Running a trade business

Licences, registrations and insurance

Many trades need a licence, and the rules are set by each state and territory:

• Occupational licences for trades such as electrical, plumbing, gas fitting, air conditioning and refrigeration, and building work.
• Contractor licences to contract for work, in addition to your trade qualification, in many states, often above a certain job value.
• Home building rules for residential work, which may include written contract requirements and home warranty insurance above set thresholds.
• Other cards and checks, such as the construction induction “white card”, and working-with-children checks for work in schools.

Check with your state’s building or fair trading regulator for the work you plan to do, and use the licence finder on business.gov.au. Keep every licence renewed, and note the expiry dates in your calendar.

Insurance: talk to an insurance broker who knows your trade about public liability, tools and equipment, vehicles, income protection and, if you employ people, workers compensation. Many builders and commercial clients won’t let you on site without proof of public liability cover.

Pricing and quoting

Underpricing is the most common reason trade businesses struggle, even when they’re busy.

Know your real hourly cost

Add up everything the business costs in a year: vehicle, fuel, tools, insurance, licences, phone, software, accounting, advertising, super and the time you spend on quotes and admin (which you don’t get paid for). Divide by the hours you can actually bill (usually far fewer than you work). That’s your break-even rate before profit.

Build quotes properly

• Labour at a rate that covers your real costs plus profit.
• Materials plus a markup to cover your time sourcing, collecting and guaranteeing them.
• Travel, waste removal, equipment hire and other job costs.
• A margin for profit and the unexpected.

Make quotes clear

• Itemise what’s included and what isn’t.
• State how long the quote is valid, and how variations will be priced and agreed.
• Include your business name, ABN, licence number and payment terms.
• Send it quickly. Speed often wins the job.

Many tradies offer fixed-price quotes for defined jobs and hourly or day rates for uncertain work, such as fault-finding. Explain which you’re using.

Contracts and getting paid

• Get acceptance in writing, such as a signed quote or an email reply, before you start.
• Use written contracts where your state requires them, especially for residential building work above set values.
• Take deposits for materials on larger jobs, and progress payments on longer ones.
• Invoice the day you finish, with clear terms and easy ways to pay.
• Follow up promptly when an invoice is overdue.

Security of payment laws

Every state and territory has security of payment laws for building and construction work. They give contractors and subcontractors a right to progress payments and a fast process to resolve payment disputes. Details vary, but they typically:

• give you the right to make a payment claim, often even if your contract is verbal or silent on payment;
• set deadlines for the other party to respond and pay;
• give you access to adjudication, a faster alternative to court, if a claim is disputed or unpaid;
• may ban “pay when paid” clauses that make your payment depend on the head contractor being paid.

Check your state regulator’s guidance, such as NSW Fair Trading or Queensland’s QBCC, and follow the process exactly when you make a claim. See Contracts and legal basics and Getting paid.

Vehicles, tools and equipment

• Your vehicle is your workshop. Keep it organised and roadworthy, and log business use for your records.
• Track your tools, mark them, and secure them; theft is common.
• Buy for durability on the tools you use every day; hire for occasional jobs.
• Plan replacements in your budget, rather than being caught out.

Safety

Construction and trade work carries serious risks: falls, electrical hazards, manual handling, silica dust, asbestos, heat, and working alone. You must manage these for yourself, your workers and anyone affected by your work.

• Do a quick risk check before each job.
• Use safe work method statements where required for high-risk construction work.
• Never work on asbestos without the right licence and controls.
• Have a plan for working alone: check-ins and a way to call for help.

See Workplace health and safety.

Keeping the admin under control

• Use job management software for quotes, scheduling, job notes, photos and invoicing, linked to your accounting software.
• Take photos before, during and after every job; they protect you in disputes.
• Set a weekly admin block: quotes, invoices, payments and bookings. See Bookkeeping basics.
• Answer calls or reply quickly. If you can’t answer on the tools, use voicemail with a promise to call back, or an answering service.

Finding good jobs

• Google Business Profile: service areas, photos of your work, and reviews. See SEO and GEO.
• Ask every happy customer for a review.
• Referrals from customers, builders, real estate agents and other trades.
• A simple website with a page for each main service and the suburbs you cover.
• Lead-generation platforms can fill gaps, but check the cost per lead and the quality of jobs.
• Specialise where you can: being known for one thing often earns more than doing everything.

Growing: taking on staff or apprentices

When you’re turning work away, consider your first employee or an apprentice. Apprentices take time to train but can be a great long-term investment, and support programs may be available. See Hiring your first employee and Trades and apprenticeships.