Is starting a trades business like creating a startup?
What is a Startup?
A startup is a new business designed to grow rapidly. A startup searches for a business model that is highly profitable and extremely scalable. Traditionally the “startup” tag is associated with technology companies such as Facebook and Twitter, but arguably any profitable business designed to scale could be called a startup.
Parts of a Startup
The Team
As startups often start with nothing but the founders, the team is the most essential element. The more you can get together a team of people that are experienced, motivated and capable of fulfilling your business goals, then the more support you will get from others.
Skills that you want to see in the founding team of a start-up include:
- The visionary - The person or people with the big goal to take over the world and the plan of how they are going to do it.
- Sales & Marketing - The go getter that is able to get out there in front of people and make things happen.
- Finance - The bean counter there planning out your financial forecasts, and tracking your results to date to ensure that you’re hitting your goals.
- Technology - The IT Gurus to build your scalable systems to ensure that the business can keep up with you as you grow fast.
- Operations - Often the strongest part of a trades based business is the Operations person. Whilst this is important, in the startup world all of the other skills are valued much higher. If your an operations person, make sure you surround yourself with partners that have the other skills (or learn them!).
The Problem Definition
A start-up is designed to solve a problem. The bigger the problem the better!
Think of real world problems. At Google they won’t start a project unless it can help 1,000,000,000 (yes 1 Billion) people. So the key is to really think big. Don’t come up with a problem that only helps a few people when you solve it.
The High Level Solution
This is your elevator pitch. How are you going to solve that problem quickly and easily?
The Revenue Model
The days of being paid by the hour for services provided have well gone.
In today’s world there are a plethora of creative revenue models to help you bring in the dollars to your new startup. Here’s a few ideas:
- Free
- Can you give your service away for free to one audience to get another more valuable audience to pay you more? This is what Google does, it gives away search for free to attract consumers that its advertisers can advertise to.
- Freemium
- Can you give away elements of your service for free to bring in prospective paying customers to your business? This is what Dropbox.com does. With Dropbox you can get 2gb of online storage for free, but if you need more then you need to pay them.
- Memberships
- Instead of being paid per hour for the work you do, would a group of people pay a membership for access to your services? RACV and NRMA do this for roadside assistance. Instead of paying for a mechanic to come out to your car, you pay a membership fee in advance to RACV and if your car breaks down they will come and help you out for free.
- Commission
- Solving a really big problem that costs lots of money? Maybe your clients will give you a commission on the money you save them?
The Technology
If you are looking to create the "Uber for Plumbers" or the "AirBNB for Backyards" then you are going to need access to State of the Art Technology and the world's best programmers. Creating unique technology is not easy, but get it right and the technology becomes a very powerful thing.
We would recommend that you have a chat with the software development team at Eaco. This is the team that created the technology behind the Service Central Marketplace. They have also created world beating technology for the Facility Management Industry, Roadside Assist Networks. Franchise Networks and much more.
If you are looking to create the next "Uber" or "AirBNB" then contacting the Eaco team should be high on your priority list. You can find them here: https://eaco.fm/
Growth Opportunities and Challenges
This is where your standard SWOT analysis (Strengths, Weaknesses, Opportunities and Threats) comes into play.
Where are your Strengths and Opportunities? How are you going to dominate your market? How are you uniquely different from the others? How are you going to win over the market, where your competitors can’t?
What are your Weaknesses and Threats? What out there is going to stop you from taking over the world? How are your competitors going to challenge you? What would happen to your business if Google or Apple decided to take you on? What would happen if the government changed the law?
The Financial Backing
The simple truth is that you won’t get financial backing unless you have the answers to all of the questions above. That said, if you do have the answers then you’ve got a solid case to ask for financial backing.
There are never any guarantees when seeking to raise capital for your startup. Venture Capitalists see 1,000 businesses for every 1 business that they actually invest in. Its hard to get in front of one, its even harder to get one to actually invest in your business.
To maximise your chances of raising capital from a VC you should:Get the business up and running with real customers and real revenues.Prove that the business can be profitable.Demonstrate how the business can scale.Find an advisor that will help you (a) finalise your pitch, (b)develop an Information Memorandum, and c) introduce you to prospective investors.
Trades based startups have the unique opportunity to earn some real money from the start. By building your startup off of the cashflows of your trades business you can “bootstrap” your way to success. This means that you’re financing the business yourself without having to rely on investors.
When do you start?
The minute you have a Billion dollar idea you start. Seriously what are you waiting for? This is your chance to change the world.
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To your article on the brickie not doing the foundations.I find clients start to think differently when one does a complete job.I ran a bricklaying business and do the complete job,from digging the trenches,casting concrete,laying the bricks and rendering of wall,if needed.However I think clients are'nt happy paying all monies to one trade,maybe a case of to much money going to one hand.Lesson-well you just can't satisfy people coz most people think Trades earn to much,not realising a tradie is responsible for his own super,etc etc.Add to that if a tradesman work for someone else he get about $27.00 in the hand,but add to that his RDO's,leave loading,sick pay,etc etc,then his wages is effectively doubled.Same goes for the client you're working for,but people just can't see it that way.
over a year ago by aardebricklaying
On the plus side for clients,I feel the mortgage are just killing everyone and the poor tradie has to cop all these frustrations.This is why a lot of people are employing a handyman,to do the work of brickie,or concretor.This this leads to a lot of rising damp problems,coz a handyman does'nt about specified heights below dampproofing course of a dwelling.
Oh well so it goes.