Top 6 mistakes to avoid when hiring a contractor

If it’s time for your small business to expand, you will likely need to hire a contractor. Between running your business and balancing your home life, you may be tempted to simply hire the first contractor you find. However, it is important you take the time to research and interview multiple contractors before signing any paperwork. Here are some common mistakes to look out for when hiring a contractor for your business.

1. Not checking their contractor insurance

Although you may assume everything is in order, it’s a good idea to verify that a contractor has up-to-date insurance. Like any profession, contractor mistakes can happen, so it is vital to ensure that they are covered if things don’t go according to plan. At a minimum, contractors should have a Public Liability insurance policy, which covers accidental third-party injury and property damage. As a business owner yourself, you would likely be aware of the importance of sufficient coverage for potential risks.

2. Not verifying their contractor licence

Whilst requirements vary by state, all contractors in Australia should be registered or have a current licence to work. This is proof they have adequate experience (usually a minimum of two years), technical qualifications and industry knowledge, guaranteeing that the person you are hiring is a professional. Obtaining this information should give you extra peace of mind that your business is in safe hands.

3. Unclear terms of the contract

You may have an excellent conversation over the phone with a contractor, but it is highly important to get the specifics in writing. Ensure you have a list of your expectations and discuss these in detail with the contractor before making your final decision. A contractor should visit your business premises to survey the site and have a clear picture of the space before writing their project plan.

Some necessary aspects of a typical building contract include a start and estimated end date, materials and equipment that will be used, and a system for handling any problems should they arise. Establishing these guidelines will reduce stress and the likelihood of unwelcome surprises.

4. Lack of budget breakdown and cost estimates

Any good contractor should include an estimate of the overall cost including materials and labour, as well as a payment schedule. Full payment up front or in cash is usually a red flag. Don’t hesitate to enquire about a breakdown of the costs, so you know exactly where your money is going.

Be wary of hiring the contractor who offers the cheapest price. You don’t want any cut corners which may jeopardise the quality of your building expansion. The contractor you choose to work with should be aware of your budgetary expectations and be prepared to meet your particular business needs. Ensure that this is clearly defined in the contract so there can be no confusion down the track.

5. Not conducting a thorough background check

Another contractor tip for business owners is checking their references. To avoid disappointment, arguments and budget blowouts, you may wish to speak to some of their recent clients in order to get a reliable idea of their standard of work. Ask questions such as what type of work was completed, was it finished on time and within budget, and whether they would work with the contractor again. If their previous clients were satisfied, you can move forward with confidence.

6. Not investigating your options

If you’re lucky, the first contractor you speak to may be the perfect fit for your business. However, it is more likely that you will need to meet with numerous contractors before you settle. The ideal contractor will be personable, a good communicator and will remain calm under pressure, in addition to producing high-quality work.

You may wish to ask friends, family or colleagues for recommendations of trustworthy contractors they have worked with in the past. Before signing the final contract, it is crucial to meet with your potential contractors to determine whether you will mesh well – after all, you will be spending months working together to build your business vision.

Recommended reading: Guide to Hiring a Contractor

*This information is general only and does not consider your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording.
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