For many contracting business owners, transitioning from being paid as a sole trader — effectively being paid for working in the business — to a business owner managing others is a challenge they would welcome guidance on if they have not held a management position in a larger business. They are skilled at their craft but less comfortable with delegation and business management. This guide covers the early stages with a focus on building the systems and controls that keep a contracting business profitable at every stage of growth.
1. Build a Financial Foundation
Before you can grow, you need to know your numbers. Use accounting software like QuickBooks or Xero to monitor income, costs, and taxes. Allocate project codes to each project and calculate a profit and loss for each one — keeping overhead costs separate as these are spread across all projects. Know your overheads as a percentage of forecast turnover: this helps you price accurately and ensures you at least break even. Aim to save 3–6 months of operating expenses as a buffer against quiet periods or unexpected setbacks.
2. Streamline Your Processes
Running a business requires more than just doing the job — it is about how efficiently you do it. Create repeatable systems for each key function:
- Marketing and business development: forecasting turnover, obtaining leads, bidding tenders, securing work.
- Pre-contract: estimating the cost of the works, adding appropriate overheads and profit, recording the mark-up.
- Project setup: establishing the baseline, drawing register, contract conditions, health and safety and environmental risks, procurement schedule, information required schedule, inspection and test plan.
- Payments: client and subcontractor valuations, goods received, plant hire control.
- Project review: progress (planned vs actual), cost value reconciliation, non-conformances on quality.
- Handover: snagging process, O&M manuals, CDM health and safety file.
3. Implement IT Systems
A major step in building repeatable processes is introducing software — this standardises ways of working that others can then use consistently. Document your workflow for each stage of a job, from initial enquiry to final payment. Schedule regular reviews and refine how processes are done.
4. Learn to Organise and Delegate
Once systems are in place, the next challenge is arranging for others to carry them out as you gain more business. This introduces another series of skills: organisation structure, internal communication, personal time management, delegation, control of human resources, and control of the supply chain. Getting these right is what enables a contracting business to scale sustainably without the owner remaining the bottleneck.
