NEW COURSE
on Paint Colour Specification Why you should have a
Company Structure not Sole Trader...
How cash flow forecasts can help you Business Reality Check: Do you have a plan B? Scale of survival beyond the current economic crisis.
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 • Anthony Igra
From the Editor
• Daniel Wurm • Helen Kay • Jim Baker • John Quiggin • Leo Babauta • Monroe Porter • Robert Bauman • Sandra Price • Vanessa Petch
EDITOR Nigel Gorman
Hey Everyone, Welcome to the 97th Edition of the Aussie Painting Contractor Magazine. With the last of the States hopefully coming close to the end of lockdown, we are expecting those areas to pick up quickly with work for all painters. In Qld there is a boom that is unparalleled in my over 25 years in the industry. Reports from other States is that things are picking up there as well. I think that those that have not been able to work are going to find things busy when they get back in the groove. I hope you have taken the time to get your business post lockdown ready. Currently APN are looking for apprentices for employers and employers for apprentices. We have 42 Employers having over 50 positions available and 49 potential people looking for apprenticeships. These range from School Based to mature aged. For more info go to https://paintingapprenticeships.com.au/jobs/ Everyone take care and stay safe.
EXECUTIVE EDITOR Caroline Miall
Till next month, Happy Painting!!
GRAPHIC DESIGNER J. Anne Delgado
Nigel Gorman
nigel@aussiepaintersnetwork.com.au
07 3555 8010
Contents 06
Underpayments of Wages PUNISHABLE BY JAIL
09
NEW COURSE on Paint Colour Specifification
12
The Subtle Power of Changing Your Identity
30
Have we just stumbled on the Biggest Productivity Increase of the Century?
33
Why would a tradie need an Insurance Broker?
38
A Business Success Story
40
How cash flow forecasts can help you
44
How To Accept Settlement Offers
45
Industry Idiots
46
Important Contacts
There are more benefits
14 18 24
Why you should have a COMPANY STRUCTURE not Sole Trader... Our Magazine Contributors Get to know them
Business Reality Check: DO YOU HAVE A PLAN B?
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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Underpayments of Wages
PUNISHABLE BY JAIL The Queensland Government last week passed legislation making it a criminal offence for employers to knowingly underpay their staff, with Directors and business owners facing jail time if convicted. This sounds good in theory as no-one should knowingly under pay their staff but the reality is most employers don’t. The majority of underpayment claims are due to human error, payroll errors and the exceedingly confusing and inconsistent pay conditions contained within the modern awards. If the Queensland Government were serious about protecting workers from underpayments, then they should be petitioning for awards and pay conditions to be reviewed and streamlined. So what are the most common reasons behind underpayments and what steps can employers take to protect themselves and their employees?
Classification Levels
Allowances
Are you paying your employees all of the allowances that they are entitled to? Allowances are hard because many of them are not applicable every day or every pay cycle so its easy for employers to miss them when they are. Some of the more common and less common allowances in the Building and Construction General On-site Award are below: • an employee is to be paid an allowance of $17.43 per day for each day worked when the employee starts and finishes work on a construction site • an employee who uses their own vehicle to travel between work sites must be paid an allowance at the rate of $0.78 per kilometre. Employees who are regularly required to compute or estimate quantities of materials in respect of the work performed by other employees must be paid an additional 23.3% of the hourly standard rate per day or part thereof.
It is quite common that employees receive pay increases each year on the basis of the classification level they were first employed at, without their classification levels being reassessed each year. This can include the number of employees they supervise, assuming site supervision responsibility, co-ordinate teams and ensuring the quality of another person’s work.
Did you know that if an employee’s tools are lost or stolen whilst being transported by the employee at the employer’s direction (ie direction to attend site with appropriate tools to complete the work) then the employer is responsible to reimburse the employee to a maximum of $1,862
Employers should review their employee’s tasks, responsibilities and classification levels each year to minimise the risks of underpayments due to classification levels.
Employers should ensure they are aware of what allowances may apply under their relevant award and ensure these are reviewed each pay period to evaluate whether they are applicable that pay period.
6 | Aussie Painting Contractor
Different Awards
For example, an employer may pay their level 2 worker $24.60 per hour instead of the award rate of $23.88. At this rate, the employee is better off if no overtime is worked, slightly better off when 2 hours overtime are worked in a week but if 3 hours overtime are worked then the employee is worse off and this would result in an underpayment to the employee.
Employers should review the positions they have employees employed in and ensure they know which Award applies and understand its particular parameters.
Reviewing the hours and patterns of work, your employees are working and then completing a Better Off Overall Test as above will assist employers in being confident that they are complying with their obligations and minimising their risk of an underpayments claim.
A painting business will have the majority of its employees covered by the Building and Construction General On-site Award however they may also have administration staff that are covered by the Clerks Private Sector Award which has different classification levels, allowances and employment conditions.
Above Award Hourly Rates and Overtime
This is by the far, the most common factor resulting in under payments. Many employers believe that if they pay an above award rate then they don’t need to pay overtime penalty rates, allowances or leave loading. This can be true but requires a Better Off Overall Test to be completed to ensure employers are aware of the outer limit.
If you have concerns over please reach out to Vanessa on 0418 190 106 or vanessa@hrmaximised.com.au
2020 October Issue | 7
8 | Aussie Painting Contractor
NEW COURSE on
Paint Colour Specification The new painting apprenticeship course is due to go live in November. Included in the new course is a new elective, called MSFID4016 Design colour schemes for interior and exterior spaces. This subject describes the skills and knowledge required to assess colour requirements, research and experiment with different colour options and create preferred colour schemes for presentation to the client. This new unit is an elective, and was recommended to be added by the National Painting and Decorating Institute during the development of the new training package. It has been included in the Certificate III Painting and Decorating because of the following reasons: • There is currently not enough assessment or training in architectural styles, writing colour specifications, or understanding the principles of colour selection in our current Cert III qualification. In fact, there is currently no training in selecting colours at all in the current Certificate III training package.
• Painters regularly select colours, or help clients select colours. EHaving an understanding of these principles will help them understand the process. • More women are entering the industry, and are naturally more attuned to colour selection. This elective will be more attractive to anyone who wants to learn this skill. • Many painters would like to add colour consultation to their skill repertoire and make it an extra feature of their business. • The paint retail market often employs ex-painters. They advise the public on colour selection all the time, even though most of them have had no formal training. • Painters who help clients choose colours should have an understanding of all the principles behind it. Adding this subject will make the trade more attractive to people who have an artistic flair, and might not normally see this trade as a career choice. It will raise the profile of the trade in the mind of the public. Instead of just being an ‘applicator’ we might regain some professional pride in our trade.
2020 October Issue | 9
What will you learn by completing this subject? Everything you need to know to provide professional advice to your clients about colour; and how to create a professional colour scheme: • • • • • • • • • • • • •
Colour Trends Australian architectural styles Historical influences of colour Colour psychology influences How to research heritage colour schemes Colour wheel theory Colour harmony theory Factors that affect the apparent colour of paint Paint Colour Bases How to choose a base colour How to choose contrast colours How to write a paint colour schedule How to create Colour Scheme for a Commercial Project
At the National Painting and Decorating Institute we have been working hard behind the scenes to create all the new learning content and activities that apprentices will do when they study this subject. It has been really interesting, so we thought we would share a little sneak preview below:
CONSIDER THE EXISTING COLOURS
Before choosing a specific colour, make a note of the colour of all the permanent features of the room you are painting. For example, the colour of the flooring, counter tops and any furniture that will remain, such as couches and tables. The new contrasting paint colours don't have to match the existing items but shouldn't clash with them either. For example, bright purple may not look so good on the wall in a room with red cherry wood flooring. Remove any colours from consideration that won't look good with other items and features of the room.
COLOUR WHEEL
Take a look at a colour wheel. It sounds basic, but can help to identify both the colours that appeal to you most and the colours that contrast with them. Contrasting colours, also called complementary colours, are the ones directly opposite each other on the colour wheel. Identify the colours you like most, and then narrow them down based on what will work best with the permanent fixtures in the room. Single out your colors by then looking at which pairs of contrasting colours appeal most to you.
10 | Aussie Painting Contractor
For example, if your client loves amethyst purple, but isn't so fond of the thought of incorporating green into the room, look for another pair of contrasting colours, such as purple-blue and pale yellow.
PRIMARY COLOUR
Once you settle on a pair of contrasting colours, choose one to be the primary colour in the room. This will be the colour that you will paint on more than one wall or on the largest walls, or will have the most space on a single wall with more than one colour. A good rule of thumb is to use the primary colour at least 60 percent of the time compared to the secondary colour. This will keep contrasting colours from becoming overwhelming and garish.
SECONDARY COLOUR
The secondary colour will serve as more of an accent to the primary paint. It can be highly visible and used in large amounts, but is not the main colour of the scheme. Use the secondary colour on trim, inside window frames or arches, on the upper one-third of the wall or even on the ceiling. You can also use the secondary colour to create stripes or geometric patterns on the wall. The National Painting and Decorating Institute has created industry validated learner guides, trainer guides, assessment, and multi-media video lessons for this new unit. The learning material is available to any RTO or college using our state-of-the-art e-learning system. If you are a painting trainer who would like to include this elective in your training, we recommend completing this subject with us, on-line, in preparation for the new training package release. Find out more -------------------------------------------------------------------Daniel Wurm is lead instructional designer at the National Painting and Decorating Institute
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
The Subtle Power of Changing Your Identity One of the most powerful switches I ever made when changing my entire life was switching up my identity. And while I never did it overnight, I successfully did it in multiple areas:
his finances … every time I’ve made a major (or minor) life change that stuck, I changed my identity. It’s more powerful than most people realize.
The Subtle Benefits of Changing Your Identity
• I changed from a smoker to a non-smoker — and once I did, I stopped thinking of smoking as something to do when I was stressed. • I went from meat-eater to vegetarian (and later to vegan). It literally took meat off the menu for me, so that I didn’t even consider eating it. • I thought of myself as a marathoner. Later, as just someone who exercises regularly to stay fit and healthy. It meant that there was no question I was going to exercise, even if I fell out of it for a bit because of disruptions. • I became a meditator (and later Zen student). That means even if I stop meditating for a little bit, I’ll always come back to it. • I became a writer. Sure, before this change, I did write, but not daily (join my Create Daily Challenge in Sea Change if you want to change this one!). • I became a minimalist. Actually, before I decided to call myself that, there wasn’t really anyone else who called themselves “minimalists”. The purposeful change in identity allowed me to free myself of clutter and enjoy a life of less.
While it takes a little work, if you can shift how you see yourself … you’ll likely notice some of these benefits that aren’t obvious to most people:
There are dozens of other examples: as a father, unschooling parent, early riser, reader, teacher, speaker, entrepreneur, someone who takes meticulous care of
There are more benefits, but I’m going to let you discover them on your own. By now, it’s probably best to get to the How.
12 | Aussie Painting Contractor
• You’ll stop doing (some of) the behaviors that you used to do. Stop smoking, stop eating meat, stop playing video games, whatever someone with your identity wouldn’t do. • You’ll make the behaviors you want become a given. If you’re a writer, you write every day. No questions asked. If you’re an entrepreneur, you … entreprendre every day? You know what I mean. • Things that you have to debate yourself about … become not a question. This saves you a lot of mental energy. It becomes much less of a daily struggle. • You can change some long-standing beliefs about yourself. That you can’t do this, that you’re no good at this, that you aren’t someone who does this. If they’re not serving you, toss em! • You begin to get a mindset that you can change anything. You’re not stuck in old ways, but someone who can grow and become new possibility.
How to Change Your Identity Unfortunately, it’s not as easy as flipping a switch and bam presto! You’re a new person. However, it’s eminently doable. It can be done a million different ways, but here are some points I’ve found important: • Do it consciously. We can change our identity without doing it intentionally … but I’ve found that it works much better if you do it intentionally. Doing it accidentally is like blindly stumbling upon something amazing — I wouldn’t count on it, but if you wander around long enough, it’ll probably happen. Instead, make it an intention to consciously shift your identity in this area. • Think about who you want to be. Do you want to be a person who writes every morning? A person who only eats plant-based foods? Someone who buys very little? Write it down: “I am a morning meditator.” • Intentionally start doing the actions. Set up visual reminders, phone reminders, whatever you need to do … but start doing the things that you would do if you’re this new version of yourself. If you’re a runner, go run. • BE the new version of you. Doing the actions is one thing, but you might be doing it while thinking that this is so not you. Instead, do the actions as if you were already that person. See yourself as the runner, the early riser, the vegan. Feel it in your being. Stand as this person. • Reinforce it by appreciating yourself. Each day, have a minute where you look back and see what you did. And appreciate this about yourself. See that you’re already shifting. “Yeah, this is happening, good job me!” We tend to focus on the bumps in the road rather than the progress we’re making. • When you falter, think about what this new version of you would do. Notice I said “when you falter,” not “IF.” Even a Zen teacher misses a day of meditation sometimes. That’s a part of life. We don’t always do things “perfectly” … but a Zen teacher wouldn’t miss a day of meditation and then just give up. She’d just sit the next day. A runner will get back into it even after a week of disruption (maybe due to visitors, illness, travel, injury, etc.). Don’t think of the disruption as proof that you’re not a runner, but instead approach the disruption as if you are a runner. Again, there are many other things you can do. As your new identity, you’ll think of them! The How actually works itself out once you start to Be the new identity.
A Caveat : Don’t Fix Your Identity & Become Rigid It’s important to note that creating a new identity for yourself — seeing yourself in a new way — can also. have some pitfalls. A big one is that you might create a fixed, rigid view of yourself. For example, if you create a new identity of yourself that you’re an early riser, that could come with the rigidity that you’ll never stay up late or sleep in a little. And if your family has a gathering that’s later in the evening, you might just pass — not because it will impact anything important, but because of a rigid view of yourself. There are lots of other possible examples: if I always work hard, then I can’t take a rest; if I am an expert in my field, then I can’t ever admit I’m wrong. We don’t want our view of ourselves to limit us always. Some limits are helpful, if they’re chosen consciously (i.e. a limit of no meat means I don’t harm animals). Other limits can be unhelpful, if they don’t let us do what would be beneficial in a situation. So while shifting identity can be helpful, I encourage you to not be too rigid. Think of your identity as fluid, something you can shift as needed, consciously.
Next Steps I encourage you to pick one area at a time. Don’t try to shift everything about yourself. Choose one, and apply the steps above. • • • •
I am compassionate about myself. I write every day. I am a loving parent. What would you like to try on?
-------------------------------------------------------------------
Leo Babauta
a successful ‘simplicity’ blogger and author from California, the creator of top 25 Blog
ZEN HABITS
2020 October Issue | 13
Why you should have a
COMPANY STRUCTURE not Sole Trader... When first setting up a business, it is common to use a sole trader structure, as it is relatively easy and cheap. E.g. you are a man or woman with a van providing a great painting service. ..Simple.
assets are very much at risk. Changing to a company structure turns your business into a separate legal entity, meaning the company can sue and be sued. This limits your personal liability.
Now, because of your outstanding service you are consistently fully booked. You need to hire other painters to keep up with increased demand and purchase multiple work vans and equipment. As your business grows, it is crucial that your business structure evolves with it.
It should however be noted that a director could become personally liable if they breach their legal obligations (e.g. the company became insolvent and the director allowed continued trade). Shareholders are only financially obligated to any remaining payment of their share price, and not to company debts. Most shares in proprietary limited companies start at $1.
Alternatively, you may aspire from the start to grow the business beyond just you and understand the importance of setting your painting business up properly from day one to protect yourself and your assets. Wherever you sit in this journey, a company structure is by far safer that being in business as a sole trader and here is why ..
SAFEGUARD YOUR PERSONAL LIABILITY
One of the biggest benefits gained from structuring your business as a limited company is that you can protect your personal property. As a sole trader you are personally liable for all business debts. You can incur debt and you be sued, which means your personal
14 | Aussie Painting Contractor
SECURING LOANS AND RAISING CAPITAL
Another plus in setting up a company is that a loan can be secured using your company’s assets. This is again because your company is a separate entity. On the other hand, a sole trader must use personal assets as a security, such as their home. In some cases, directors of a company will need to provide a director’s guarantee (this is a personal guarantee). As a director of a company, you will own shares in the company. A company can raise capital by selling shares to third party investors. A sole trader structure does not consist of shares, leaving a sole trader to rely on bank loans or partnerships for extra money.
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16 | Aussie Painting Contractor
BUSINESS INCOME
A company can choose to retain profits made in order to grow, rather than paying out dividends to shareholders. These profits are taxed as income to the company. Any funds you receive from the company will be shown on your individual tax return to be completed separately. Sole traders do not have this option; everything the company earns is considered to be your individual income. Therefore, a sole trader must pay all tax involved with their business as personal income tax. If you plan on growing your business, a company structure, although more complex, will be more beneficial in the long run.
COSTS INVOLVED
A sole trader will pay a set-up cost to ASIC of under $40 (for registering a business name), compared to approximately $550 in fees (for incorporating a company). This includes: • Obtain Australian Business Number – Free • Register a proprietary limited company under ASIC - $506
Yes, incorporating a company will cost you a little bit more however the benefits heavily outweigh those of a sole trader. These are just some of the reasons why you should consider restructuring your business.
WHAT YOU NEED TO DO ..
Let’s Talk! A free consultation with us can help to tackle your legal issues.
TYPICAL LEGAL DISCLAIMER!…
Unfortunately, there is never a ‘one size fits all’ formula to apply. Every situation is unique and it can be tricky to wrap your head around some areas of the law. To ensure you are setting yourself and your business up for success, it is always best to consult a legal professional with expertise in the field and a tax expert for your tax advice.
P: 0402 318 033 E: helen.kay@riselegal.com.au
2020 October Issue | 17
Get to know e n i z a g a M Our s r o t u b i r t Con Aussie Painting Contractor 18 | Aussie Painting Contractor
Helen Kay is an experienced business lawyer and is passionate
about helping business owners avoid unnecessary risks by providing them with tailored commercial legal advice. She explains that there is No ‘One Size that Fits All’ and that a template contract or a lawyer who does not take the time to get to know your business will not help solve your problem. Helen is “The Tradie Lawyer “and helps trade business owners from start up to sale to get where they need to go by completing their commercial contracts so they get on and run their business. She is also a really nice person and great to have on your Team!
Vanessa Petch is a Human Resources consultant with 18 years experience and is passionate about working with small and medium businesses to manage their teams, improve productivity and build engaged, high performing teams. Her background in human resource management is complemented by senior positions in finance, administration and operational management in small and medium businesses. This allows her to understand the challenges of running a business. She’s worked in and across a variety of industries including trade services, manufacturing, agribusiness, IT and financial services. Her end goal is to work alongside businesses to ensure they grow strong, sustainable and profitable.
Monroe Porter is an experienced consultant for painting contractors having taught seminars throughout Australia, the US and Canada. He also is founder of PROSULT™ Networking Groups, a best practices painting network of non-competing contractors with participants from the US, Canada and Australia.
Jim Baker have a painting career spans 50 years in which 38 years
have been self employed. His time now is spent by helping others in their painting businesses through mentoring. Jim have also developed numerous business products, written two books and currently a trainer for an online training organization.
2020 October Issue | 19
Through his dedicated mercantile agency ‘Contractors Debt Recovery’, Anthony Igra has recovered over $60 million dollars for contractors using the Security of Payment Act across Australia. He has conducted seminars for many construction industry associations around Australia, and provides their memberships with an invaluable service in relation to payment problems and debt recovery. Anthony is a regular contributor in the construction press both in Australia and the US, and his views on payment issues have been sought by both government, and industry bodies.
Sandra Price founded Tradie Bookkeeping Solutions for tradies. Looking deeper than just the books to uncover the reasons for one of the major issues that tradie businesses big and small often face… not having enough cash flow. Sandra is a certified consultant for Profit FirstTM and XERO True Blue Partner, Tradie Bookkeeping Solutions offer simple, stressfree bookkeeping solutions for Tradies while building profitability.
Leo Babauta is a regular guy, a father of six kids, a husband,
a writer from Guam (moved to San Francisco in 2010, now living in Davis, California). But he have accomplished a lot over the last couple of years (and failed a lot) and along the way, he have learned a lot. Zen Habits is about finding simplicity and mindfulness in the daily chaos of our lives. It’s about clearing the clutter so we can focus on what’s important, create something amazing, find happiness. It has over a million readers.
Robert Bauman has been a Financial Planner for 17 years and
an Accountant and Business Advisor for over 25 years. Robert’s passion is to educate and empower people to take their financial future into their own hands. That’s why he wrote two books to spread the message he has distilled over the years of his accounting and financial planning practice.
20 | Aussie Painting Contractor
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Business Reality Check: DO YOU HAVE A PLAN B? As the first tranche of JobKeeper winds down and JobKeeper 2.0 comes into place, business owners need to face more critical decisions on the future of their business. Here are the key points you need to know about JobKeeper 2.0 and when you can apply for it.
JobKeeper 2.0 - Key Details
The JobKeeper Payment scheme has been extended until 28 March 2021, see JobKeeper extension. From 28 September 2020: • employers need to demonstrate that their actual GST turnover has fallen against a comparable period • tier 1 and tier 2 JobKeeper rates apply and are generally based on average hours worked by employees. For the JobKeeper fortnights starting 28 September 2020 and 12 October 2020 only, we are allowing employers until 31 October 2020 to meet the wage condition for all employees included in the JobKeeper scheme.
24 | Aussie Painting Contractor
Employers do not need to re-enrol to claim payments in the first extension if they are already enrolled in JobKeeper. They just need to check their continuing eligibility and submit this information to us online from 1 October 2020. Employers also need to tell the ATO the payment tier they are claiming for each eligible employee or business participant in their November monthly business declaration. Visit our Blog for more details about the JobKeeper 2.0 Tweaks to the ‘Decline in Turnover’ Tests.
What’s your Plan B?
Surprisingly, the outlook for the construction industry overall was positive, as stressed by some economists. “The spread of COVID-19 is anticipated to have a light effect on building construction industries. The industry’s revenue growth is not expected to be significantly affected by COVID-19 during 2019-20, although the industry may endure construction delays stemming from the disruptions in the supply chain for building materials and the supply of skilled labour. Operatorsin these industries require materials such as paints, varnish, adhesives and specialist coatings.” (source IBISWorld)
For business owners who have employees on JobKeeper now, it is particularly relevant to know how much JobKeeper did to keep your business afloat and how much it was running under its own steam. As a business owner it’s best you never make a decision based on just one factor. Without looking at your Profit & Loss statements for the last couple of quarters it would be difficult to get a sense where your business is on a scale of 1 to 10 for survival beyond the current economic crisis. Almost three monthsinto the 2020-21 financial year and with no end in sight to thisflagging economy, it’s prudent to review your Plan B – if you have one. In order to ride out an uncertain future, I have five key questions for you to think about: 1. If what you’re doing right now isn’t working, do you have a Plan B?
These questions may bring up some tough thoughts and emotions. Don’t let them overwhelm you. Talk to your bookkeeper or accountant to get some help with looking at your business financials. The first step of facing up to the truth about your money is always the hardest. It gets easier from there. If you have any doubts about the profitability of your business, call my office on 3399 8844 and we’d be happy to help you with a FREE COVID-19 Business Health Check. You can also visit our website at www. straighttalkat.com.au and complete your details on our Home page to request an appointment. Please Note: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.
2. Have you done a risk assessment of factors currently impacting your business? 3. If the current economic climate continues to worsen, do you know what that would mean for your business and what you could do about it? 4. Are you taking advantage of all the government assistance that could be available to you? 5. Do you have a business exit strategy that doesn’t leave you with a mountain of debt?
2020 October Issue | 25
Have we just stumbled on the
Biggest Productivity Increase of the Century? One of the most striking responses to the COVID-19 pandemic has been the sudden shift of around half the workforce to working at home.
remained more or less stable since Neolithic times, a finding known as Marchetti’s Law. (The same observation has been attributed to Bertrand Russell.)
In many cases, this was combined with an equally sudden shift to home schooling. Contrary to what might have been expected, working from home was one part of the pandemic response that went remarkably smoothly. Most kinds of office work continued almost as if nothing had changed. Discussion of the crisis has mostly worked on the assumption that a return to something like the precrisis “normal” is both inevitable and desirable. But the unplanned experiment we have been forced to undertake suggests we might have stumbled upon a massive opportunity for a microeconomic reform, yielding benefits far greater than those of the hardfought changes of the late 20th century. The average worker spends an hour on commuting every work day. Remarkably, this is a figure which has
Marchetti’s Law says we spend about an hour travelling to work whatever the era.
2020 September Issue | 27
If working from home eliminated an hour of commuting, without changing time spent on work or reducing production, the result would be equivalent to a 13% increase in productivity (assuming a 38-hour working work). If half the workforce achieved such a gain, it would be equivalent to a 6.5% increase in productivity for the labour force as a whole. For a comparison, let’s look at the radical microeconomic reforms of the 1990s, including privatisation, deregulation and national competition policy. In 1995 the main advocate of these reforms, the Productivity Commission, then called the Industry Commission, estimated they would increase national income by 5.5%. In retrospect, that estimate appears to have been over-optimistic. Although there was an upsurge in measured productivity growth in the mid-1990s, the total increase relative to the long-term trend was less than 1 percentage point per year above normal. Low productivity growth since then has wound back those gains.
These gains are big, compared to those we sweated on Even so, those reforms were, and to a large extent still are, widely seen as a crucial contributor to economic prosperity. So, an improvement of 6.5% would be a huge benefit. It would be enough over a few years to offset the economic costs of the lockdown and many other impacts of the pandemic. But, as in the case of microeconomic reform, this initial estimate may be misleading. And even if there are real benefits on average, it’s important to ask who will get them and who, if anyone, will lose. A study by Harvard and New York University economists finds that people working from home spend around 48 minutes more time per day connected to their offices, leaving an average gain in free time of only 12 minutes per day. Read more: Vital Signs: Shorter meetings but longer days – how COVID-19 has changed the way we work
28 | Aussie Painting Contractor
It seems likely, however, that at least some of this time is spent on household tasks, especially to the extent that workers had to take on child care and home schooling during the lockdown period. And, as well as saving commuting time, workers also save the monetary costs of commuting and at least some of the time spent getting ready for work. On balance, it seems clear that on average working from home yields net benefits. However, workers for whom social contacts at work represent a significant “fringe benefit” will lose that benefit, while other workers who value privacy or separating work and social life will gain a benefit.
It’ll be harder for managers…
Similarly, those who rely on chatting to colleagues to develop ideas will lose something relative to those who prefer more systematic approaches to obtaining information relying on electronic contact. Another group of workers who might lose from remote working are middle managers. To the extent that management depends on “presenteeism”, that is, physically keeping an eye on workers, remote working presents problems. Intrusive checking on computer activity is likely to be resisted and evaded. Managers will have to learn to manage by objectively assessing results rather than observing what people do, and to get that evidence accepted further up in the hierarchy.
…manageable for employers
For employers, the shift to working from home has had little immediate impact. Workers wages haven’t changed and, at least in the short run, neither has spending on office space. But, in the long run, remote working offers the possibility of much greater flexibility in hiring. Some employers such as Facebook’s Mark Zuckerberg have already floated the idea of paying workers less because they can now live in cheaper locations, setting the stage for future conflict. For the most part, disputes over sharing the benefits of remote office work will be hashed out between employers, workers and unions, in the ordinary workings of the labour market.
But what about the other half of the workforce, who donâ&#x20AC;&#x2122;t have the option of working from home? In particular, what about the mostly low-paid service workers who depend on people coming into offices? If the productivity gains made possible through remote work are to be shared by the entire community, substantial government action will be needed to make sure it happens. Most obviously, the higher rate of JobSeeker allowance has helped us get through the pandemic without the upsurge in suicide and other measures of social distress predicted by many. Returning to the poverty-level unemployment benefit (the old Newstart) would be a disaster.
Weâ&#x20AC;&#x2122;ll need to change the way we support workers The pandemic has shown how whole sectors of the economy, such as aged care, rely on casual workers piecing together multiple jobs, with no access to standard conditions like sick leave. Younger workers in particular suffer from underemployment and
The portable, inexpensive method to prevent paint waste-water polluting the environment.
difficulties in making the transition to permanent full-time work. What will be needed is both an expansion of publicly funded employment in a wide range of services, including aged care, and a reversal of trends towards casual and contract employment. Disastrous though it has been, COVID-19 has taught us a lot about ourselves and about how our economy and society work. If we learn these lessons, we might be able to benefit and mitigate at least some of the harm done by the disaster. --------------------------------------------------------------------
John Quiggin
Professor, School of Economics, The University of Queensland
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Why would a tradie need an
Insurance Broker? As a self-employed tradie, why would you bother using an insurance broker? Your business is fairly straightforward, you can get quotes from most insurance companies online, and why pay extra fees to a middle-man, right? Not so fast! Just like you’d never recommend that your customers DIY their building work, there are good reasons not to DIY your business insurance. In this guide we’ll look at a few of the myths around using an insurance broker, and why it’s a good idea for any trade business, even if you’re just starting out. Note: This guide is more targeted at the smaller 1-5 staff trade businesses. Larger trade businesses are generally well aware of the benefits of using an insurance broker.
What will an insurance broker do for me? The short answer is… They’ll save you time and money! But there’s a lot more to it.
32 | Aussie Painting Contractor
At the quote stage For starters, a broker will have a chat to you about exactly what it is your trade business does. You might consider yourself a typical electrician, but when we did a little deeper we might find business activities that fall outside of what most insurance companies consider normal for an electrician. We can then make sure we place your cover with an insurance company or underwriting agency that will agree to cover those activities. What does it matter? Well if you have a standard electrician policy and need to make a claim for an activity that falls outside of the insurer’s standard activities, you could find that your claim is declined. Once we know which insurers are going to be right for you, we can compare premiums to get the most competitive quotes for you. So not only are we looking to get you the lowest insurance cost, but most importantly the lowest cost for a policy that will properly meet your needs.
During the year There are so many potential benefits during the year, but the one that is most relevant to most tradies is that you don’t have to deal with a cell centre.
We’ve dealt with hundreds of claims for electricians, carpenters and plenty of other trades. Of course we don’t know how to build a deck or install solar panels, but we know how to deal with the typical claims that come from these activities.
Every Trade Risk client, no matter how small in size, has their own designated account manager. If you need anything at all, you can call or email your account manager and know that you’ll be looked after.
Our higher level of understanding when it comes to trade businesses and our greater level of experience with trade related claims enabled us to fight for the best outcome for you.
This save you time by not having to wait in a call centre queue, and gives you the confidence that you’re dealing with a local expert every time and not potentially an outsourced call centre.
How much extra does it cost for a tradie to use an insurance broker? One of our first jobs as your insurance broker is to find you the most competitive premium for cover which is appropriate for your business.
Claims This really falls into the “during the year” category, but is so important that it deserves its own category.
So if we can find you a more competitive premium than anyone else, including the direct insurers, then we’re actually saving you money rather than costing you more!
There are multiple benefits as a tradie having an insurance broker at the time of a claim – especially a trade insurance broker.
We’re on your side If you purchase your business insurance direct through an insurance company, in the event of a claim it’s you against them. Of course they have to do the right thing, and in most cases it will probably be all okay, but if things get a little grey they’re going to be on their own side, not your side. When you use a broker, you have an expert on your side. Although we have great relationships with the insurance companies, we always on your side and will fight for the best outcome for you. We could give numerous examples of where we have fought against an insurance company because we weren’t happy with their claim offer, and have secured a better result for our client.
We’re experts in the trade Talking more specifically about TradeRisk rather than general insurance brokers, our other big advantage is that we only deal with tradies.
There’s also the time – and therefore money – that we can save you by doing the running around for you. You might be able to spend half a day getting quotes and researching policies to save an extra $50, but how much has that time cost you? A couple of hundred if it’s stopping you from doing what makes you money. Of course you could do it much more quickly, but then you’re just comparing prices and not comparing the policies. What happens when you have a claim declined because the policy wasn’t right for your business activities? Is that worth risking your home over if you get it really wrong? Because we’re experts in the trade industry we can find you competitive rates much more quickly, and you can have the peace of mind knowing that we’ve recommended the right policy for you.
2020 October Issue | 33
Is it worth it for a one-personal trade business?
public liability and tool insurance, we can help you online. You can receive an instant online quote and purchase your policy fully online.
Afterall, why would a one-man business need an insurance broker when you can just buy a cheap policy online through one of the direct insurance companies?
If you’d rather speak with a real person we can do that too. Simply call us on 1800 808 800 and our team will be here to help.
You might think that your trade business only needs an insurance broker once it has grown a little larger.
Whilst we do look after trade businesses with multimillion dollar revenues, the majority of our 4,000+ clients are actually sole traders. That’s right. Sole traders. We look after thousands of sole traders and one-person companies, and many of them have been clients for years and years. They stick with us because they know how we can save them time and money, and they know that when things go wrong they won’t be on their own – they’ll have the Trade Risk team fighting in their corner. So no matter how small or large your trade business is, we would say it is absolutely worth having a good insurance broker, and especially one that specialises in trade insurance.
How to get started
For larger trade businesses with more complex needs our team of insurance brokers can assist in a variety of ways. We look after most of our clients via phone and email, or if you’re local to Brisbane we can visit you or you can come to our office. We are passionate about helping business owners with their trade insurance needs, and like most of our clients we are also a 100% family owned Australian business. Get in touch with us to see how we can help you.
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www.traderisk.com.au 1800 808 800
The best way to get started is to simply talk with us. If you have no more than five staff and only need
2020 October Issue | 35
A Business
Success Story My wife and I have just returned from a three-week road trip in Queensland (the only place Queenslanders can travel at present due to the border closures) and as one of our stops on route was Townsville, I thought I would catch up with a mate of mine. I met him many years ago at a Dulux Accredited Conference and the reason I want to highlight this person in particular is because he has done extremely well for himself, even though there have been those ‘Ups and Downs’ which many of us have had. Anthony Williams grew up in Ipswich, which is around 40kms west of Brisbane. After he left school in Year 12, he developed some anxiety and depression issues, but his love of reading helped him cope with this and it made him into a very, confident person. For instance, when Anthony looked for employment, he would do some background work on the company first, find ways to improve it and then say to the interviewee, ‘You need me! I can help your business’. As well as completing a Cert 3 in Catering, Anthony also finished an apprenticeship in Stone Masonry, but as his passion was to start a business of his own, he realised how much money was required to purchase tools and
36 | Aussie Painting Contractor
stock, he decided against it. So at the age of 23 he made the decision to do another apprenticeship, and this is where his painting career began. He worked for an extremely good boss in Brisbane’s Bay-Side area where he learnt a lot about business, and of course, how to paint well. In 2006, Anthony and his wife moved to Townsville and in 2009, started his dream of running his own business. His first contract was a re-paint of a house which he completed by himself. The second was a much larger property where he knew he would need assistance; this is where he took on his first employee. As in all ‘start-up’ businesses, finding constant work can be difficult. He placed adverts in the local paper and in the Yellow Pages (hard copy and online) but it was his ‘door-to-door’ marketing to display homes and builders that proved to be the most successful. Now we all know that builders tend to become your main source of income when starting a business and for this you need staff to get through the work quickly. Within six months, Anthony had enough work to keep 15 painters employed.
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For many years he concentrated on the new-builds but then gradually expanded into the re-paint and commercial property market. The business grew so well that Anthony desperately needed a property to store all his equipment, his vehicles and also, office space to work from. He purchased a residential property 5kms from town on a main, duel-carriage road. Now being on a main road it would naturally make good sense to boldly advertise your business, but because of strict council rules, you have to abide by the size of the advertising. As Anthony desperately wanted passing traffic to know about his business, he came up with a very innovative way to attract attention. Now! close your eyes and imagine this; (Well; read the following first of course). The property has a fifteen metre picket fence along the front. The top half is painted in bright blue and the lower half in pink, but in a wave effect. To make it stand out more, the driveway gate is painted with white dots of different sizes. His legal-size advertising board now prominently stands out for all to see. A very clever marketing tool in my opinion. For many years his wife did all the bookwork but as the business grew, Anthony realised he needed a professional bookkeeper. This made a huge difference to his turnover and the effectiveness of his business and is what he says now, ‘The most important decision I ever made’. Another smart decision was to reduce the number of builders he had. From having eight, he picked the best and most profitable and reliable payers of them and is now down to two. This also helped his cash-flow as builders tend to hold onto your money, or not even pay you. Anthony does all the quoting himself and when we met up, I was quite impressed to see how he does it all from his phone. Measurements, time, notes, are
all entered into a program which can be accessed by the office staff who then finalise the quote and sent out to the client. The competition in Townsville is no worry to him as 30-40% of jobs are accepted which is enough to keep his staff employed. Another question I asked was, ‘What is a good number of employees are you happy with in your business?’ As I have preached many times before when talking to painters, ‘More is not always good’ and in Anthony’s case, he totally agrees. He reduced the number of painters from 45 and believes having 13-14 painters and a few casual administrative staff in the office is the perfect number. Check out his website at https://ajspaintingtownsville.com.au/ Apart from his successful business, Anthony belongs to a support group called ‘Strive To Be Alive’. This is a group that meet up every three weeks who encourage people that are having, or know of anyone with mental health issues to join in. Everyone is welcome to go along and have a chat as they are all there for each other. Anthony is also very active in charity work and every year he donates his time and material (worth around $6,000) to paint their property. They may be down on their luck and can’t afford it or they may be suffering from mental illness. A gesture like this gives them hope. Note: I would like to thank Anthony for his time by giving me his great story and also the hospitality he gave myself and my wife while we were in Townsville. -------------------------------------------------------------------
Jim Baker www.mytools4business.com 2020 October Issue | 39
40 | Aussie Painting Contractor
How cash flow forecasts can help you Managing cash flow is a vital part of running a successful business. Some business owners think managing cash flow simply means keeping track of how much money enters and leaves their business, but there’s actually more that goes into it. Cash flow forecasting, for example, is an incredibly valuable tool that helps you anticipate cash flow issues, plan for days when your cash flow is limited, and show the bank that you are prepared. It’s an important process that you shouldn’t ignore. Here are ways cash flow forecasts help entrepreneurs.
They help identify cash flow issues before they happen
Most businesses go through slow periods. Sometimes, those periods are obvious. A seasonal business, for example, will have decreased income during the off-season than during the on-season. There can be less obvious peaks and valleys in your income, though, that you have to prepare for. Your cash flow forecast can help you monitor your day-to-day cash flow and anticipate when times will be slow before they hit. By anticipating when cash coming into your business might be light—or when you might have to spend more than you’re accustomed to—you can avoid a cash crisis.
That’s a great thing to do, but it’s only helpful if it doesn’t put your business in jeopardy financially. Cash flow forecasting is a great reminder about how your bank accounts will look during tougher times, so you can make important decisions about when to spend your money and when to save it. If you know a slow period is coming up, it might be better to save money for now and give out smaller bonuses. If you can anticipate your slow period, you can plan major purchases and bill payments around it, to stretch your cash further. At least by conducting cash flow forecasts you’re less likely to be surprised by a sudden cash flow crisis.
They show banks you can plan ahead
Banks prefer to give their money to entrepreneurs who show they are capable of planning ahead. Financial institutions prefer business owners who are realistic with their financial projections and show they have a means of addressing cash flow issues.
Final thoughts
Forecasting your cash flow gives you a clearer picture overall about your business and how the money moves into and out of it. It provides important insight into your company’s financial health.
By examining your cash flow over the previous years and forecasting your future cash flow, you can better anticipate financial cycles and how they affect your bottom line.
If you haven’t conducted cash flow forecasting so far, it’s a good idea to get started now so you have a better understanding of your company’s finances and so you can prepare for the future.
They help plan for tougher times
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It’s tempting to spend money when you have a lot coming in. Your business may need new equipment or maybe you want to give all your employees a raise or a bonus.
Sandra Price
www.tradiebookkeepingsolutions.com.au Facebook : Tradie Bookkeeping Solutions
2020 October Issue | 41
How To Accept
Sett Se ttlement lement Off Offers ers I recently had two clients (let’s call them Jason and Peter) who were both offered a settlement deal by their debtors. Contractors Debt Recovery had made adjudication applications on behalf of both of them, and the offers had been received once the debtors had read the case against them. It was clear that they could not produce any valid reasons not to pay my clients. One client received a letter from the debtor’s solicitor offering full payment within 14 days on the condition that the application be withdrawn. The other client received a phone message from his debtor offering to ‘work it out’.
I advised Peter to prepare a letter outlining the conditions under which he would accept the offer, which of course included a ‘no payment, no withdrawal’ rule. Peter got his money. Jason is still waiting, and faces starting the payment claim process from scratch, or commencing winding up the debtor. Why the different outcomes? The difference lies in control and power. Peter maintained his position of power and controlled the manner in which he accepted the offer. Jason relinquished his power, and didn’t control the process.
I discussed the matter with both clients.
When you get an offer from a debtor to pay, you need to follow these 6 steps.
Jason wanted me to withdraw the adjudication application as he felt he was sure he would get his money within the 14 days. I was not so confident, but as the letter came from a solicitor it held a bit more water. So Jason agreed to the deal.
WHY – should you accept the offer? Are there other pressing reasons why you would entertain an offer? Perhaps there are other business or personal reasons that are best served if you settle quickly for as much as you can get. This is really for you to decide.
Peter asked me if he should call his debtor back, but he really didn’t feel like talking to him. I advised Peter to fax his debtor a request to put anything he had to say in writing. He did so, and sure enough Peter also got a written offer to pay the whole amount on the condition that the application be withdrawn.
If the offer is an insult, then you will probably want to keep the pressure on. As a general rule, if you’re not being offered at least 70% of what you are owed, it’s a joke of an offer and I’d keep fighting. Your debtor clearly wants to avoid a fight if he can, which is why he’s made an offer in the first place, so keep going. But this is open to each individual circumstance.
42 | Aussie Painting Contractor
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WHO – is making the offer? Don’t negotiate with someone who is not authorized to make payment offers. Often you will strike a deal with someone who has been playing with you, just to see how low you will go. Then when you accept the offer, you are told that that person was never authorized to make offers. This can happen if your debtor is a large company where you might be dealing with project or site managers. Are you sure these guys can make settlement offers on behalf of the company? So if you are not sure if the offer is coming from a senior enough person, ask them for written confirmation that they are duly authorized to negotiate a payment settlement on behalf of the company. Advise them that you will only consider an offer once you have such confirmation in writing. WHAT – are they willing to pay for? This is the business end of the deal. How much are they offering? Often you will have a gut reaction to the number once you see it. Go with that most of the time. If an offer is reasonable it is generally better to accept it and save yourself the time, stress, and cost of a much harder fight. I would stress here that this applies to ‘reasonable’ offers. Most of the time you will get pathetic offers that your instinct will immediately reject. Often there will be vast slabs of work (often variations) that the debtor will not pay for, instead offering payment for some tiny item of contract works. That is the time to
44 | Aussie Painting Contractor
push forward with your adjudication, payment claim, or other recovery process. The golden rule here is DO NOT MAKE A COUNTER OFFER. If you are offered $30 000 payment on a $100 000 debt, don’t suggest that you will accept $70 000. This is a road to nowhere, as your debtor will never accept your counter offer. He may come up to $50 000 if you’re lucky. Remember, your role is to accept offers. It is your debtor’s job to come up with one that you will accept. If you reject an offer, then keep your mouth shut and keep going. Your debtor then will have to fight on, or make a better offer. WHEN – will payment be made? This is the time to impose some control. When you have accepted an offer, the worst thing you can do is relax because ‘it’s finally all over’. This is when it can all go south. When you have a figure you can live with, you need to define when it is due for payment. And I mean ‘when’ precisely. That means a day and time. This is a crucial step because by imposing this rule you can test your client’s credibility. If they hesitate at any kind of a deadline then you know the offer is not real. They may offer another deadline that you can live with, but make sure that your power is intact. You continue your adjudication or recovery action right up to the time that money hits your account. If you relinquish this power, you can kiss your money goodbye.
WHERE – will payment be made? Again this is another aspect of controlling the process. Where do you want the money to arrive? It may come to you by couriered cheque. Or a cheque may be sent to your lawyer’s office, or to your office. This step only applies to payment by cheque, but you must define where the cheque will be sent, and advise your debtor accordingly. HOW – will payment be made? This is the most important aspect of control, because you need to confirm that you have actually been paid before drop your recovery action. Today there are many ways of moving money around: Most of the time you would accept payment by either cheque or direct transfer into your account. Remember that if you accept a cheque it MUST be a bank cheque. Offer to pay your debtor for the cost of the cheque in order to make it easier for him to comply. If you can’t get a bank cheque out of him, then you will only consider payment to be made on the clearance of the money, NOT receipt of the cheque itself. Or you could provide account details for a direct transfer. Evidence of this will be an online receipt.
But be careful. I have seen one of these faked using liquid paper and a photo copier. So again only consider payment to be made once you can see the cash in your account. This will usually be a day after the transfer. So have a go at writing an offer acceptance letter incorporating all the elements above, and preserve your power, and control the process. Anyone can make offers. It’s your job to turn them into cash.
www.contractorsdebtrecovery.com.au
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 September Issue | 47
