Building companies are usually founded by one of two types of people. The first is a tradesperson who has been working in the industry for a while and has decided it is time to branch out on their own. The second is someone who doesn’t actually work as a builder but would like to run a building company as a business.
No matter which one you are, both of them require a certain set of skills and a level of preparation before you can make the jump into owning your own business. Both will also require a hands on approach to running the company, so they’ll need to be involved from the skip bins hire and sourcing contractors, through to clean up at the end of the project.
Here are some tips for getting your own building company started:
Write a business plan
As with any new business venture, the first thing you need to do is write up a business plan. This should include your goals, both short and long term, and the methods you will use to reach those goals. You should also outline what you will need to start your company (such as what equipment) and any marketing plans.
Decide on your business type
You have the option of setting up your business to operate as a sole trader, or register as a company or partnership. Being a sole trader is the easiest and cheapest business structure, and although the name sounds like it suggests otherwise, you can still employ people to work for you. Each business type has different regulations and costs associated with them, so make sure you are across what is required from you when you have chosen your business structure.
Check the regulations
Before starting your first job, make sure you have ticked all the boxes for whatever requirements and regulations you need to adhere to. Renew all of your licenses, such as your builders license, as well as any specialist ones that may apply to the work you are planning on doing (electrical or plumbing work require different licenses). You might also need a contractor’s license or a White Card for the kind of work you are doing.
Work out exactly how much money you are going to need to get the business started. If the amount exceeds what you can realistically save, you will need to speak to a bank or other financial institution for a loan. When you apply, you’ll need to show them a copy of your business plan so they can see exactly what you have planned as well as your future goals for the company. Take the time to discuss the different types of loan available to you, as well as interest rates and terms and conditions of the loan.
To set up your business, there is some admin you’ll need to get through first. You’ll need to get an ABN – you are not allowed to start invoicing or making money without it. You will also need to set up a Tax File Number (one for yourself as well as one for the business), apply for an Administrator AUSkey, register for GST and register a business name. You will also need to get liability insurance organised for the business, and then get a Certificate of Insurance for each and every job that is over $20,000.
Once you have written your business plan, updated all licenses and insurance and secured the funds, it is time to get some clients.
An imperative part of running a successful building business is generating good word of mouth. The more jobs you do, and the better you do them, the more people will begin to refer you when they have friends who need to renovate or build. Keeping the customer happy should always be your goal, but the first few jobs are the most important of all. If you only have a handful of customers to rely on for referrals, you want them to be glowing.
To get the first customers in the door it might be worth offering a ‘grand opening’ style discount. It might be part of your overall marketing plan for your business, and you could budget for it accordingly at the business planning stage. Once you have signed up a few clients, do the best you can to make sure the job finishes on time or early, within budget and to a high quality standard and you’ll be getting great referrals before you know it.
Another way to keep customers happy is to be upfront from the very beginning about what they can expect from the building process. The average person will only undertake one or two major renovations or builds in their lifetime, so they won’t be aware of all the glitches and delays that can be a very normal part of building.
Walk the client through the process from beginning to end so they know to expect some rough patches along the way. If they are expecting smooth sailing the whole way through then everybody will end up disappointed.