Writing a Simple Trade Business Plan

A trade business plan does not need to be a thick document; it needs to answer four honest questions: what you sell and to whom, what it costs to keep the doors open, what you have to charge to make a living, and how much cash you need to start and survive the slow months. For a one-person or small trade business, a few pages built from real numbers beats a polished plan full of guesses. This guide walks through a simple, practical structure you can write in an afternoon and actually use, grounded in the same startup costs and pricing realities every Canadian trade faces.‍‌‌‌‌‌‌‌‌‌‌‌‌‌‌​​‌​‌​​‌‌​‌​​​​‌​‌‍

Why bother, when you already know the work

A plan is not paperwork for a bank; it is the tool that stops the two most common first-year failures, which are under-pricing and running out of cash. Writing down your overhead forces you to see your true break-even rate. Writing down your startup and working-capital needs forces you to see whether you can actually afford to start, or need to line up a buffer first. If you ever do approach a lender or want to bring on a partner, the same plan is what they will ask for.

1. What you do and who you serve

Start with one clear paragraph: your trade, the kind of work you take (service calls, renovations, new builds, subcontracting to general contractors), the area you cover, and the customers you serve (homeowners, general contractors, property managers, commercial clients). Be specific. "Residential plumbing service and small bathroom renovations within a 40-kilometre radius, mostly homeowners and a few repeat general contractors" tells you more, and shapes your pricing and marketing more, than "plumbing".

This is also where you decide whether your growth runs through homeowners (where word of mouth and a good local presence matter most) or commercial and institutional work (where being incorporated and carrying higher insurance can be a gate to getting hired). That choice feeds the structure decision in Sole Proprietor vs Incorporation.

2. The money it takes to start

List your one-time startup costs honestly. For a solo trade these usually run between $10,000 and $50,000 or more in the first year, with the work vehicle the single biggest swing. The line items to cost out:

• Hand tools and power tools for your trade
• A work vehicle and its fit-out, if you do not already own one
• General liability insurance (most general contractors require at least $2 million)
• WCB or WSIB registration and first premium
• Business registration and any trade-licence or municipal-licence fees
• Accounting software and first-year accounting
• Starting inventory or common materials
• Basic marketing: a simple website and a Google Business listing

The realistic ranges by trade are set out in Startup Costs by Trade. Use real quotes for your insurance and vehicle, not guesses; those two dominate the total.

3. The cost of staying open, and your real rate

This is the part that prevents under-pricing. List your overhead, the cost of being in business whether or not you work a given day: vehicle running costs and fuel, insurance, tools and replacements, phone, accounting, software, marketing, and an allowance for slow days. Then work out the rate you actually need to charge:

1. Decide the annual income you want to earn.
2. Divide it by the billable hours you can realistically charge. A solo operator often bills only 1,000 to 1,200 hours a year once quoting, travel, admin and holidays are stripped out, not the 2,000 you might assume.
3. Add your overhead on top.

Many new tradespeople find their true break-even rate is $20 to $30 an hour higher than the figure they first had in mind. Better to learn that on paper than after a year of working flat out for nothing. The wider pricing discipline, including deposits, written quotes and change orders, is in Your First Quote.

4. Cash flow and the working-capital buffer

Profit on paper does not pay your bills; cash in the account does. The trap that sinks busy trade businesses is running out of cash to fund materials and labour before the client's progress payments arrive. This is especially acute for general contractors, who sub out the work and carry the materials and crew costs up front. Plan for it:

• Estimate your working capital. A common rule is about three months of overhead plus a materials float. For a general contractor this can be the largest single number in the whole plan.
• Take deposits. A 10 percent deposit on a fixed-price residential job is the Canadian norm, higher on small jobs, which keeps you from funding the work entirely out of pocket.
• Carry your own living costs separately. Few solo operators are fully billable from week one, so set aside a few months of personal living expenses outside the business numbers.
• Set aside tax from day one. Move a fixed slice of every payment, plus any GST/HST collected, into a separate account, so the tax bill is never the thing that breaks your cash flow. See Business Banking and Separating Finances.

5. A one-page action plan

Finish with a short list of what you will actually do in the first weeks and months: the registrations from Your First-Year Checklist, how you will find your first clients, and a simple revenue target for the first quarter. Keep it to a page. A plan you will reread beats a plan you file and forget.

Common mistakes

• Quoting a rate before working out overhead. The classic under-pricing trap. Build the rate up from real costs and realistic billable hours.
• Ignoring working capital. Being busy is not the same as being solvent. Plan the cash to carry materials and labour until you are paid.
• Using optimistic billable hours. Assuming you bill 2,000 hours a year instead of 1,000 to 1,200 quietly halves your real rate.
• Treating the plan as a one-off. Revisit it after a few months against your actual numbers, and again before any big change.

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