How to Grow a Carpentry Business

The contracting ladder

Carpentry businesses grow by moving up a fairly predictable ladder. Each rung adds margin and adds obligation, and skipping one usually ends badly — mostly because the working capital requirement steps up faster than the revenue does.

Most carpenters find their level somewhere in the middle and stay there deliberately, which is a perfectly good outcome. The mistake is drifting up a rung without noticing — taking on a job that needs a licence you don't hold, or funding materials you can't afford to carry.

Getting off labour-only rates

Labour-only subbie work is comfortable. It's also the lowest-margin work available to you, and it concentrates all your risk in one or two builders. Diversifying takes deliberate effort, because the phone won't start ringing on its own.

• Check your rate is a business rate, not a wage. A subbie day rate that hasn't moved in three years while your ute, insurance and tools have is a pay cut you gave yourself.
• Take supply-and-install work. Decks, pergolas, doors, stairs, built-ins. Materials margin is real money and you don't need a bigger crew to earn it.
• Say yes to the small direct jobs. They're annoying and they're how you build a residential pipeline that isn't dependent on a builder.
• Never let one builder be more than half your work. When they slow down — and they will — you need somewhere for the crew to go.
• Specialise in something. Staircases, cabinetry, heritage, decks, second-storey additions. A carpenter known for something gets called for it; a general one competes on price.

Pricing bigger jobs without carrying the risk

As jobs get bigger, the risk shifts from your labour to your quote. A poorly scoped $80,000 job can lose more than a year of subbie work made, and the losses come from the same four places every time.

1. Scope it in writing before you price it. Every inclusion, every exclusion, every allowance. A lump sum with a vague description is an invitation to an argument you'll lose.
2. Set stage payments that keep you ahead. Deposit, then claims tied to visible milestones — frame, lock-up, fix-out, completion. You should never be more than one stage out of pocket.
3. Protect the price on materials. Quote validity of 14 or 30 days, priced on supplier rates at the time of order. Timber and sheet goods move enough to eat a whole job's margin.
4. Price variations before you build them. Written approval, every time, no exceptions. The most common way a good carpentry job loses money is a series of small unpriced favours.
5. Allow for time you can't bill. Site meetings, supplier runs, waiting on other trades, weather. On a managed job that's a lot of days and it belongs in the price.

Our guide to writing a scope of work covers how to define the job properly, and working out your charge-out rate covers the number underneath your pricing.

Building a crew

There's a point where growth stops being about better jobs and starts being about more hands. It's also the point where your role changes, whether you planned it or not — the person managing the crew isn't producing much billable work themselves.

• Subbies scale fast and cost nothing when idle, but they're not available on demand and their finish is your reputation.
• Employees give you consistency and control at the price of a wage that runs whether or not the work does. That needs a forward book, not a busy fortnight.
• An apprentice is a four-year investment. They add supervision load before capacity and pay back later. Take one on when you can afford to teach, not when you're desperate.
• Know the real cost of employing someone — wage plus superannuation, workers compensation, leave, vehicle, tools and phone. Requirements vary by state, so check with your state authority and your accountant.
• Someone has to run the site. Once you have two or three people, the coordination is a real job. If you're doing it in the evenings on top of a full day on the tools, that's a problem waiting to surface.

Our guide to what your first employee costs works through the numbers that sit on top of the wage.

The admin that decides whether growth works

Carpentry businesses rarely fail from lack of work. They fail from unbilled variations, late progress claims and jobs that turned out to have made nothing — all of which are documentation problems, not trade problems.

1. Quote from saved pricing. Decks, pergolas and fit-outs share the same line items every time. Rebuilding them from scratch is hours a week you're not paid for.
2. Claim the day the stage is reached. Late claims signal that your cash flow is comfortable and you'll wait. Send them on time, every time.
3. Log variations against the job as they happen. Not from memory on Sunday. A variation you can't evidence is a variation you're donating.
4. Photograph what gets covered. Frames, blocking, fixings, flashings. Once linings go on, the photos are the only record of what you did.
5. Cost every job when it closes. Quoted labour and materials against actual. It's the only way to find out which types of job are worth chasing more of.

Frequently asked questions