Expert tips for setting up a new business

But despite these difficulties, our research has found that, for some people, business has boomed, with Companies House data showing that over 112,000 new UK trades companies have been set up since the first lockdown.

More than one in ten of the new businesses set up since 23rd March 2020 are trade-focused, with companies centred on ‘development of building products’ seeing the largest increase within the trades sector (20,753).

To help tradespeople who are looking to set up their own business, we’ve worked with Rick Smith, Managing Director at insolvency and business rescue specialists, Forbes Burton, to reveal some expert tips on how to make sure your new company has the smoothest start possible.

1.       Know your costs

Knowing the costs of running the business is the first step on the road to success, and if this stage is missed, then the future of the company is at risk.

Rick says: “Your first goal should be to have three months of running costs in a separate account to give you security.

“Next you should evaluate the true cost of starting up your business. Make sure you have an understanding of the expected running costs, including wages, rent, rates, vehicles and what all this will total in cost per week, month and quarter to trade with no work coming in.

“You also need to know what it is going to cost for things like rent deposits, equipment, tools and supplies for your first few jobs. Remember, at first you may not get paid for quite some time.

“Finally, always price your work according to your figures. If you have the previous few steps worked out, this should be easy and will ensure smooth sailing for the most part.”

2.       Remember to focus on the whole business

Many tradespeople will set up their own business because they’re experienced on the job and are confident in their abilities, but the work itself is only one part of running a successful business, and tradespeople also need to learn how to run a company.

Rick says: “A high percentage of our trade clients grow through a demand for their services. Put simply, if you are good at what you do, you will be in demand.

“The problems start when they have to learn how to run a business. Providing a quality service and running the business well are equally important and you can’t do one without the other.

“The business side of it doesn’t always get the attention it requires, which can mean the foundations of the company are weak. A combination of poor systems, processes and financials means cracks will appear and it then becomes a real problem that can spiral.”

3.       Implement a sustainable structure

Remembering to divide your time between completing work and running the business is vital to the company’s survival, so you should ensure that you dedicate time to creating a structure that allows both aspects of the company to get the attention they need.

Rick says: “If you are an established tradesperson, you should know how to quote and fulfil the work before you even set up a business, but time should be taken to research, get a good understanding and implement a structure to your business that is sustainable.

“The golden rule should be, get the right balance of working in and on your business. Scheduling your time weekly, rather than monthly to work on your business is always a good idea. It may seem like an inconvenience getting in the way of fulfilment of work but is the difference between success and failure in a lot of cases.”

4.       Market your work

You could be an incredible tradesperson but getting the word out about your company is something that takes time and specific attention, otherwise you’ll find work difficult to come by, regardless of your skill.

Rick says: “Start by looking at what is working for other people in your position, how are they marketing their business?

“You should consider things like signage on the site of jobs you’re working on, or at least on your work vehicle. You should also make use of social media, like Facebook, where community groups can be especially good at getting word out about your services. You can also use physical marketing, such as printing leaflets and information booklets to distribute in key areas.”

You can read more of our tips on how to make the most out of social media here.

5.       Build your reputation

Finally, developing a good reputation is key to long term success, and will ensure that you have a growing list of reliable clients.

Rick says: “Word of mouth is always invaluable in spreading the message about your company, and you should always look to provide the highest quality of service to build your reputation.

“Treat your customers well and be polite, do your job to the best of your ability, and don’t be afraid to ask for testimonials and reviews after a job well done.

“If you’re just starting out, you can always ask your clients to pass on the word to their friends and family, which may just lead to you securing new work.”

For all of your on-the-job needs and supplies, whether you’re an established business or just starting out, visit https://www.ironmongerydirect.co.uk/