If you’re keen to take your business to the next level, then transitioning from a sole trader to a company could be the next move for you. But how can you navigate this growth opportunity and the recategorisation of your trade business?
In this article, we delve deep into some practical tips that will make that transition seamless. These steps will not only set you up for success but also ensure that you’re doing it the right way, with the right protection and strategy.
1. Start with Your Legal Restructure
As a sole trader, you’re the business. The profits, the losses, and all of the liability fall on you. While this structure works perfectly when you’re just getting started and keeping it small, as soon as you start to scale up you’ll need a little more protection.
Shifting from a sole trader to a limited company can provide several benefits. For one, it provides a clear separation between your personal assets and the business’ liabilities. If something goes wrong — a client lawsuit, a financial setback etc. — your personal home or savings won’t be in jeopardy. This is exactly why so many tradies decide to take this step when expanding their operations.
An accountant or business advisor can help you determine what kind of legal structure is appropriate. There are options like partnerships, trusts and companies to explore, depending on how you plan to grow and who you want to involve in the business.
2. Get The Right Insurance in Place
Once you’re clear on the legal structure, it’s time to consider how you will protect both your business and your clients. This is where liability insurance for your business comes into play. Whether you’re laying a new kitchen, sorting out a plumbing problem, or getting your hands dirty on just about any project, mishaps happen. If you were to accidentally damage a client’s property (or worse, someone gets hurt on the job) you could be in for an incredibly costly and stressful time without the proper cover.
Simply put, public liability insurance is non-negotiable for tradies. It ensures that you’re covered in the event of on-site accidents, helping protect your business and reputation. If you’re expanding, it also assures your clients that you are a quality professional who takes their business seriously by having the necessary insurance in place. Many larger contracts and clients may even require proof of insurance before they’ll work with you.
It’s also wise to consider other types of coverage, like tool and equipment insurance, especially as you start accumulating more expensive tools. The right insurance gives you the confidence to focus on your tasks at hand instead of second guessing potential mishaps. So, make sure to do some comparison shopping for the right policies to fit your unique needs as a tradesperson.
3. Invest in Systems and Processes
As a sole trader you’ve had to depend on your ability to multitask and be organised on the go. As your business grows, however, those systems need to be updated to keep you on track. From invoicing and scheduling jobs to tracking expenses, there’s a wide variety of software that can help things run smoothly.
For example, job management software allows you to schedule jobs, keep tabs on quotes, and send invoices — all from your phone or computer. This simplifies your day-to-day work, making sure nothing slips through the cracks. Your clients would also appreciate the transparency and efficiency, helping you appear as a trusted professional.
Similarly, having a solid accounting system in place is crucial as your business starts to scale. Staying up-to-date on income, expenses and taxes can quickly spiral out of control if you’re not organised. This is where online accounting tools such as Xero or QuickBooks come to the rescue, enabling tradies to stay on top of their finances. If you’re unsure about tax obligations, hiring a good accountant to help you navigate the financial side of your business can make a world of difference.
4. Build Your Brand and Online Presence
As a sole trader, most of your work probably comes from word of mouth and personal recommendations. That’s all well and good, but if you’re in the market to grow your trade business into an enterprise, the next step is to start thinking about your branding and online presence. In a highly competitive market, you need to stand out.
Start with the basics: get a website up and running. A professional website doesn’t have to be flashy—it just needs to convey who you are, what you do and how clients can contact you. Additionally, never underestimate the influence of social media. Instagram and Facebook work exceptionally well to demonstrate your skill set, be it through before-and-after shots of your projects or client testimonials.
Creating a brand identity that reflects your values and the quality of your work is vital. It helps build trust with potential clients and makes your business memorable. With more people searching for services online, a good digital presence can mean the difference between an empty calendar and one that’s bursting at the seams.
5. Focus on Hiring the Right People
There will come a time when the solo part of your journey will need to shift. As your trade business expands, you’re going to need more hands on deck. From hiring more tradespeople to employing office staff to take on administrative work, expanding your team is one of the most crucial steps you will take.
The real secret to hiring well is to have a clear understanding of what your business values and seek people who align with your goals and values. You don’t just want workers who know what they’re doing — you want them to be trustworthy and reliable too. The last thing you need is a bad hire who causes more problems than they solve. Conducting thorough interviews and checking references is essential. Additionally, consider offering apprenticeships to help build a team with the right experience and expertise, and to foster long-term loyalty.
If you’re looking for experienced tradies to join your company, submit an open vacancy form on our website and one of our recruiters will connect you to the right skilled tradespeople in Australia.
Are you a job seeker looking for your next big opportunity? Click below to see how we can assist you in finding the perfect role.
6. Expand Your Services and Client Base
As you grow from sole trader to a large company, it’s time to start thinking big. One way to grow even faster is to offer more services. For instance, if you’re a plumber, you might consider adding heating services or drainage work. If you’re a builder, you could branch into residential or commercial work. Diversifying your offerings will help you capture a wider range of clients and projects.
But expanding your services isn’t the only solution. You also need to target a broader clientele. Keep an eye out for opportunities in new markets or industries that might benefit from your skills. Network with other businesses or join trade associations to get your name out there. Teaming up with suppliers, contractors or other tradespeople can also open new doors to larger, more lucrative projects.
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Final Thoughts
In this day and age, starting a trade business from scratch is no walk in the park. As a plumber, electrician, builder, or carpenter, you’ve probably learned the ins and outs of the trade world through practical experience, doing everything from sourcing materials to managing client relationships.
But transitioning from a sole trader to an employer comes with its own unique learning experiences and requires that you develop even more skills. This includes learning about the right legal structures, insurance, systems, branding, and professionals to add to your team.
So long as you focus on providing quality work, safeguarding your business and diversifying your opportunities, however, rest assured that you will soon reap the rewards of your hard work as your company grows.
Just make sure to keep evolving, and enjoy the journey of growing your trade business into something you can truly be proud of.
Looking to take the next step in your career or find top-tier talent to grow your team? Dayjob Recruitment connects skilled professionals with leading employers across the country, specialising in trade jobs in Australia and stone industry jobs in Australia. Whether you’re hiring or job hunting, trust Dayjob to help you build a solid future in the trades.
FAQs
What are the key benefits of transitioning from a sole trader to a company?
Transitioning to a company structure offers several advantages, including legal protection through limited liability, potential tax benefits, and increased credibility with clients. It also enables easier access to larger contracts and the ability to hire staff as your business grows.
What types of insurance should I have when growing my trade business?
At a minimum, tradies should have public liability insurance to protect against on-site accidents or property damage. As your business grows, you should also consider tool and equipment insurance, income protection, and possibly workers’ compensation if you hire employees.
How can I attract more clients and grow my brand as a trade business?
Invest in a professional website and maintain an active presence on social media platforms like Instagram and Facebook. Showcase your work, share client testimonials, and highlight your services. Building a clear brand identity helps establish trust and makes your business stand out in a competitive market.
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