10 tips to save money on
TRADIES INSURANCE Chances are you’re starting a new trades business
JobKeeper Changes coming in September Don’t let your business become a
ZOMBIE COMPANY
Volume and Profits Don’t Necessarily Go Hand in Hand
www.aussiepaintersnetwork.com.au
Many great careers start with a Pathway. Whether that be, beginning your Apprenticeship whilst still at school, or by finding an employer ready to take you on from the very start. Become a Painting Apprentice
A painting apprenticeship takes 3 to 4 years to complete dependant on the individual student. They get paid as they learn rather than building up a debt by going to university. An apprentice learns the theory behind painting as well as the practical application of working with others on the job.
Become a Qualified Painter
After completing an apprenticeship, you become a qualified painter. You can continue working for painting companies or building companies on wages for as long as you like. Your wage should increase as you now have your qualification.
Become a Painting Business Owner
After completing your apprenticeship this is where you take the leap of working for yourself and potentially put on staff and your own apprentice. At this point we recommend that you contact Aussie Painters Network as well as other organisations and associations.
Are you running a Painting Business? See how we can assist you in growing your business with apprentices!
CONTRIBUTORS • Andrew Wallace • Anthony Igra • Helen Kay • Jim Baker • John Quiggin • Leo Babauta • Monroe Porter • Peter Hurley • Robert Bauman • Sandra Price • Vanessa Petch
EDITOR Nigel Gorman EXECUTIVE EDITOR Caroline Miall GRAPHIC DESIGNER J. Anne Delgado
From the Editor Hey Everyone, Welcome to the 95th Edition of the Aussie Painting Contractor Magazine. This month we welcome Micheal Moller to our team. If you have an apprentice being trained under Aussie Painters Network you will be seeing him regularly as he is coming out onsite to look after all the Employers and Apprentices needs. He will be onsite with you every 6 weeks as a minimum for those within a 200km radius of our office, if you are outside that he will be in regular contact with both employer and apprentice. If you are wanting a more personal touch, contact us and we can assist with all your training needs. Last month we launched PaintingApprenticeships.com.au , it has gone off like a rocket with us placing nearly 20 potential apprentices with employers. The industry seems to be booming at the moment. Its great to see. I personally haven’t seen it this busy since the late 1990’s. Keep an eye out for what we are doing over the coming months as we have some exciting new news and things coming ahead. Don’t miss out on the Super Member Pack that is only available while stocks last.
Till next month, Happy Painting!!
Nigel Gorman
nigel@aussiepaintersnetwork.com.au
07 3555 8010
Contents 06
Trouble Finding Staff? Those serious about working are submitting applications.
08
JobKeeper Changes coming in September
10
10 tips to save money on TRADIES INSURANCE
16
Protect your Business Register a Trademark
21
JobTrainer explained:
24
THE 7 HABITS of Highly Indebted People
What is it, who qualifies, what does it pay?
27
How KPIs can solve employee UNDERPERFORMANCE
30
Don’t let your business become a
34
Essential Meaningful PRODUCTIVITY
37
Don’t mention it
40
Volume and Profits
42
Cutting taxes for the wealthy
46 47
Zombie Company
You don’t need or require a response from an act.
Don’t Necessarily Go Hand in Hand
Is the worst possible response to this economic crisis
Industry Idiots Important Contacts
Opinions and viewpoints expressed in the Aussie Painting Contractor Magazine do not necessarily represent those of the editor, staff or publisher or any Aussie Painters Network’s staff or related parties. The publisher, Aussie Painters Network and the Aussie Painting Contractor Magazine personnel are not liable for any mistake, misprint or omission. Information contained in the Aussie Painting Contractor Magazine is intended to inform and illustrate and should not be taken as financial, legal or accounting advice. You should seek professional advice before making business related decisions. We are not liable for any losses you may incur directly or indirectly as a result of reading Aussie Painting Contractor Magazine. Reproduction of any material or contents of the magazine without written permission from the publisher is strictly prohibited.
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1800 355 344 / 07 3555 8010 info@aussiepaintersnetwork.com.au aussiepaintingcontractor.com,au
Trouble Finding Staff?
6 | Aussie Painting Contractor
Finding quality trade qualified employees is the bane of most trade service business, painters included. As someone who offers recruitment services to clients, taking on a trade listing always involves a little bit of trepidation. I pride myself on delivery a great candidate but sometimes finding a good trade candidate can be difficult. But not at the moment! In the last two months, we have recruited for two qualified painters, two qualified light vehicle mechanics (even more rare than a painter!), a light commercial electrical and two certified trade trainers as well as a couple of trade’s assistants. In all cases there was a reduced number of applicants, but the quality was great and we were able to have a successful candidate within the week in most cases and two weeks in the rest.
This is a unique time and one that’s not going to last much longer. The increase in the JobSeeker payment and the decrease in the reporting obligations for JobSeeker means that only those serious about working are submitting applications. Travel restrictions also means that we’re receiving only minimal applications from workers overseas seeking sponsorship. This means that applications received are from genuine workers wanting to work.
Across the board the applicants we’ve received are looking for: • • • •
Long term stability Good workplace culture Varied work Happy to work on smaller projects
For most candidates these have all been weighted more heavily than pay. Most have recognised that the boom times are over and they are prepared to take a few dollars pay cut for the benefit of working for a stable and solid company. They have also recognised that they were just a number at the big company and now seeking smaller companies where they’ll be valued and appreciated.
So, here are my tips to maximise your recruitment searches: • Advertise on more than one platform. Seek still remains the biggest platform but there are others- Indeed, Jora and even Facebook – I advertise in the local community groups as well as using Facebook jobs. All except Seek offer free versions to advertise. • Make sure your ad is interesting. You’re not just advertising a job but your company as well. There are less candidates around so make sure that a candidate wants to click on your advert and apply.
• Make it easy to apply. • Create a sense of urgency for them to apply. • Ring every halfway decent candidate. Don’t just go off their resume. One of the mechanics I recruited for, the company dealt in performance cars. I received an application from someone who only listed his last two jobs – Harry’s Mufflers and Corner Mechanics. Nothing to get excited about, however, when I called him it turns out he had worked for Mercedes Benz in their performance team for 15 years! Something that would’ve been really handy to have on his resume, but I’m thankful he didn’t as it meant we got him when others would’ve overlooked him. My client’s only problem now is keeping the work up to him. • Ring candidates daily and get them in for a trial that week if possible. Candidates are moving fast and you don’t want to miss out. • When meeting your candidate, find out what they’re looking for in a job and make sure you highlight how your business can meet that. This is an interview for both of you, they’re also evaluating you against the 10 other companies that have rung them. • Its not all about money but make sure you’re not underpaying either. A fair wage along with a great culture and interesting work will attract and keep good staff. And finally, don’t hold out looking for a unicorn. Sometimes what you’re looking for isn’t in the marketplace right now, but with a bit of training, support and guidance, a less experienced worker can turn into your best employee. Same goes for an older worker who might be looking to step back from some of the responsibilities they had before and are now happy to hold a brush all day doing a good job. If you’re having trouble finding a new staff member, then reach out to Vanessa from HR Maximised on 0418 190 106 or vanessa@hrmaximised.com.au
Vanessa Petch HR Maximised 0418 190 106
2020 July Issue | 7
JobKeeper Changes coming in September The government has announced changes to the JobKeeper scheme. The Treasury’s review found that the subsidy was still “needed” but required a “test to ensure that JobKeeper is well targeted”. Be prepared
Reassessments in October and January
In early October, businesses will need to prove they’re in financial distress (showing a decline of at least 30%) in the Jun 2020 quarter in order to be eligible for the October - December scheme.
This means there will be changes to your current situation and your entitlements will be affected. The details of the changes are being announced now and we will ensure our clients are fully informed as to how this will affect them once we have processed the finer details of these changes.
This will need to be proven again in early January based on September quarter figures.
What’s changing?
Thank you
The JobKeeper subsidy has been extended to March 2021, but with some changes. Here is an overview of what’s changing and when.
Once again we thank you for your support and request your patience as we work through these next set of changes and its ramifications for you.
JobKeeper 2.0
Once we have all the information on hand from the Government and the ATO and have understood what it means for you, we’ll be in touch.
The next phase of JobKeeper will start at the end of September at a reduced rate. The subsidy will reduce from $1500 per fortnight to $1200 per fortnight for full time workers and those working more than 20 hours per week. For those working less than 20 hours per week will receive $750 per fortnight. This will be based on the amount of hours worked in February (pre-coronavirus).
JobKeeper 3.0
From 4th January 2021 these payments will fall to $1000 per fortnight and to $650 per fortnight for those working less than 20 hours per week.
A new test to see if businesses are eligible
From October, the payment will be subject to a new eligibility test which assesses whether the business recovered in the last 6 months.
8 | Aussie Painting Contractor
Please note: Details surrounding these changes are yet to be legislated so they are subject to change. As more details come to hand, we will pass them on.
What’s next?
Take the time now to prepare for the future. It would be wise to prepare a budget and cashflow forecast now to ensure you are ready for these changes that are coming. We are happy to help on this front so please get in touch if you have any questions.
Sandra Price
www.tradiebookkeepingsolutions.com.au Facebook : Tradie Bookkeeping Solutions
1 - 8 8 8 - 4 9 - S T I N G | s t i n g e r b ru s h .c om S T I N G E R @ S T I N G E R B RU S H .C OM
"First innovation in a brush that works in a long time." - Todd H Professional Painter for 35 Years
U.S. Patent 10,674,809
10 tips to save money on
TRADIES INSURANCE There are plenty of tradie memes about clients who choose the lowest quote. Typically it involves a picture of terrible building work! But the fact is that most people are looking for a cheap quote, and that includes tradies looking for business insurance. When the client chooses the cheapest quote What’s important of course is to find the most competitive quote for quality insurance cover that suits your business. Whether you have Trade Risk do this for you, or you choose to go DIY and shop around yourself, these ten tips should help you to save money on your trade insurance. The first five tips relate to starting a new policy, and the next five relate to existing policies and renewals.
When starting a new policy If you’re starting a new business insurance policy, chances are you’re starting a new trades business. Cashflow is so important at this point, so saving money on your insurance is vital. These five tips should help get you started. 5. Don't assume direct is cheaper This is probably the biggest mistake that tradies make when trying to save money on insurance. They assume that going direct to a big brand insurance company, like NRMA or AAMI for example, will get them the cheapest quote. We’re so used to doing this with our home and car insurance, that it just seems to make sense. You get
10 | Aussie Painting Contractor
a few quotes from the big guys, choose the cheapest and you’re good to go. Business insurance can be more complex in terms of pricing, and the big guys with their online quotes and call centres aren’t necessarily the cheapest. Extend your search to some of the smaller players, and especially the trade specialist providers. We can provide instant online quotes for standard trade businesses with up to five staff, and you’ll find the rates are typically more competitive than the big name brands for similar (if not better) cover. PS. We help plenty of trade businesses with more than five staff, it’s just that we provide more tailored quotes for these clients rather than quoting them instantly online.
4. Pay annually if you can Whether you go direct to an insurance company or via an insurance broker, paying monthly will cost you more. Sometimes it’s worth it, especially with cashflow being a constant challenge for many trade businesses, but keep in mind that the overall cost will be higher. With the direct insurers, generally they just increase the overall premium. So if you multiply the monthly payment by twelve, the total would be higher than the annual premium. If you use a broker, generally the premium will stay the same, but you’ll be charged interest via a structure known as premium funding, or premium financing. In this case the funder (typically a third party) is essentially lending you the money to pay the premium, and you then pay them back over 10-12 months depending on the setup.
3. Know what you're paying for This one’s a little trickier to explain, but it’s important to understand what you need and what you’re paying for. A classic example is tradies, and especially handymen, undertaking work for real estate agencies and property managers. The standard paperwork will state that you need a range of insurances including public liability and professional indemnity. If you don’t know what you really need, you’ll just go off and buy both policies, but in reality, you most probably don’t need professional indemnity insurance. As brokers we have to explain this to handymen on a weekly basis, and we’ve even written an article about it! Knowing what you need, and what you’re paying for, can help you save money by not paying for insurance that isn’t even relevant for your business. Tip: A good insurance broker will be able to tell you all of this! 2. Package your policies If you have multiple policies you might be able to save money by combining them. Most trade businesses, even if you’re just one person, will have a need for at least three policies. Your public liability, your tools and your vehicle. You can probably include personal accident insurance.
policies with multiple insurers but managed via a single insurance broker. Combining or packaging your policies is no guarantee of saving money. Sometimes spreading your policies across insurers can actually work in your favour, as a single insurance company isn’t necessarily going to be the cheapest across all of the covers you need. For example Company 1 might be cheapest for public liability and tools, Company 2 might be cheapest for your vehicle and Company 3 might be cheapest for your personal accident cover. Never assume that having everything on a single policy will be the cheapest option! 1. Use an insurance broker We are an insurance broker, so of course we’re going to list this as one of our tips! But we can back it up… We save tradies money by doing the shopping around for them. You tell us all about your business, and we’ll use our knowledge and experience to find the most competitive premiums to suit your needs. In many cases we’ll be able to find a better premium than you could on your own, simply because of our size and experience in having helped over 10,000 tradies with their insurance needs. One of the first mistakes that a tradie can make with business insurance is assuming that using a broker will cost them more. In most cases, a good broker will actually cost you less.
Combining them can mean one of two things. It could mean combining them into a single policy with the same insurer, or it could mean having multiple
2020 August Issue | 11
12 | Aussie Painting Contractor
Existing policies and renewals
Once your business insurance is in place it can be easy to get lazy and let it roll over each year without shopping around or making changes. The is especially true for tradies, as you have so much else going on trying to juggle work on site as well as all the paperwork. But if you can spare an hour or two each year to look at your renewal properly, you could definitely save yourself some good money on your trade insurance. 5. Advise us if your business shrinks Most public liability insurance policies are priced based on the size of the business. It’s not the only factor, but it is one of the big ones. Size is measured differently by different insurers. Some look at the size in terms of staff numbers, and other look at the size of your annual revenue. Often we’ll ask for both measures, which allows us to obtain quotes from different insurers regardless of how they measure size. A trade business can grow and shrink in size from year to year depending on many factors, including the timing of completion on larger projects.
If you’ve reduced your usage of subbis from one year to the next, make sure you let us know as this could result in a significant saving on your public liability insurance. 4. Advise us if your activities change Another factor that the insurance companies use to calculate your public liability insurance cost is the activities you undertake. Not just what trade you do (although that is part of) but any higher-risk activities you undertake.
If your revenue was $1 million last year and you don’t provide any updated figures for this year, your policy will be renewed assuming the same revenue.
For example, an electrician would be considered a standard trade under a liability policy, but if you’re doing work at power stations or airports, you’re now in the higher-risk category.
But if you have fewer projects being completing this year, or perhaps you’ve just downsized, you’ll be paying more for your insurance than you need to.
If you were undertaking this type of work when you took out your policy, you’d be paying considerably more than a standard policy.
So if you’re expecting reduced revenue in the upcoming renewal period, make sure you let us or your insurance company/broker know.
You will continue to pay that higher amount until you tell your insurer or your broker that you’ve stopped.
The same applies to staff numbers if that’s how your insurer rates your policy. If you’re expecting to have fewer staff this year because you have fewer projects on the go, make sure you update your policy. Bonus tip – Subcontractor use Some insurers take into account the percentage of your revenue that goes to subcontractors. The higher your use of subcontractors, the higher the cost of your public liability could be.
If you don’t tell us, you could be paying hundreds (or thousands) more for your insurance each year than you need to. The reverse is also true though… If you’ve started undertaking higher-risk activities and don’t tell us, you’ll be paying less for your insurance, but any claim relating to those activities will be declined. So whether you’ve stopped or started undertaking higher-risk activities, make sure you tell us!
2020 August Issue | 13
3. Pay annually if you can We’ve already covered this in the new policy section, but the same applies to renewals.
We can have multiple policies spread across multiple insurers to ensure we’re getting the best deal on each one, but you have a single point of contact, being us.
Paying monthly will almost always cost you more than paying annually. This is regardless of whether you’re going through a broker or direct to an insurance company.
If you’re paying monthly we can combine them all into a single monthly payment, even when the policies are with different insurers.
But before you curse the monthly option for being more expensive, you need to consider the value of managing your cashflow.
We recently helped an electrical contractor who had most of his business insurance with us, but his five vehicles were insured elsewhere. He had them with the same big name car insurance company, but each vehicle was on a separate policy.
Spreading the cost of your trade insurance across the year might cost you more, but it could also free up cashflow that you can spend in other areas to help grow your business, rather than having to pay the full amount on day one of your policy.
He thought he was doing the right thing, but we combined the five vehicles onto a fleet policy and managed to save him $250 a month!
And don’t think that financing your insurance through a premium funding company is just for companies that can’t afford the full premium. Large companies with tens of millions in revenue often fund their insurance with premiums in the hundreds of thousands.
1. Use an insurance broker Last but not least, use a broker! A good broker (like us, with over 600 five-star reviews!) will not only help you when first setting up your insurance, but also at renewal time. Every renewal we’ll look around to see if we can find a more competitive deal for you, along with ensuring your cover is still appropriate for your trade business. We’ll ask you the right questions to help us to shop around, which saves you having to do the running around. So not only will a good broker help you to save money, but also time. And in any business, especially a trade business, time is money!
2. Package your policies This is another tip that we already shared in the section on new policies. Packaging your policies can be done two different ways. If you’re dealing directly with an insurance company, it would mean having all of your covers with a single insurer. This rarely works out for the best, as the cheapest company for public liability mightn’t be competitive on tool insurance or vehicle insurance. The other option is to have all of the policies with a single insurance broker, such as Trade Risk.
14 | Aussie Painting Contractor
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Protect your Business
Register a Trademark The only way to stop someone else using a business name or logo that is the same as yours is through registering a trademark. Protecting your business from deliberate or mistaken intellectual property theft is crucial. Many people do not realise that registering a business name is different to registering a trademark. Registering your business name is a legal obligation, as it differs from the name of the legal entity that owns the business. However, registering your business name as a trademark is a separate choice you can (and should) make in order to protect your brand from someone else using it. Registering a trademark protects others from using the goodwill in your brand that you have created through the good work you have done for past clients. For example, it is important to register a trademark so that clients do not mistakenly go to another businessâ&#x20AC;&#x2122;s Facebook page that might be using your name. Case Study: I had a call a while ago from a lady who had just heard from a supplier that another business with a remarkably similar name was opening a
16 | Aussie Painting Contractor
few doors down from her shop and had ordered a similar product range. Her business name was not registered so nothing we could do at this stage. We quickly registered her name as a trademark and when this is registered will seek to prevent the other business using the name. Registering a trademark was something she had been thinking of doing but not got round to. -------------------------------------------------------------------It is possible to register a remarkably similar business name through ASIC as another operating business â&#x20AC;&#x201C; e.g. The Contracts Lawyer vs. The Contract Lawyer. This will inevitably cause confusion for customers, suppliers etc. and could negatively impact the positive perception of your brand through no fault of your own. Registering a trademark is the only way to stop someone else using a similar business name. It should also be noted that registering your business name as a trademark gives you the widest form of protection, compared with registering your business logo (even if the logo contains your business name).It stops anyone using your business name within their name or logo (in your designated class(es) of good and services).
Once you have completed the trademark registration process you will own the right to use the registered word, phrase or letters in relation to the classes of goods and services in respect of which it is registered. This applies across the whole of Australia. The benefits include being able to serve a cease and desist letter on other businesses using the name. You can also sell a registered trademark, making it a valuable asset when selling a business, and it can be reflected on the balance sheet. Furthermore, you can license your trademark or franchise your business, which can be financially advantageous.
A helpful tip when applying is to use pre-application service known as TM Headstart. This provides an initial assessment of your application before you officially apply using online services. With TM Head start the payment is split. The Part 1 fee will cost $200 per class, followed by a $130 fee per class in Part 2*. *Prices correct as at July 2020.
Did You Know…
A TM symbol on a brand indicates that said brand is currently an unregistered trademark, however the owner is in the process of registering it. Whereas the ® symbol means the mark is a federally registered trademark. ® trumps TM.
The results from the initial assessment of your application should only take around 5 days. This may save you money, as the examiners report will determine if your trademark is likely or unlikely to be registered before commencing to Part 2. Therefore if it is deemed unlikely you may decide not to pay the next pay of the fee to a full determination. The entire process will take approximately 7 months under Trademarks Act. Therefore, by using TM Headstart you are also saving time, rather than waiting many months before finding out your application has been denied.
How to register a trademark?
Further Protection
The good news is that registering a trademark is relatively inexpensive and easy to do. A commercial lawyer or trademark attorney can complete the registration on your behalf. Alternatively, if you would prefer to do it yourself, there is a five step process on the IP Australia website, currently costing $330 per class. You can use the trademark assist tool on the IP Australia website to help determine whether your name is ‘trademarkable’, as well as search for existing trademarks. You must be unique. You cannot simply trademark the term “Great Lawn Mowing”, as commonly used descriptive terms are unlikely to be accepted for registration.
There are structural changes you can make to your business to ensure the maximum protection of your intellectual property and assets, for example you could set up a company and family trust and appoint the company as corporate trustee of the trust. In addition to this, your intellectual property can be held in a company other than the operating entity. The owner of the intellectual property could then grant an intellectual property license to the operating company. This way, your intellectual property is separated from the main operating company. Please contact me if you require any further information on registering a trademark or any other commercial legal issue.
You must determine the class or classes of goods and services in which you will register your trademark. There are 45 separate classes and it is possible to register in multiple classes (each charged individually). For example ‘plumbing services’ fall within Class 37 however ‘bathroom installations’ fall within Class 11. To help you decide what goods or services to list think about the exact nature of your business and ask yourself the following: • What is the nature of your business? • What are you best known for by your customers/clients? • What products or services does your business provide?
P: 0402 318 033| E: helen.kay@riselegal.com.au
2020 August Issue | 17
Are you looking for a Painting Apprenticeship?
Are you running a Painting Business?
Find out how...
Grow your business with apprentices!
Is Painting & Decorating for you?
Interested in becoming a Painter & Decorator? paintingapprenticeships.com.au
Painting Apprenticeships brings Apprentices together with Painting Business owners.
JobTrainer explained:
What is it, who qualifies, what does it pay? The Australian government has announced a A$2 billion skills package it has dubbed JobTrainer. It follows JobKeeper, the wage subsidy program (worth about A$70 billion); Jobseeker, which doubled the A$550-a-week unemployment benefit (as well as other government income payments, at a cost of A$14 billion); and JobMaker, providing A$250 million to stimulate work in the entertainment, arts and screen sectors. Read more: Government announces $2.5 billion package
to support training and apprenticeships
The JobTrainer package has two parts. The first part, worth A$1.5 billion, is aimed at keeping those already in apprenticeships and traineeships employed.
It covers half the wage eligible employers pay apprentices and trainees, up to A$7,000 a quarter (A$28,000 a year). This compares to A$9,750 the Jobkeeper pays as a flat rate of A$750 a week. But unlike JobKeeper, employers are not required to demonstrate reduced turnover to qualify. There is a cut-off criteria according to organisation size, but itâ&#x20AC;&#x2122;s more generous than the scheme it extends. Previously the subsidy was only available to businesses with fewer than 20 employees. Now the limit is 200. The federal government estimates about 90,000 businesses will use the scheme, supporting about 180,000 apprentices or trainees. The scheme is scheduled to run till March 31 2021.
The second part is aimed at school leavers and those looking for work. It provides A$500 million for vocational education and training courses. That funding is conditional on matching funds from state and territory governments.
Subsidising wages The A$1.5 billion to subsidise the wages of currently employed apprentices and trainees extends a pre existing program called Supporting Apprentices and Trainees.
Get the Data
2020 August Issue | 21
Vocational education and training
The second part of the JobTrainer announcement is expected to support an extra 340,000 free or lowcost course places from September 2020 – dependent on the states and territories matching the federal goverment’s A$500 million. Funding will prioritise courses in areas the National Skills Commission has identified to as likely to see job growth. Examples nominated include health care and social assistance, transport, warehousing, manufacturing, retail and wholesale trade. Many of the 340,000 training places are likely to be shorter courses, known as skills sets, which are parts of full qualifications. These skills sets can provide students entry into new industries and also pathways to full qualifications which Australians can access through existing funding and subsidy arrangements. Public, not-for-profit and private training organisations will all be eligible to apply for funding to provide these courses. The vocational education and training system has suffered many problems over the past decade – including policies that resulted in widespread rorts and funding cuts. Even with an extra $1 billion in funding, total government support is still likely to be lower than its 2012 peak.
What’s missing from JobTrainer
JobTrainer doesn’t provide any new incentives or subsidies to encourage employers to take on new apprentices or trainees. In April and May 2020 the number of new apprentices and trainees fell 33% on the same months in 2019. The Mitchell Institute has previously highlighted how fewer apprenticeships and traineeships can have negative long term effects. Read more: Trade apprentices will help our post COVID-19 recovery. We need to do more to keep them in work This is especially true for school leavers. About 12% of all school leavers take an apprenticeship or traineeship as a pathway into the workforce. Not making a successful transition from school to the workforce is associated with poor long-term outcomes. These include higher rates of long term unemployment, high incidences of health problems and a lifetime engagement with the workforce characterised by low pay and precarious work. Fewer new apprenticeships also disrupts the pipeline of skilled workers. An apprenticeship usually takes four years. This means a reduction in new apprentices now will result in fewer people completing their apprenticeship in four years’ time. The JobTrainer policy probably won’t be enough to keep all current apprentices and trainees in their jobs. Employers faced with reduced work and uncertain conditions may still make the difficult decision to suspend or cancel a training contract. But it is certainly welcome assistance to keep those losses to a minimum. --------------------------------------------------------------------
Peter Hurley
Policy Fellow, Mitchell Institute, Victoria University
22 | Aussie Painting Contractor
HALVE HALVE
WHAT IF YOU COULD
Paint Drying Times?
The iQuip Dehumidifier is amazing. The other day I was doing a job that was all concrete walls – it was a school toilet block. The concrete walls had a lot of moisture, and it was lucky to be 10°, so I put the dehumidifier in & switched it on. It was unbelievable. Somehow it just wicks the moisture out of the walls and paint. Usually we put the undercoat on and wait
to the next day to try and recoat. This was dry within 3-4 hours, it sorta HALVED our drying time. To be honest when I purchased the unit, I knew it would work, but I didn’t think that it would work that well.
Simon Roberts - Orange NSW
We have being using iQuip Dehumidifier on a max 13° days and now able to get a coat of sealer &
two coats of ceiling white sprayed in just a day. Masking tape & plastic on windows no longer have moisture in the mornings. We were surprised the with water removed by the iQuip dehumidifier, up to 10 litres of water was removed from the air.
George Lindsay Painter & Renderer VIC
CLICK FOR DETAILS & FAQs ON IQUIP PAINTERS DEHUMIDIFIER iquip.com.au
THE 7 HABITS of
Highly Indebted People I spend all my time trying to get clients their money. Inevitably sometimes you exhaust all avenues and cannot recover their money. This is very frustrating and can leave you feeling deflated. You ask yourself, “Where is the justice”? The most common thing I hear is business owners saying that “I did the work and I am entitled to every cent”. That’s not quite true in my view. One of the duties of a business owner is to mitigate and manage risk. Yet all too often business owners commit their companies to too much work, for too great a value, for very poor quality clients, under non-existent terms. If you do that you can hardly complain about entitlements and justice. The fact is that there are scumbags in the business world who will take your work and run. If you make it easy then you carry some of the responsibility.
When you find yourself with no way of getting your money, I advise you to learn from the episode by asking yourself 7 important questions:
I had a bad feeling about it. Why did I do the work anyway? So often one’s 6th sense knows a scumbag when they see one. Pay attention to that inner voice and if it telling you that something is not right with your client/prospect then do further investigations before contracting with them or doing work. An early indicator is if your client is shy about giving you contact details, addresses, ABN’s and so on. Believe it or not, I have had clients do $20 000+ worth of work on the strength of a first name and a mobile phone number!
I hardly had any details about my client. Why didn’t I background the client properly? Once I had a client that was owed a five figure sum only to find that his client was run out of a rented townhouse. Before doing work you should be doing several searches and checks on your prospect. Check ABN’s, addresses, and contact details; especially the usual place of business. If it’s a residential apartment then tread carefully. Also Google the company name you are dealing with. Get an ASIC extract and see who the directors are and where they are. Find out who you are dealing with.
I did the work on a verbal agreement. Why didn’t I get the contract in writing? Too often businesses are undertake high value work under either scant contract terms, or none whatsoever! This is inexcusable. It is part of your duty as a business owner to manage risk. It does not matter how comfortable you fell with your client, get the contract right! Make sure the terms are place solid payment terms around the work, and entitle you to stop work if payments are not made, or repossess your goods if you are not paid. Get your solicitor to sort this out. And more importantly, actually get the contract signed off by the client; don’t just send it over and then start work. It’s nothing to be shy about.
because your client has been friendly or related some anecdote as to why you haven’t been paid. They are using you for credit. Things get worse when you keep working for the client until there are a pile of invoices unpaid. If there is one regret I hear all the time it is “Why did I keep working?” It comes down to misplaced trust. You are not a friend of your client, you are a supplier in a business relationship. That relationship is governed by fee for service. You need to remember that.
But she said she’d pay me for the extra work and the changes. Why didn’t I get any of that in writing? I’m not going to labour the point, but if you are not getting every single change on paper, you are increasing the risk on your business’s cashflow. Remember that 6 months after the work was requested, when you’re chasing your money, you need to be in a position to show that agreement in writing.
I showed how patient I was for 6 months. Why did I wait so long to chase my money?
I was asked to do all this extra stuff. Why didn’t I get the request documented? This is so common. It stems from a lack of clarity about what your ‘deal’ with the client is: you have promised to do a specified scope of work for a specified price. Anything above that is extra, and warrants extra payment. There is nothing wrong with doing extra work. Just get the client request or direction in writing. Never underestimate a person’s ability to lie about it later. Often the additional work is worth more than the original contract. So get over how friendly you think you are with your client and get the additional request on paper. If they’re genuine this should not be a problem.
My client did not pay me on time. Why did I keep working? If you are not enforcing your own payment terms on your client then you are asking for it. If you do not have enough respect for your own due date for payment, then your client won’t. Do not keep working
There is little reward for patience when it comes to getting paid. If you wait too long your client will go from having little money to no money at all. They may even go under! There is simply no excuse for not getting paid on time or within a reasonable time. If you do little to ratchet up the pressure, then you bear a lot of the blame. You should have a debt recovery plan in place which increases pressure as time goes on. However don’t let it drag in the first place. At 45 days overdue you should be well and truly in top gear: not just sending out another email about how much you’re owed. The ultimate lesson you should be learning here is that the seeds of debt are sown from the beginning of the deal with your client. If you don’t tend to it carefully, you simply increase the risk of not getting paid for your work. Always remember that you are in a business relationship with your client. You are not mates. Keep that at the forefront of your mind, and that will make it easier for you to enforce your terms in good time.
Anthony Igra
Contractors Debt Recovery
2020 August Issue | 25
The portable, inexpensive method to prevent paint waste-water polluting the environment.
How KPIs can solve employee
UNDERPERFORMANCE Has COVID-19 revealed weak links in your team? Whilst most tradies have forged ahead on with a can-do, positive attitude, grateful to be considered an ‘essential service’ amongst a world of uncertainty. There are the odd few whose true colours have shone through — and it’s weighing heavily on your mind and your bottom line. If you’re trying to get your painting business back on track post-pandemic, how are you tracking your employee’s performance? In our plumbing business, Dr. DRiP Plumbing, we set employee targets using key performance indicators (KPIs) — to understand which of our tradies are killing, and which are veering off route.
KPIs for your painters
KPIs provide you as the trade business owner, information you can draw on to analyse and review employee performance against your business goals.
And whilst your employees’ worth cannot be reduced down to just a number. If they are consistently underperforming (and the situation can’t be salvaged) — you’ll have real data to inform your decisions about the painters future in your business.
Which KPIs should be tracked — and why
Setting achievable targets for your team is essential. As the painting business owner, it’s up to you to decide which KPIs matter to you and your business (these will be dependent on your style of work, how big your team is, and your business goals), using a Staff Performance Dashboard to track these.
To grab your copy of our Staff Performance Dashboard, and find out how to implement it in your painting business seamlessly, check out our KPI guide for tradies via this link https://www.lifestyletradie.com.au/painter-kpi
2020 August Issue | 27
As a maintenance plumbing company, here are four examples of KPIs Dr. DRiP tracks: 1. Revenue per employee (Total invoiced out) This is a measure of what each employee brings in. It brings to light whether or not a team member is making you money, or costing you. 2. Profit per employee (Gross profit) This KPI breaks down profitability (excluding expenses). It measures how much money each of your painters is bringing in each day/week/ month over and above your break-even point. 3. Employee billable percentage This shows you the overall ratio of profitable work to non-profitable work each of your painters engages in. It demonstrates the relationship between “billable” and “non-billable” time. 4. Overtime per employee This can be interpreted in different ways. For us, we monitor how many hours a week our tradies are working. This is paid, and a necessary part of the job in our business.
Quick KPIs checklist
In our trade business, we track KPIs on a weekly basis using our job management software (AroFlo) and accounting software (Xero), and review these with our team on a monthly basis.
28 | Aussie Painting Contractor
Before you get started tracking your teams KPIs, ask yourself the following questions: • Are your KPIs easy to understand and measure? • Does your team know why KPIs are important? • Have you clearly communicated KPIs and expectations? • What does accountability look like? • How frequently will you track and review KPIs with team members? • How will you track the data? Ultimately, KPIs are for learning and decision-making, not judgement. They’re designed to drive collaboration and continuous improvement, so that your team is held accountable without fearful of job instability when they don’t quite hit their numbers. This is critical to creating a high-performance team for your painting business. For further help in your business, visit our ‘Survive the Sh*t Storm’ hub, where you can download free strategies and resources: www.lifestyletradie.com. au/survive-the-sht-storm --------------------------------------------------------------------
Lifestyle Tradie
Lifestyle Tradie is an award-winning education service and community for tradies in business who want to make more profit and fast-track financial freedom.
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2020 August Issue | 29
Don’t let your business become a
Zombie Company Is your business at risk of becoming a ‘zombie company’? There is increasing concern by economists that a number of businesses will not recover after the government support package of JobKeeper comes to an end. Fortunately, the program has just been extended, however, for some companies, this may only delay the inevitable. Some industries are clearly more vulnerable than others, so I thought I’d look into what’s going on in the construction industry. But first here are the major changes to the JobKeeper program recently announced. Changes to JobKeeper On 21 July 2020. the government has announced proposed changes to the JobKeeper Payment program including: »» an extension of the program to 28 March 2021 »» turnover tests to determine eligibility »» tiered payments for eligible staff • from 28 September to 3 January 2021 payment rate of $1,200 per fortnight for all eligible employees who, in the four weeks before 1 March 2020, were working in the business or not-for-profit for 20 hours or more a week on average; and $750 per fortnight for employees who were working in the business or not-for-profit for less than 20 hours a week on average • from 4 January to 28 March 2021- payment rate of $1,000 per fortnight for all eligible employees who in the four weeks before 1 March 2020, were working for 20 hours or more a week on average and for business participants who were actively engaged in the business for more than 20 hours per week, and $650 per fortnight for employees who were working for less than 20 hours a week on average.
30 | Aussie Painting Contractor
These proposed changes will not impact JobKeeper Payments until after 28 September 2020. Visit the Treasury website for more details about JobKeeper extension. The outlook is bleak Denita Wawn, CEO of Master Builders Australia said new modelling conducted by Master Builders Australia showed the devastating impact that lockdown was having on the building industry, the economy and the community. Master Builders Australia previously forecast there would be around 159,000 new housing commencements in 2020/21. “We now expect there to be only around 116,000, a drop of 27 per cent,” Ms Wawn said. It is estimated that 90% of building and construction companies in Australia work in the residential building sector. Around 388,000 of these are SMEs. That’s clearly not good news for painters and tradies who have to compete for those projects that do go ahead.
Zombie companies on the rise
So what kind of business is being called a ‘zombie company’? According to Investopedia, Zombies are companies that earn just enough money to continue operating and service debt but are unable to pay off their debt. This is an important aspect, when you think about the fact that the Federal Government has just extended their guarantees for companies who want to take out business loans to get back on track. The Government wants businesses to survive and create more jobs, so they have been providing lots of different avenues for assistance, which you probably are familiar with. However, keeping a business on life support when it’s not really sustainable into the future would be a management failure. So what does it mean for the small
tradie business? The old saying “Don’t throw good money after bad” definitely holds true here. Critical
numbers to create a healthy business post Covid-19
The road to a financially healthy business, no matter what the economy, is based on 5 critical numbers. 1. Gross Profit in $ / Gross Margin % 2. Markup 3. Net Profit $ / Net Margin % 4. Budget 5. Breakeven Aside from taking stock and doing a budget and expenditure audit, these are the 5 critical business numbers that will help you decide which measure to take and which way to turn. While it might seem like a good idea for some businesses, taking on an additional loan could well mean the breaking point in the not too distant future for others. That’s why it’s important to check your numbers first before jumping headlong into a potentially precarious situation. Rather than taking on more financial commitments, your business could survive by making some changes in the way you operate, and rethinking what kind of services you provide. With every downturn in the economy, there are always opportunities arising for business owners who are nimble and quick to pivot and take advantage of them. If you are stuck and need help with a complete review of your Covid-19 business recovery plan, call my office on 3399 8844. You can also visit our website at
www.straighttalkat.com.au
2020 August Issue | 31
What exactly do you receive as an
Aussie Painters Network Member Work, Health and Safety Management Plan Job Safety Environmental Analysis
Incident Investigation Forms Incident Investigation Form Register
Toolbox Meeting Record Form Template Rate Guide and Calculator
Quotation Tools Profit / Loss Per Job Tool
National Codes Of Practice State Codes of Practice
Aussie Painters Network have developed the tools to assist you to become more profitable. Once you join, you will get to pick your gift of choice from the list in the images below.
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Essential Meaningful
PRODUC TI VI T Y I don’t care about being efficient and productive just to be a better person, to get more done, to be more awesome. Cranking out more stuff for productivity’s sake doesn’t interest me anymore (it used to). Today, I care about productivity only as it affects my mission. I’m on a mission to change the world, and if I can be more focused, effective, and powerful as I do that … then it serves the mission. What doesn’t serve the mission is burning myself out. I’m in this for the long haul, and rest and selfcare are incredibly important. I also don’t want to just have my nose to the grindstone. I care about the experience I’m having as I’m on my mission — it needs to be powerful, joyful, meaningful. I’m not just cranking widgets. With that context in mind … let’s look at what is essential to this kind of productivity — what I think of as Essential Meaningful Productivity.
What’s Essential Meaningful Productivity
essential might be some of all three of those). This should be essential for your mission or something incredibly important to you (health, loved ones, etc.). Work on what matters. This means getting clear every day on what’s essential to you. 2. Meaningful: This should not just feel like the next thing on your task list … it should feel like the most meaningful thing on your task list. You might even open yourself up to feeling like this is your purpose, your joy. This is serving someone out of love, with devotion. It’s like when I made dinner for my wife & kids last night — this was an act of nourishing them, of taking care of them, of loving them. Writing this post feels like that for me. In fact, we can bring that kind of meaning to most tasks, if we practice this kind of devotion. 3. Productive: In this mode of work, I’m focused. I don’t turn away from the difficulty or discomfort or uncertainty, running to distractions or easier tasks. It’s important, it’s meaningful, it’s an act of love — and the people I’m serving are so worth this discomfort. I clear away distractions, and go into full-screen mode, giving this my entire focus.
There’s three parts to this:
As you can see, these three parts overlap quite a bit. Each word is really describing a different aspect of the same thing, but each is useful.
1. Essential: You focus on what’s essential, not just busywork, not what feels urgent, not on what other people are asking you for (though what’s
So how do you do this? Let’s look at the keys to making this happen.
34 | Aussie Painting Contractor
self why this is meaningful to you. Second, by pouring yourself into it fully, as if this were the most important thing in the universe. The only thing in the universe. Third, let yourself play, find joy, or otherwise /feel alive/ during this session! • Turn towards instead of away. You will feel uncertainty, fear or discomfort around some of your most important tasks. That’s called “groundlessness” — the uncertainty of not having solid ground under your feet. Instead of turning away, turn towards this task. Stay with the groundlessness, mindfully. Be present with the fear and uncertainty, but don’t let it force you to exit. Let it be an act of love and devotion to stay in the middle of the groundlessness as you do the task.
The Keys to Essential Meaningful Productivity You can actually do this in an infinite number of ways, but here are some elements I’ve found to be important in my own exploration: • Work on what matters. Do you know your most important tasks for today? For the week? For the month? For your mission or life? This is something to get clear on. We don’t always have to be perfect, but the idea is to know what’s essential, and to focus on that more of the time. • Structure sessions. Most of us just go through the day doing random things at random times, with no structure. Some people structure their days so rigidly that there’s no room for spontaneity or rest. The middle way, I’ve found, is to create structured sessions: 30 minutes for working on an essential task, for example. Or 90 minutes for writing. 15 minutes to process your inbox or messages. Two ideas: do your top most important task for 60-90 minutes at the start of every day. First thing. Second, do focused pomodoro sessions (25 minutes of focus on one task) 6 times throughout the day, every day. • Pour yourself into it. Put meaning & joy into each session. OK, you’re starting a session. Make this a meaningful session — first, by reminding your-
• Put smaller things into focused sessions. It might be true that few individual emails or messages or errands are going to be essential — so under the guidelines above, you might think you should never answer those emails or messages, never do the errands. But doing errands, paying bills, answering emails — these are all important at some level. The juggernaut of your mission will grind to a halt if you never maintain the engine. So the answer is to batch less important (but still necessary) tasks into focused sessions. Spend 1520 minutes processing email, for example. These batch sessions become essential. There are other ways to work with these ideas. For example, you might spend half a day, or an entire week, focused entirely on something really essential. You might structure your day so that you are doing certain tasks at certain times — meditate and write in the morning, messages and meetings and workouts in the afternoons, for example. But none of that is essential to the approach. The idea is to have structured sessions for essential tasks, turn toward the groundlessness and pour yourself into it with meaning and joy. It’s that simple.
Leo Babauta
a successful ‘simplicity’ blogger and author from California, the creator of top 25 Blog
ZEN HABITS
2020 August Issue | 35
50 YEARS A HOUSE PAINTER
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36 | Aussie Painting Contractor
Don’t mention it How many times have you said this or, that someone has said it to you? It is a response spoken when a person has appreciated a selfless deed that has been done. What you are actually saying is, ‘There’s no need to thank me, in fact, there is no need to even mention it as I was glad to help’.
The conversation came up recently when speaking to a painter mate of mine that I’ve been helping out (not quite sure why I call him a mate as he keeps mentioning how my business books are a great way for keeping his table level). He thanked me and said that he greatly appreciates the chats and advice I give him. This is when I replied, ‘That’s OK! Don’t mention it’.
When you do things in life that you love and are passionate about, it makes you feel great as a person. You don’t need or require a response from an act, as the act itself fulfils you. On this occasion though, truth be told, it was nice to hear the ‘thankyou’ and was really glad he did ‘mention it’. An appreciation from a person when not expected, gives you the urge to carry on in what you’re doing. It is the same with volunteers. They give up their time for the love of it as they enjoy helping people in need. They don’t expect recognition or a ‘thankyou’, and they don’t do it for the recognition or a ‘thankyou’, but deep down inside, it makes them feel good to be recognised for what they do and be thanked you for it.
2020 August Issue | 37
I’d like to give an example of when my wife and I had a home clean-out by getting rid of items we no longer needed. Instead of going through the hassle of selling it online (and because of the current Covid 19 crisis), I decided to donate it all to charity where the money (maybe $600 worth) could be put to good use. The shop I have been going to for the past six months is run by ‘RETO to Hope’ (a non-profit organisation to help people with addiction problems in order to reintegrate them into society). The volunteers there are either past addicts or people going through a rehabilitation process. Each trip I made to the store I was cheerfully greeted and thanked, not like another charity shop I went to that wouldn’t give you the time of the day. Because everyone was so pleasant and polite, I gave them a box of ‘Crispy-Creams’ to share. They were so overwhelmed and surprised by this, they couldn’t thank me enough. How a simple gesture can make a person’s day!
You may be wondering now; ‘What’s the actual point of this article and why put it in a magazine?’ Simply this: In many businesses, recognition to employees is not mentioned enough. There is too much emphasis on what they do wrong and not enough on what they do right. No matter how many staff you have, you need to praise them when they are performing well or exceeding expectations (I have to admit, I am guilty of not doing this enough when I had employees). Recognition of a job well done can boost the moral and confidence of a person. All it takes is a ‘thankyou’ or a pat on the back.
38 | Aussie Painting Contractor
You can improve on the verbal ‘thankyou’ too by either giving them a bonus, a gift voucher, or a simple thing like buying lunch. There is more chance that employees will stay with you if they are happy and contented with you as a boss, even if they could get a higher wage somewhere else. Keep in mind that this is a gesture of appreciation and should only be applied when the deed is warranted. If you do it on a regular weekly basis for instance, they will expect it every week, even when they don’t perform well. It is a bonus to them and should be earned. The other benefit also is you will be saving money from not having to look for a replacement. As you may know, it costs a lot to find a good worker, not just in advertising but the time it takes you to train them to what your expectations are. It is much more cost effective to keep the ones you have. In any business, a happy worker is a contented worker and generally produce more work. You will also see less downtime and less sick days as disgruntled employees are more prone to accidents. Being appreciated, wanted, respected, and being paid on time are the major concerns employees have regards to their employment. Your employees are the back-bone of your company (unless of course you operate alone). Make working for you a pleasant experience.
Jim Baker
www.mytools4business.com
Phone: 13 25 59 Fax: (07) 3877 2285 sales@quickally.com.au
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2020 July Issue | 39
Volume and Profits Don’t Necessarily Go Hand in Hand Most contractors are busy and excited over the amount of work they have but profits and sales don’t always follow the same path. An increased sales volume means you need more people, more cash, more management and probably will end up with more stress. The busier you get the less people tend to pay attention to details.
cause an increase in overhead and at some point, the competitive gains per unit stops. For example, suppose your rent is at $1500 a month equaling $18,000 a year. A rule of thumb is that every employee generates approximately 2000 hours a year (40 hours per week by 50 weeks). Your rental cost per field hour looks something like this:
Some of this is due to the economic principle of diminishing returns or also know as the law of marginal utility returns. This means that during the production process the gain of changing production factors will reach a point where the marginal per unit output will start to decrease. Here’s how my economics professor explained it. If you are thirsty, drinking an ice-cold glass of water is very satisfying. Each additional glass of water thereafter is less satisfying and ten glasses might even cause you to throw up. Sales volume works this way. In the beginning it can be a huge profit boost but eventually that return diminishes. Here are some things to keep in mind.
5 employee = 10,000 hours and $1.80 an hour for rent ($18,000 ÷10,000 hours) 10 employee = 20,000 hours and $.90 an hour for rent ($18,000 ÷ 20,000 hours) 20 employee = 40,000 hours and $.45 an hour for rent ($18,000 ÷ 40,000 hours)
Don’t randomly grow. Try to find your sweet spot. Most overhead items are fixed and it takes a certain volume to be competitive. However, uncontrolled growth can
40 | Aussie Painting Contractor
From 5 to 20 employees the rental cost per hour dropped 75%. Note from 5 to 10 employees rental overhead decreased by $.90 an hour but only $.45 from 10 to 20 employees. The cost per hour decreases slower as billable hours increase. At some point such growth will require fundamental overhead addition such as needing a bigger office or another project manager. When it comes to overhead you want to do as much volume as you can without increasing overhead or outgrowing your production capacity.
Production and the rubber band effect. The more you stretch a rubber band, the more power you get. Stretch it too far and it breaks. Stretching your organization will maximize profits but stretch it too far and it also breaks. Things begin to fall through the cracks and contracting is not very forgiving. A couple of bad jobs and you have a catastrophe. A couple of key managers leave and you have a crisis. You can only stretch your organization so far. Every guy you add is a little worse than the guy you had before. Take a sheet of paper and list by name the people you would lay off first, second, etc. Now divide the list in half and I bet the list of people you would keep is quite a bit more productive than the folks you would get rid of. Rarely do you add new people who are as good as the better people you already have. This has a way of fixing itself over time as you weed the bad folks out but can be painful and costly as you go through this process. Hurrying through estimates leads to mistakes. My father-in-law was a construction superintendent and he kept this note above his desk. The “hurrier I go, the confusier I get”. More volume means more tasks. As people become busier the odds increase that they will make a mistake. A bad estimate or two can prove to be both financially and emotionally devastating. You already have more work than you can easily perform. Suddenly you are tied up on work that is losing money. When you hurry, it’s also easy to miss the telltale signs of a crazy customer or a complicated dangerous job. I know a contractor who had a nice profitable business,
was busy but took a 600k job they never should have taken. The customer was difficult, the conditions poor and the job complicated. It cost 1.2m out of pocket to put in and they are now struggling to survive. Sloppy expenses and buying habits can become a factor. When you are broke and have no work, you squeeze every dime. However, when you are overloaded with work there is a tendency to not control costs as well. Suddenly no one is checking employee gas cards, you simply buy stuff and don’t try to get a better price, you pay overtime when it may not be effective or needed. Run a quarterly profit and loss. Make sure its accrual not cash and select an option where it shows each line items percentage of sales. If your raw labor cost was 25% of sales last year and 30% this year, that doesn’t seem like a lot but it is a huge number. It is now costing you 5% more to get the work done which is a 20% increase in labor cost, not just 5% (5% increase divided by 25% equals 20%). Don’t quit looking at the numbers because you think everything is ok. Don’t let an increase in sales volume lull you into complacency. Business is unforgiving. Pay attention to the details and maximize your profits.
Monroe Porter
is president of PROOF Management a firm that teaches seminars and runs networking groups for painting contractors.
www.proofman.com
2020 August Issue | 41
Cutting taxes for the wealthy
is the worst possible response to this economic crisis Australia’s response to the health and economic impacts of the COVID-19 pandemic is rightly considered one of the world’s best. At their best, our federal and state politicians have put aside the sterile games dominating politics for decades. It seemed possible these efforts might last, as politicians sought to find common ground and make real progress on issues such as climate change, industrial relations and inequality as part of the coronavirus recovery. But as soon as the virus seemed to be receding, politics returned to the old “normal”. Policies are again being put forward on the basis of ideological reflexes rather than an analysis of the required response to our new situation.
This economic crisis is different One of the most striking features of Australia’s initial response to COVID-19 was the speed at which the Morrison government abandoned a decade of rhetoric denouncing the Rudd Labor government’s response to the Global Financial Crisis. In mid-March the government was floating the idea of a tightly limited response with a budget of A$5 billion. By the end of the month this had been abandoned in favour of the JobSeeker and JobKeeper schemes, estimated to cost A$14 billion and A$70 billion respectively. Other schemes brought the total to A$133 billion.
There is no more striking example than the federal government’s reported plan to bring forward income tax cuts legislated for 2024-25. The idea apparently has backbench support. Those cuts will benefit high-income earners the most. They include replacing the 32.5% marginal tax rate on incomes between A$45,000 and A$120,000, and the 37% rate on incomes between AA$180,000, with a single 30% rate up to A$200,000. This is being proposed while the government begins to wind back income-support measures, such as free child care, with much more serious “cliffs” fast approaching.
42 | Aussie Painting Contractor
Prime Minister Scott Morrison with (on screen) the head of South Australia’s Department of Premier and Cabinet, Jim McDowell, NSW Premier Gladys Berejiklian and Western Australia Premier Mark McGowan during a National Cabinet meeting on May 1 2020. Alex Ellinghausen/AAP
2020 August Issue | 43
Despite the close resemblance to the Rudd stimulus packages, there was one crucial difference. The GFC caused a collapse in the availability of credit, potentially choking off consumer demand and private investment. This was the classic case needing demand stimulus. By contrast, the COVID-19 pandemic caused a shock to the production side of the economy, which flowed through to incomes. Millions of workers in industries such as tourism, hospitality and the arts were no longer able to work because of the virus. The crucial problem was to support the incomes of those thrown out of work, and keep the businesses employing them afloat until normality returned. There were problems with the details of eligibility and implementation of the JobSeeker and JobKeeper programs, but the response was essentially right.
Have cash, will buy luxury car
The primary rationale for early tax cuts is that they will stimulate demand. But the economy’s real problem is not inadequate demand – particularly not on the part of high-income earners. On the contrary, the problem for high-income earners is having a steady income even as many of the things they usually spend on (high-end restaurant meals, interstate and overseas holidays) have become unobtainable. Among the results has been a splurge on luxury cars. Compared to June 2019, sales of Mazdas, Hyundais, Mitsubishis, Kias, Nissans and Hondas last month were all down. But Mercedes-Benz, BMW, Audi and Lexus were all up. As Jason Murphy notes, this rush to buy fancy cars isn’t definitive proof the wealthy are looking to ways to spend all the money they’re saving. “But it is suggestive. Eventually the money has to go somewhere.”
The worst possible course of action
The continuing problem with the pandemic is the loss of income faced by millions of workers. By definition, anyone in a position to benefit from a high-end tax cut doesn’t have this problem. Equity would suggest
that, far from receiving more income, they should be sharing more of the burden, if not now then in the recovery period. When the federal government legislated its tax-cut schedule in advance, critics including Reserve Bank governor Philip Lowe and Access Economics partner Chris Richardson pointed out the danger of promising future tax cuts based on projected growth. The same policy had failed ignominiously in the 1990s when the Keating government legislated tax cuts to be introduced after the 1993 election. After declaring the cuts “L-A-W”, Paul Keating was forced to withdraw half of the tax cuts when the budget deteriorated. These criticisms have now been vindicated. The decade of strong economic growth, starting this year, that was supposed to make big tax cuts affordable has disappeared. We will be lucky if per capita GDP is back to its 2019 levels by 2024-25, when the tax cuts are slated to kick in regardless of circumstances. Once that happens, we will need all the tax revenue we can get to bring the budget back into balance and deal with the continuing expenditure needs the pandemic has created. The government now seems to be headed for the worst possible course of action – cutting support for those hit hardest by the pandemic while pouring money into the bank accounts of the well-off. The inevitable result of such a policy will be a surge of personal and business bankruptcies, mortgage defaults and evictions. That will bring about the kind of demand-deficiency recession the tax cuts are supposed to prevent, superimposed on the continuing constraints created by the pandemic. So far we have all been in this together. For high income earners that means forgoing tax cuts promised in happier times and contributing more to the relief of those who need it most. --------------------------------------------------------------------
John Quiggin
Professor, School of Economics, The University of Queensland
The Industry Idiots
46 | Aussie Painting Contractor
IMPORTANT
Contacts
Aussie Painters Network aussiepaintersnetwork.com.au
Ph. 0430 399 800
National Institute for Painting and Decorating painters.edu.au
Ph. 1300 319 790
Australian Tax Office ato.gov.au
Ph. 13 72 26 / Ph. 13 28 65
Award Rates fairwork.gov.au
Ph. 13 13 94
Fair Work Building & Construction fwbc.gov.au
Ph. 1800 003 338
Mates In Construction matesinconstruction.com.au
Ph. 1300 642 111
Workplace Health and Safety Contacts Comcare WorkSafe ACT Workplace Health and Safety QLD Victorian WorkCover Authority WorkCover NSW SafeWork SA WorkSafe WA NT WorkSafe WorkSafe Tasmania
comcare.gov.au worksafe.act.gov.au worksafe.qld.gov.au vwa.vic.gov.au workcover.nsw.gov.au safework.sa.gov.au commerce.wa.gov.au/WorkSafe/ worksafe.nt.gov.au worksafe.tas.gov.au
1300 366 979 02 6207 3000 1300 362 128 1800 136 089 13 10 50 1300 365 255 1300 307 877 1800 019 115 1300 366 322
actcancer.org cancercouncil.com.au cancercouncilnt.com.au cancerqld.org.au cancersa.org.au cancervic.org.au cancerwa.asn.au
(02) 6257 9999 (02) 9334 1900 (08) 8927 4888 (07) 3634 5100 (08) 8291 4111 (03) 9635 5000 (08) 9212 4333
Cancer Council Australia ACT NSW NT QLD SA VIC WA
2020 August Issue | 47
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