Seven steps to starting a successful tradie business

Setting yourself up

Tradies can be anything from plumbers to construction. Because the industry is so broad, there’s a lot of competition and a real need to focus on the customer experience. Our checklist will help set up your business for success.

1. Check customers are happy

Always collect customer feedback

Tradie businesses often rely on positive customer word of mouth to build new business, so it’s important to have a system that captures how your customers feel. Talk to your customers after a job’s completed; ask them ‘what did they like’ and ‘what could you improve’? Document their answers and review monthly. Is there anything to change in your business? It could be as simple as calling in advance before a job is started, or complicated such as needing to discipline staff.

Ways to generate feedback

There are many ways you can generate customer feedback, including monitoring social media (if you have a Facebook or LinkedIn presence) and surveys. You can also talk to suppliers or other tradies. Often the customer is more open to talking to someone else about you, rather than talking face to face.

Use feedback and research to find new opportunities

Is there anything you could provide that customers have requested? If you wanted to test the market before committing to new products and services, you could out-source to contractors to gauge demand too.

Stay up-to-date

Keep a close eye on the industry and it's latest developments. Attend industry events and trade shows, build your networks and join relevant networking associations. Continually look for ways you can improve your offering to remain current.

Review if you need to change focus

What is currently in demand? Consider if you should drop focus on new building projects, for example, heritage restorations, or home renovations. It’s worth checking your market to identify where the growth will be, and if you need to alter what you’re providing. 

Check what's happening in your industry

Research is a key factor to ensuring you're offering the right services. Whether it's checking out the competition or interacting with customers for feedback, keep your ear to the ground. This will allow you to learn the latest in what's happening in your industry. The Australian Construction Industry Forum (ACIF), opens in new window is a great place to stay up to date with construction industry news.

2. Check your marketing

Review your current strategy – what is it and is it working?

Consider what options you’ve been using to market your business to retain current customers and gain new ones. Check what marketing is working by reviewing how your last 10 customers heard about you. Keep doing what works, adjust what isn’t.

Attend industry events

Consider attending industry events as a guest speaker. That way you’re positioning yourself as an expert in your field, and you’ll also meet new people and potential customers. Everyone has a story to tell, and most trade conventions or shows have guest speakers.

Know your competition

Review your competitors by looking at their advertising, their website, registering for their e-newsletters and asking suppliers. There may be things they do better than you. But you’re looking for things that could impact your business. For example, let’s say you’ve discovered that your competition is using a brand of paint that’s superior to the product you’ve got. It’s now time to look at whether you should change suppliers.

Target your customer

Advertising works best if it’s designed specifically for the customers you’re targeting, so determine who your ideal customer is, and what their needs are. Then adjust how you market to them, for example, through digital marketing, social media or direct mail. If the customer is a large corporate you may have to register for an RFP (Request For Proposals) and pitch for a contract. If it’s a home owner, it’s more likely to be word of mouth, local advertising or digital marketing. Develop specific tactics for each customer type so you’re prepared.

Develop a digital presence

It’s important to have a great digital presence, such as a responsive website to inform and educate customers about what you do. It will help raise the awareness of your business. Consider Google Adwords marketing, opens in new window, keeping an up to date Facebook page for your business, opens in new window or using Facebook call back request forms, opens in new window to generate leads.

Have multiple ways for customers to contact you

Try and set up different ways for customers to contact you. Email, voicemail, mobile phone, and business cards are standard. But also consider a quote form on your website, apps where customers can provide job specifications. You might even consider a login area on your site for customers wishing to download guides or checklists you’ve created.

Tip for exporters

Austrade is the Australian Government agency that supports and assists businesses to export. As a first step download their Export Guide, opens in new window.

Always keep an eye out for new markets

If you spot opportunities opening up in another area, be flexible enough to move there for the duration of a project. If a project’s large enough you could consider moving your business to that location. Or opening a new office, or joint venture with a business that’s based locally. The data provided by the Australian Bureau of Statistics, opens in new window can also provide insight into growth areas and opportunities.

Do market research

Successful businesses always review and update their marketing strategy. Staying in touch with your customers and keeping an eye on your competition are critical. This is where market research is essential – check out IBISWorld’s Market Research Report into Construction in Australia, opens in new window.

Make sure you’re listed in the White Pages

One of the first places people look when searching for a tradie is the Yellow, opens in new window or White Pages, opens in new window, both the hard copy and online. So it’s important that they can find you there.

3. Check your systems

Document your work flow

A system will help ensure your business is efficient. Document the work flow from when a new job comes in, to doing the work and scheduling your staff. Also include ensuring equipment is available, liaising with other sub-contracting tradies, finishing the job and after-sales support.

If it’s complicated then documenting the flow will help you pinpoint roadblocks to clear. It could also be useful to engage an efficiency expert to have an outside look at your business.

Accepting payments easily

Customers are more likely to pay on the spot once you’ve completed a job if you can offer a mobile payment option. So make it easy for customers to pay you, and for you to pay suppliers.

• NAB EFTPOS has options for on-the-go and in-store payments (if you offer customers the option of coming in to your office to pay), making the process even easier.
• NAB Direct Debit allows you to debit funds straight from your customers’ accounts, so it’s an effective method for tradespeople working on large contracts.
• Download NAB Easy Tap to your Android device for a low-cost, simple way to take contactless card payments without the need for a terminal.

Use accounting software to keep everything up to date and compliant

The last thing you want is to worry about invoicing, tax payments and payroll. Set up an accounting system so you know what’s happening to your money. This way you can get an overall picture of activity. Once you have accounting software you can integrate your accounting package with your NAB account to make bank reconciliation fast and easy.

Implement workflow or project management software

If systems and processes aren’t helping manage your workflow, don’t be afraid to look at new options. Talk to your staff and get their view on how to improve the process. Consider implementing workflow or project management software that’s designed for businesses in the construction industry. Project-Management has a review of their top 5 construction project management software solutions, opens in new window.

4. Check your capacity

Are you getting more work than you can handle?

Are you saying "yes" to everyone because you're a new business? It’s important to understand the dangers of overtrading. Of course it’s great if you’re getting lots of work, however if you’re stretched to the point that you can’t handle it, your reputation is going to take a nosedive. Look at ways you can increase your capacity, by hiring more staff, or have agreements with other businesses to help with the overflow.

Check staff capability

If you’re growing fast, make sure staff have the ability to manage larger projects or more employees. For example you may need qualified project managers for large contracts, and people with HR experience managing layers of employees. Be aware you may need to hire staff with a different skill set than when you started.

Have the right vehicles and equipment

It’s important to check your vehicles and equipment are aligned to your business needs. Consider options such as buying new, second hand, or leasing. You can even hire if the need is short term, but make sure you factor these costs in.

Increase your cash flow

Options to increase your cash flow:

• Business Overdraft: linked to your NAB Business Everyday Account to help manage cash flow. There’s no set repayment schedule, so you can make repayments when it best suits your cash flow situation.
• Equipment Finance: A great option for tradies that need to increase their cash flow with the ability to personalise it for your equipment needs. Consider automating your payments and setting up direct debits with NAB Business Cards to reduce hassle, and administrative burden.
• NAB QuickBiz Loan: A good option to consider if you only need a short-term cash injection.

5. Check your KPIs

Compare your actual revenue against your revenue forecast

Regularly review if your revenue is tracking to target. If you’re not getting as many jobs or quotes as you’d hoped, consider adjusting your forecasts so you can manage your cash flow more effectively. Ideally you’re using accounting software to give you real time data.

Check your costs aren’t exceeding your budgets

Watch your costs carefully, especially when you have multiple jobs on the go. Crucial costs to keep a close eye on are the largest, including labour and materials. Sometimes you can justify going over-budget if you know a large payment is due.

Make sure you’re achieving the margins you need to see a profit

Do you have a set margin you work to for each job type? If you’re not achieving these margins then you’re either lowering your price to win work, or your costs are increasing.

Check your staff costs

Try and benchmark what you pay staff with other businesses in the same industry, or ask your local industry association if they have data you can use.

Use benchmark tools

There are some benchmark tools, opens in new window you can use, where employees can enter their salary and get a comparison.

Focus on your customers

Your regular customers are most likely to provide referrals from word of mouth. Increase this possibility by matching and exceeding expectations. Be on time, deliver within budget, ensure the job is completed properly, be easy to do business with and offer flexibility and outstanding customer service.

Use KPIs

Keep track of your Key Performance Indicators so you can make informed decisions about future growth. ResearchGate has a report into Australian construction industry KPIs, opens in new window, which looks at how businesses can measure KPIs, and methods for KPI reporting.

6. Understand the industry dynamics

Understand contracting and pitching

If you’re considering pitching for contracts for the first time, it’s best to get help from professional advisers. You’ll learn the different ways of pitching and how to tailor them for various customers. You’ll also learn the finer points of contracting and what to look out for. You can spend a huge amount of time and energy pitching, so you want to make sure you have a great chance of winning.

Become a member of your trade association

If you’re not already a member of your trade association, it’s a good idea to join. There are benefits to belonging to a group of like-minded business owners. Austrade has a directory of the main building and construction industry groups, opens in new window you can view.

Identify construction areas or industries that are growing

Keep an eye on where things are growing in the construction industry. For example, if you’re a builder and a city is developing new subdivisions, be in there early with your pitch. Or it could be that an area has been hit by a natural disaster, and urgent rebuilding is needed.

Identify new opportunities, such as sub-contracting with other businesses

Business alliances are a great way to gain work. Keep up to date with industry developments and stay in touch with what other businesses in your industry are doing. Sub-contracting also means that you’re forming alliances that can be very successful on an on-going basis. If you have a positive experience with another contractor, it’s a relationship that can benefit you both for future projects.

Tap into expert knowledge

You can never be too well informed. It pays to attend as many industry events as you can. If experts in your industry are offering seminars, tap into their knowledge as often as you can. The ACIF has a calendar of upcoming events, opens in new window, and it’s also important to become a member of Master Builders Australia, opens in new window. It’s an essential resource for any construction business in Australia.

7. Check your compliance

Make sure you have the right licence or registration

To work as a tradie in Australia you must have a licence or be registered. What you need depends on the state or territory you’re working in. The Housing Industry Australia, opens in new window website has a section on what you need to do to become registered or licenced in your area. This includes what qualifications you’ll need to have.

Understand and be compliant with health and safety regulations

Like licencing and registration, work health and safety in the construction industry is regulated by different states and territories. So it’s important to contact your work health and safety regulator, which you can do through the Safe Work Australia website, opens in new window. You can also read more about the regulations around the construction industry in Australia, opens in new window, including demolition, excavation, structures, and accident prevention. It’s highly recommended that you take the time to read up on construction work health and safety to ensure your business is compliant. If it’s not, this should tell you what you need to do to become compliant.

Ensure you’re up to date with codes of practice

It’s important that you understand the standards to which you need to operate in the construction business. Not complying with these standards can result in facing an expensive and stressful disciplinary process. Safe Work Australia provides detail on the Code of Practice for Construction Work, opens in new window – a very useful and necessary read for all tradies.

Become a Master Builders member

Master Builders’ membership, opens in new window is an essential resource for anyone working in the building industry. Over 31,000 residential and commercial builders, sub-contractors and related industry professionals are already members of Master Builders throughout Australia. They provide advice, products, services and benefits. You'll attend industry events and training courses, and stay informed as to what's happening in the construction industry.