Consider these before starting a building business

Should you start your own business? It’s a question most builders ask themselves regularly. Whether to keep earning a safe wage or risk it all and go out on your own. If this is a question that’s been plaguing you for a while, we listed seven key things to consider before starting a building business

1. Why

Think about why you want to start your own business. Knowing the answer to this is integral for making sure you are starting a building business for the right reasons. Perhaps you want to increase your earnings and need more flexible working hours. Or maybe you are simply ready to take on a new challenge.

If it’s an increase in salary you are after, you need to understand that with that comes greater risk. As a business owner, you take on all of the responsibility to ensure you have consistent work in order to pay yourself and your staff. So while you may think your current boss is getting more perks than you, remember they are also more at risk if something goes wrong. 

Wanting the benefits of being able to decide when you work is also an incredibly common reason for wanting to start your own business. Being the boss means you can decide when your workday starts and finishes. But it also means you have to ensure you always have enough ongoing work. And it means completing all of the paperwork that comes with running your own business. These additional tasks may actually leave you with less time than you wish. Part of taking this leap is understanding that you have to start somewhere in order to get to where you wish to be.

2. Income source

Ongoing income is the backbone of all businesses, big or small. In 2012 The Australian Securities and Investments Commission released a report finding that 40 per cent of small businesses became insolvent due to inadequate cash flow. To ensure this doesn’t happen to your building business, you need to identify where you are going to get your work and income from. This could mean that you subcontract your services to select few companies or perhaps you’ll get work directly from the public. The key is, whatever you do, it needs to be consistent and ongoing.  Sub-contracting can be a more secure option, but it may not leave you with the flexibility you are seeking. Before saying goodbye to your current job and starting a building business, it’s crucial that you have a solid plan for where the work for your own business will come from

3. Business knowledge

In order to run a successful small business, you will need to know the daily ins and outs of business that come with the responsibility of being the boss. While going back to university isn’t necessary, you will need to have an understanding of accounting, cash flow, budgeting, quoting, hiring and team management. It is possible to outsource some of these to other professionals in those areas, but as a small business that often isn’t an option. Instead, look at our list of apps that are changing the game and making admin a lot easier for small business owners.

4. Responsibility 

With the bonuses of starting your own business, comes a lot of additional responsibility. As an employee, everything is taken care of for you. Supplies are ordered ahead of your arrival. The next job is already organised before the current one is complete. The paperwork is all taken care of and in a legal sense, you are not as liable as your boss.

When you take the reins of a business, these responsibilities all become your own concerns. And are things you have to manage yourself and for your team. On top of all of this, you do still have work with tools in hand to get the job done and will likely be the one working overtime if things aren’t complete on time or if problems arise. Considering this, it’s important to decide if pressure, responsibility and being heavily relied upon are likely to cause unbearable stress, or if you are the type of person who thrives in that type of environment.

5. Dependants

With statistics proving that only 50% of small businesses will continue the past the first three years, it’s important you consider who and what you need to provide for in your first years of business. If you are single, with no debt or dependants then embarking on a journey of self-employment will consist of only a small amount of risk. However, if on the other hand you are supporting a family and paying off debts like mortgages or a car. Then taking the leap into self-employment can come with some big risks. The best way to limit the risk is to prepare as much as you can. Make a detailed plan that you will stick to and consider saving enough money provide for the family to get you through any tough periods.

6. Timing

Before you begin the nitty-gritty of a detailed business plan, first think about the timing. There are many factors that can contribute to this. If the economy is slumping, people are likely to be more frugal with their money and less likely to commence large builds or renovations. Along these lines, it’s also good to do some research into how the building industry is going, particularly in the area where you intend to start your business. Is the region saturated with other similar businesses to the one you plan to start or is there a hole in the market you’d be able to fill. Finally, it’s a good idea to think about your personal life. Are you planning other big changes to occur soon? If so, perhaps it’s a good idea to wait for things to settle before embarking on opening your own business. 

7. Risks

Finally, after careful consideration, it’s best to weigh up the pros and cons. Decide for yourself if you think the potential risks will be worth the reward. Taking the leap and starting a building business, of course, can be incredibly stressful but ultimately also very rewarding.