Starting your own carpentry business can be a big step forward in your career. It is often a new challenge, whether you’ve spent years working for someone else or are jumping in after earning a certificate. Either way, there’s a good chance you don’t exactly know where to start.
There’s no one way to build a carpentry business. But, there are common steps that most carpenters will hit as they go from an idea to a fully-functioning business. There are also steps that often get skipped, but that could help set you up for greater success!
Here are our tips for starting a carpentry business in New Zealand.
Writing a business plan
Let’s start off with a step that is often skipped: writing a business plan. Many small business owners don’t bother writing a business plan because they think it’s something that only big companies need to do. But no matter what size business you are building, a business plan can be an asset.
A business plan is a document that guides you through setting up and running your business. It can be a great way to set goals, organise yourself, and track your success. There are many items that can be included in a business plan, including:
- Your short- and long-term goals – What specific milestones do you want to reach, and when do you hope to meet these goals?
- A list of the services you plan to offer
- Financial forecast and budgets – How much you need to make to break even, cash flow, sales projections, etc.
- Your ideal customers – Who will hire you (i.e., residential homeowners, construction contractors, etc.)
- Local market research – What’s the need for carpentry services in your area?
- Competitor research – Who are your direct competitors? How do they advertise themselves? How much are they charging?
Your business plan can start simply, with just a page or two of information. As you get closer to launching your business, you should have more details that can be added.
Making it official
In New Zealand, there are required and optional steps for registering your carpentry business. These measures impact how you will pay taxes, your legal obligations, and how efficiently you can run your business. Steps you may need to take include:
- Choosing a business name and registering a trademark for it. The ONECheck tool provided by the NZ Ministry of Business, Innovation & Employment can help you verify if any has registered your chosen name, see if any trademarks exist and if the web domain name and social media profiles are available.
- Choosing a business structure. Will you work as a sole trader, partnership, or company? There are pros and cons to each, and the structure you choose will impact your tax obligations and the laws you must follow. The Ministry of Business has online resources to help you choose which business structures may work for you.
- Apply for a New Zealand Business Number (NZBN). An NZBN makes it more efficient to do business. Instead of sharing your trading name and contact details with every customer, client, vendor, or supplier, you can instead provide your NZBN, which is linked to this information.
- Register for GST. This is required if you make more than NZ$60,000 per year. Sole traders and partnerships can register with Inland Revenue
Along with the above list, you may also want to look into central and local government regulations. There may be industry rules you must follow, especially if you will be working in construction.
Financing your business
Getting a carpentry business off the ground takes money. Finding financing may be necessary to make sure you have enough cash on hand until you start turning a profit. Three common ways to finance a carpentry business are:
- Loans – Money for new businesses is most often borrowed from a bank, but there may also be government loan schemes that you qualify for.
- Government grants – Assistance from central or local government grants may also help you fund your business. You may also get access to mentoring and advice so you can grow your business knowledge and skills.
- Private investors – An investor may also be an option for funding your carpentry business. Their money may come on the condition that they own a percentage of the business and part of the profits.
You might consider speaking with an accountant to help you weigh your funding options. The advice of a solicitor may also be useful if you are dealing with an investor.
Buying tools and equipment
Investing in quality tools and equipment will likely be the highest upfront cost when starting your carpentry business. If you’ve been working as a carpenter for years, you probably have most of the tools you’ll need to strike out on your own. However, it’s likely that you’ll need to buy some equipment before you get started, such as:
- Circular and table saws
- Power sander
- Power drill and bits
- Nail gun
Another consideration is your work vehicle. Is your current ute reliable? Can you securely store your tools and supplies in the back? Now might be a good time to upgrade to a newer model or install a lockable truck bed cover to help prevent theft.
And don’t forget office equipment! You may not need much to start, but a laptop, smartphone, and tablet could be useful. These electronics could help you create invoices, accept payments, keep in touch with customers, and navigate to jobs.
Considering business insurance
Protecting your carpentry business may be important to you. Skilled tradesmen often consider business insurance as a way to help shield themselves from expensive claims and lawsuits. There are many carpenter insurance policies available that cover different business risks, such as:
- Public Liability* – Protects against third-party claims of injury or property damage.
- Portable Equipment* – Helps you repair or replace tools and equipment if they are damaged or stolen.
- Business Interruption* – Covers loss of income and the increased cost of doing business if a specified event causes you to temporarily close up shop.
Without insurance for carpenters, the cost of fixing a bad situation could fall squarely on your shoulders. This can quickly drain your bank accounts, even leading to bankruptcy in some cases. Insurance policies help prevent this from happening and get you back to work as quickly as possible.
Hiring help
There’s much more to running a carpentry business than just measuring, cutting, and nailing. You also need to think about the day-to-day admin. Tracking invoices, ordering supplies, and balancing your books are essential to tracking your success and keeping everything above board.
You may be an expert in carpentry, but you’re probably not an expert in business admin. That’s why many carpenters get help from professionals like:
- Accountants or bookkeepers – These pros can help keep your books in order and assist during tax time.
- Marketing specialist – This pro could help you find new customers through real-world and online advertising, setting up a website, or updating social media profiles.
- Graphic designer – This pro can help you design a memorable logo and choose brand colours that can be used on your website, letterhead, work vehicle, and advertising.
- Office assistant – This pro can help you schedule jobs, keep up with emails, order supplies, and many other admin tasks.
- Carpentry contractors – These pros could help you take on more work or complete large projects that require more than one person.
It may not be possible to hire full-time employees from day one. However, you might consider getting part-time or freelance help until that is a reality.
Time to build your carpentry business
Running your own carpentry business is a popular step toward more career freedom. When you’re running the shots, you get to choose the projects you work on and the customers you work with. You can set your own rates and hours and build a work-life balance that fits your lifestyle.
Carpentry business tips checklist:
- Write a business plan to help guide your efforts
- Register with the appropriate government departments
- Find appropriate financing options
- Invest in quality equipment and tools
- Look into business insurance options that may fit your needs
- Consider hiring professionals to help take care of different office admin tasks
Building a carpentry business from scratch may not be easy, but it could be very rewarding! The tips discussed above could help jump-start your efforts and set you up for success.
Ready to compare carpenter insurance for your small business? BizCover makes it easy for NZ tradies to buy insurance for carpenters online in just minutes! Get started today.
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
© 2022 BizCover Pty Limited, all rights reserved. BizCover Limited is owned by BizCover Pty Ltd (ABN 68 127 707 975)
