You need more than the right skills and tools to run a plumbing firm. You also need support that only certain financial products can provide.
Starting or expanding your plumbing business would be much harder if you had to shoulder all the costs yourself. Fortunately, there are plenty of financial products for plumbers that will help get your business off the ground, allow it to grow and keep it running smoothly.
A financial product helps you manage your own or someone else’s money. Common financial products include business bank accounts, loans and insurance. Most firms benefit from one or more of these products.
As a plumber, you’ll need access to financial products that help you:
Manage cashflow – this includes business accounts and business savings accounts
Protect your company and its assets – examples include van insurance, public liability insurance and goods in transit insurance
Fund big projects – for instance, business loans, credit cards and leasing products
Financial products for businesses offer benefits not seen in equivalent products aimed at private individuals. For instance, unlike many business bank accounts, personal current accounts don’t tend to allow you to upload receipts to your account.
Whether you’re new to the plumbing trade or building up an existing business, you’ll need certain financial products. Here’s a rundown of the main ones and the pros and cons of each:
Business bank accounts
A business bank account enables you to record all transactions and typically comes with an overdraft.
Pros:
Includes handy benefits, including accountancy software so you can work out your tax and National Insurance liabilities
May feature facilities to upload receipts and record invoices
Could boost your business credit rating, making it easier to get business loans
Cons:
May come at a cost – for example, some charge £12.50 a month or more
You may need to switch accounts if your business requirements change
There are rules about taking money out of your account for personal use
Business credit cards
Business credit cards work like personal ones, making them handy for covering unexpected expenses.
Pros:
A convenient way to keep business transactions separate from personal ones
Perks include cashback, discounts, air miles and 0% deals
They can boost your business credit score
Cons:
Access to higher levels of credit can lead to debt that’s hard to repay
You typically need a good to excellent credit rating to apply successfully
There’s a wide range of business insurance policies that are suitable for plumbers, including the following:
Public liability insurance – covers injury or damage to another person or their property
Employers’ liability insurance – as above, but covers your staff and is a legal requirement if you have anyone working for you who’s not immediate family
Professional indemnity insurance – covers disputes if you’re accused of not doing your job properly
Tool insurance – covers damage or loss of valuable tools
Pros:
Can save you a lot of money if you need to claim
Some clients will insist on you having certain insurance
Fulfil a legal requirement if you have staff
Cons:
Expensive if you never claim
Some have exclusions that you need to watch for
Excesses can be high
Mobile phone insurance
Mobile phone insurance protects your phone against loss or damage while you’re out and about. Given the nature of your job, it’s probably invaluable.
Pros:
Guaranteed replacement if your phone is lost or damaged
Good policies may cover water damage
Cheaper than needing to buy a new phone if your phone breaks, is lost or stolen
Cons:
Cover can be expensive, as can excesses
Your phone may be covered if you have business contents insurance
You may not get a next-day replacement
Business bank loans
Business loans can be secured or unsecured and can be a great way to help fund company growth plans.
Pros:
Quick access to finance, typically ranging from £1,000 to more than £1 million
Some lenders offer flexible loan terms of from one month to more than five years
Typically better interest rates than you’d get with online lenders and credit cards
Cons:
Strict eligibility criteria
Can take time for applications to be approved
Risk of losing your company or being declared bankrupt
Crowdfunding
With crowdfunding, you raise money via social media portals and websites. Individual investors pitch in an amount in exchange for a share of any profits made or for rewards, such as discounts on future work (typically offered to commercial investors).
Peer-to-peer lending
Peer-to-peer lending is like crowdfunding, but lenders earn interest rather than take a share of your profits. The risk for them is that they may receive no return if your firm folds.
Angel investors
Think Dragon’s Den. Angel investors are individuals or groups who invest their time and money in your business in return for shares. They are typically an option for larger firms with a good track record or smaller ones with a stand-out innovation. You likely need to be active on social media and a fluent networker to snare a potential investor.
The list of financial products that can help a growing plumbing firm doesn’t end with those featured above. You might also like to consider the following:
A growing plumbing business will inevitably need more tools, equipment and parts. Suppliers know this, which is why many offer trade accounts. In addition to offering purchase discounts, they often provide secure online ordering portals that record account statements, invoices and even stock levels.
The impact of the cost-of-living crisis on plumbers can’t be underestimated. Customers feeling the pinch are less likely to get plumbing problems fixed or upgrade existing installations. Firms offering monthly repayment plans backed by Financial Conduct Authority-registered lenders can attract more business.
Equipment finance works in a similar way to car finance. It may be useful if you move into a specialist area where expensive equipment is needed, such as heavy goods vehicles or solar panels.
You may be eligible for financial help from the government in the form of a grant or a loan. You’ll need to produce financial records going back three years and have a strong growth plan to get either. Many grant and loan schemes are run on a local level.
Business insurance is a way to protect your company against financial risk if things go wrong.