What makes a truly successful construction business? What can you do to ensure that everything runs smoothly?
In this mini blog series, we’re outlining everything you need to know about the world of construction, beginning with setting up your first business.
Whether you’re a tradesman making the leap into self-employment, a new subcontractor, or you’re moving from a senior employed position to start your own business, this guide will help you get the right things in place from the get go.
Conduct market research and create a business plan
Before you do anything, we’d recommend conducting some market research first and fleshing out a business plan. A good place to start is by scoping out other construction companies in your area and what they’re charging, to find out where you would fit in the market. You might also want to consider the demographic in your area so you can factor that into your costs and the services you’re offering too.
Before you even think about setting up your business, creating a business plan is the best way to get things off the ground, as well as providing direction for everything you do. When it comes to creating a solid business plan, here are a few things you’ll need to consider:
- Who are your customers?
- What value are your providing them? (Why should they go to you and not the business next door?)
- How will you generate revenue?
- What resources will you need?
- What are your important costs?
- What do you need to do to be successful?
Once you’ve answered these key questions, and have a good idea about where you fit in the market, you’re ready to take the next step.
Pick a unique business name
Next up, it’s time to choose your name! It might sound trivial, but picking a name for your business is super important. Not only does it say something about you as a business, you’ll need it to set up your company in the first place and to communicate with HMRC.
Picking your name can be one of the most frustrating things to do, but once you nail it down, you can start to advertise your services, set up a website, and build a social media presence.
Got an idea for a name? Do a quick Google search first to see if there are any other businesses with that same name. You’ll also want to make sure the social media handles and the website name are free!
Self-employed or limited company?
Getting this right from the start will save you a lot of time, hassle and costs further down the line. This is a difficult point to start on, as each has different responsibilities and it should always be reviewed on a case by case basis, but you could begin by thinking about the following:
If you’re likely to incur a lot of business expenses, you can claim a wider range of expenses as a limited company.
If there is a high degree of risk involved in your business, you will have limited liability as a limited company. This means you are treated separately from your business, which protects your personal assets. However, if you opt for self-employed, you are personally responsible for your company’s debts, so personal assets could be at risk.
Choosing between being self-employed or setting up a limited company is massively different for everyone, so we’d recommend having a proper think about this and maybe taking some advice. One of our team would be happy to chat it through with you, on the house.
Setting up as self-employed
If you go down the route of being self-employed rather than setting up your own limited company, you’ll need to let HMRC know by registering for Self Assessment within 3 months of starting, otherwise you could get fined £100!
If you’re subcontracting, you’ll also need to call HMRC’s CIS helpline (0300 200 3210) to register as a subcontractor. When a contractor uses your service, they’re required to “verify” you with HMRC, and if you’ve not registered they will have to deduct 30% in tax rather than the usual 20%, so it’s well worth the five-minute phone call!
Setting up a limited company
Alternatively, if you opt for setting up a Limited Company, check out this step-by-step guide.
Set up a business bank account
We recommend setting up a separate bank account for your business straight away. This keeps your finances neat and tidy, and from an accounting perspective, you can easily distinguish between your business and personal expenses. (This might sound trivial, but it will actually save you a lot of time and hassle in admin!)
Nowadays, you can setup a business account in a matter of minutes with a branchless bank like Starling or Revolut, which you can manage entirely online. No need to stand in any more queues at your local bank!
With Starling, you can sign up for a business bank account on your mobile, and you’ll be up and running in a matter of minutes. You can easily deposit cash into your Starling account, get a flexible overdraft and automate your expenses.
With Revolut, you can sign up for an account on your laptop or mobile phone, get approval with 24 hours, with access to around the clock support as and when you need it. You can also set-up scheduled payments and bank in up to 28 currencies, all whilst beating exchange rates.
Alternatively, you can go to your usual high street bank like RBS or HSBC and set-up a business account, but this could take up to 3-4 weeks (!!), with some services only available in the branch.
Not sure whether to opt for a traditional bank or a branchless bank? Check out the article we wrote on choosing the write bank account for your business.
Get set up on an accounting platform
Okay, this sounds a lot scarier than it actually is. Getting your business finances in shape from day one will reap massive rewards in the future. We recommend Xero, but you could look at something like QBO as well. Xero is the leading online accounting software for small businesses. It automates everyday business tasks like invoicing and allows you to visualise your finances in real-time.
Think of Xero as the base for everything you can do with your business, not just the numbers stuff. As things start to grow, there are mountains of other apps that can connect to Xero to save you time and effort with your accounts and admin. (Because who wants to do accounts, right?!) They’ll make your life easier by streamlining every aspect of your business, from managing expenses to managing your jobs. For the next post in this series, we’ll outline these apps in more detail.
Insurances
Now that you’re working for yourself, you’ll need to make sure you’re protected. You will have been covered by your employer beforehand, but not anymore. We’d always recommend speaking to an insurance broker on this, but as a quick guide you should be thinking about whether you need the following:
- Public Liability Insurance
- Employers Liability Insurance
- Vehicle Insurance (to cover you for business use now).
What next?
There’s a lot of things to consider when setting up your first business, but getting it right from the start can make your life so much easier. It will also ensure that you’ve got the right foundations in place as you move forward.
At Complete HQ, we work with a range of construction businesses, so we know what it takes to get things running smoothly. We can advise you on setting up your business, choosing the right accounting software and everything else in between. Just drop us a message and we’ll give you a call!
