Skilled tradespeople can choose from several career paths. Many electricians, builders, plumbers, and service providers are full-time employees, working for companies, in the same way most members of the workforce earn income. Contract employment is another viable option for some tradespeople, signing-on for stints building new structures, or working projects with preset parameters. A third option chosen by remodelers, masons, contractors, and other trade professionals is self-employment – opening an independent shop.
If you’re ready to hang out a shingle and ply your trade without the limitations of working for someone else, you’ll need more than just jobsite skills. Running a trade business requires not only entrepreneurial passion, but also flexibility, attention to detail, a strong work ethic, financial savvy, and a consistent can-do attitude.
Do you have what it takes to be a successful business owner/operator in the trades? A look at the big picture can help you decide whether self-employment is your best path to professional prosperity. For the highest chance of success, hone your performance on the job, and carefully consider what it takes to run a thriving service business.
Growth Opportunities in the Trades
Trade work is closely tied to the country’s economic fortunes. When building is booming, tradespeople enjoy steady employment, but when times tighten, carpenters, plumbers, electricians, and other industry pros can run into work slowdowns. Fortunately for today’s tradespeople, demand for skilled workers is on the rise, and conditions are good for establishing a small business in the trades.
Bureau of Labor Statistics (BLS) tracks employment trends, publishing helpful information for American workers. The organization’s Occupational Outlook Handbook projects trending need for workers in various fields. According to the Handbook, trade occupations are growing.
BLS places the average job growth rate outlook for the period spanning 2016-2026 at 7 percent, across all industries. By comparison, it is thought carpentry professions are paced to grow at 8 percent. According to the BLS Outlook Handbook, masons and plumbers can expect to see their professions grow at an even faster rate. During the 10-year period, the bricklaying field could grow at a rate of 12 percent, and plumbing trade may experience a brisk growth rate of 16 percent. The figures paint a clear picture for professional growth in the trades, which could be an advantage for tradespeople considering self-employment.
Creating a Blueprint for Success
Creating a comprehensive plan is an essential first step for would-be business owners weighing the costs and benefits of independent trade ventures. Like other personal and professional pursuits, outlining your path to success increases your chance of reaching the finish line. A comprehensive business plan should be based upon research and experience.
The planning process and your completed business plan both provide immeasurable benefits, starting from day one. During the formative stages of your business, data gathered for your plan can help you evaluate the viability of striking out on your own. And once your independent venture gets the green light, a detailed business plan is there to guide you, projecting what your thriving trade business should look like.
The Small Business Association (SBA) identifies these 8 sections as essential features of a traditional business plan:
- Executive Summary
- Company Description
- Market Analysis
- Business Organization
- Products and Services
- Marketing and Sales
- Financial Projections
Setting up Shop
Equipped with a sound business plan and the funding needed to launch your trade business, one of the next steps, getting off the ground, is finding staff to support your venture. Unfortunately for budding entrepreneurs, the demand for qualified tradespeople has led to shortages of well-trained personnel in some parts of the country.
The market research conducted while crafting your business plan should expose staffing limitations in your region, if present. Results drawn from a recent Manpower Group study underscore a prevailing problem maintaining an adequate talent pool, from which to fill skilled trade positions. For various reasons, including an overall shortage of candidates, their lack of experience, and lagging technical competency, hirers report difficulty filing open positions.
If your business plan accounts for labor conditions in your locale, and workers are available, it may be possible to quickly staff your business and begin work. However, if your job schedule grows faster than your recruiting success, additional measures may be necessary. According to Manpower Group, trade businesses operating in particularly tight labor markets turn to these strategies to overcome shortages and recruit skilled talent.
- Outsourcing tasks
- Changing work models
- Offering higher pay
- Expanding employee benefits
- Recruiting workers from other fields
Rules, Regulations, and Industry Standards
Even before engaging in commerce, small business owners face myriad responsibilities, conditions, and requirements. In order for your trade venture to succeed, you’ll have to comply with regulatory requirements and legal mandates. The most successful businesses also adopt industry best practices and high professional standards. Before launching, consult your municipality for information about starting and operating a business within the jurisdiction. If state and federal requirements apply to the type of work you do, it may be necessary to obtain licenses or file paperwork with the appropriate agencies.
In addition to legal compliance, your trade business must also be insured, to protect you from accidents and unforeseen events. Commercial agents can advise you about pricing and proper coverage levels, but you can expect to pay a substantial sum for comprehensive coverage.
Buying a surety bond is another step independent tradespersons take to assure their customers. To be “bonded” means you’ve bought a surety guarantee, which can provide reimbursement when property damage and other problems arise on the job. Adding this additional measure of financial protection can also help you land customers, enabling you to advertise your trade services as Licensed, Bonded, and Insured.
Walking through the formalities with regulatory agencies ensures you’re licensed and operating legally, but small businesses must also account for their finances. Depending on the size of your business and comfort level balancing business books, you may wish to hire an accountant, so all your tax filings and financial documentation is kept in order.
Self-employed tradespeople enjoy more freedom and flexibility than hourly workers, but maintaining a business in the trades requires dedication, commitment, and business savvy. If you’re a true self-starter, willing to do your homework and buckle-down for success, an independent trade business may be the best way for you to maximize earnings in your chosen field.
The Sprout Funding blog offers tips, reports, insights and other ideas to help small business owners learn and grow. Have a question for our team? Email us at: email@example.com, and tell us how we can help you.
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