When you are starting your own business as a tradie, there are lots of things to consider, from funding to competition and plenty more. When every detail, no matter how small, is not considered, we see small businesses that fail to succeed. The figures show that 60% of Australian small businesses close within the first three years of operation. The Bureau of Statistics recognises 2.1 million small businesses in Australia currently, but in the last financial year, 54,922 of them did not survive.
So why is this happening? Why are so many of Australia’s small businesses including tradies not getting off to a strong start right out of the gates?
Top 5 reasons businesses fail:
1. Wrong motivation
If you are starting your business to make a lot of money quickly, you probably want to reconsider your motivation. Often, if not always, start-ups require a large amount of funding, which usually comes directly from the owner’s pockets.
2. Poor management
Many businesses report their failure is due to the leadership team not having an effective management strategy. If, as an owner, you can’t identify issues and ways to rectify them, your business will struggle to cope with the ups and downs of being newly opened.
3. Inadequate funding
If you don’t have the money to invest in your business, and you can’t find investors willing to hand over the cash, your business may have trouble staying afloat. Before starting your business, consider any legal fees, employee salaries, manufacturing and distribution costs, etc. Also, consider putting extra cash aside for any surprising costs that occur.
4. Wrong market
Location, location, location! If you set up your business in an area where there is already a large amount of competition, or your target market isn’t large, you may struggle to find your feet. Make sure you consider the best place to set up the business that will see trade flow smoothly.
5. Lack of planning
As the famous saying goes “if you fail to plan, you plan to fail”. Without the proper know-how to run a business, every element of your company is going to struggle to find success.
These facts might be daunting to think about, but they shouldn’t stop you from going after your dream of owning a business. Trades are highly sought after and frequently utilised, so the market exists and is booming.
To help ensure your success, consider the following tips when starting your company:
5 top tips for business success
Before you make any concrete decisions, research your target market and the sector you want to enter. If you are an electrician by trade who wants to start his own business, look at the area you want to service and consider how many other companies are set up in the same area. What are you going to do to be different and stand out?
Once you have finished your research, come up with a business model and plan. Consider your challenges, goals, and the strategies you will use to overcome any obstacles that land your way. A return to study can support your planning and confidence.
3. Have the money organised
Knowing your budget is one thing: having money available is another thing entirely. Whether you are funding your business yourself, getting a loan, or you are relying on investors, be sure you have the cash lined up and ready to go.
4. Be passionate
If you aren’t personally invested in the work you want to do, there is a good chance you won’t be successful. Although it will be stressful, you still have to feel a passion and a determination for the work you will be doing and for running the business.
5. You don’t have to do it alone
Consider whether bringing in a business partner is the right move for you. Would it benefit you to start off having extra knowledge, someone to bounce ideas off, and more funds?
Each of the above strategies can be put in place when you are starting your business to ensure your success. However, one of the most important decisions you make that could be the difference between success and failure is education.
Whether you already have a diploma or are considering getting one, you can make for your business. Project Management (BSB51415, Leadership & Management (BSB51918) or Building & Construction Management (CPC50308) qualifications would all provide you with skills and knowledge to benefit your start-up business.
By following these strategies and seeking further training, your tradie business will start on a strong foot, with you as a competent, knowledgeable, and dedicated leader.