roles you may try to fill first. A reliable bookkeeper can keep the revenue and expense in order, help with budgeting and make sure everyone gets paid on time. They might also be your secret weapon at tax time, helping you stay on the ATO’s good side whilst finding the business the best possible tax deal.
People often call a solicitor after they’ve gotten into trouble, but this strategy could negatively impact your business in both the short and long term. Seeking legal assistance when you’re starting out or considering changes to your business could help you avoid expensive headaches. A solicitor specialising in small business matters may also be able to assist with things such as trademarking your business name and logo.
Enjoy The benefits of being your own boss
There are many things to consider before starting a construction business. However, it may be worth the time and effort required to get started. Setting your own schedule, doing the work you love and taking home that first pay check are all perks of being your own boss. With some research, help and a bit of luck, you might be on your way to becoming an Australian business owner.
Author bio: Let’s Insure is an Australian based life insurance specialist, dedicated to distributing high quality life insurance products in Australia.