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4 mindsets that separate successful business owners from the rest

Business Coach Daniel Fitzpatrick takes a look at four ways of thinking that will get you to the next level a lot faster.

If you’re like most tradies and have a lot on your plate right now, it’s easy to forget about how your mindset impacts your success, and simply go through the motions every day. Ticking off your long list of to-dos.

You want to be making progress, but it feels like you’re bogged down by what’s urgent. And not necessarily getting to what’s most important.

So, how can you ensure you’re on the right track and progressing towards where you want to be? Such as running a thriving, growing company with an amazing team and reputation that is second-to-none (with plenty of space for regular family time and holidays!)

Start by understanding these 4 mindsets that separate successful business owners from the rest:

1. They take responsibility for the big picture

Hal Elrod says: “The moment you accept total responsibility for EVERYTHING in your life is the day you claim the power to change ANYTHING in your life.”

It’s true. When you don’t take total responsibility for something in your business, then you’ve given up the power to change that thing. It’s unlikely to then go in the direction you want it to.

Ever started a job and took ownership, but a few things got away on you? Like when you discovered there were a few extras involved that were not allowed for in the quote, but it was just easier to carry on and deal with it later? In the end, your margins disappeared and it was too late to negotiate with the client because the job was finished?

Taking total responsibility (even when it means having the hard client conversations in the middle of a job) saves a whole lot of headaches later.

Another big one is taking complete responsibility for your financials. This means consistently being ahead of the game: knowing exactly what’s coming in, what’s going out, and what’s left.

It’s tough right now, which is why it’s essential to focus on building the fundamentals of a strong business.

Ask yourself two important questions:

  • What’s out of control that needs fixing right now? (e.g. cashflow – there’s a whole lot of debtors you haven’t followed up, and that’s why you’ve got no money)
  • What are you letting coast by that you need to get control of because it’s going to bite you in the future? (e.g. your foreman is being difficult)

If you can really get a handle on those loose ends, when you get to the end of the year, you’ll be much happier with the results.

2. They make financial decisions based on the ROI, not the cost

Fact: not all costs are the same. When you make a financial decision, it can either be seen through the lens of it being a cost, or an investment.

For example, implementing new project management software will cost time and money initially, but will save you time
and improve margins and control in the long term.

Therefore, just viewing it for its initial cost could hold you back from investing in something that would later benefit you. The more growth focused approach is to analyse your financial decisions based on the ROI, the overall effect.

You’ve got to think: for what I put in, am I getting a greater return?

Making financial decisions in this way can save time and frustration, and play a great role in taking your business to the next level.

3. They fixate on their goals but are flexible in their approach

Any significant goal will have curveballs on the way that try to shunt you in a different direction. The winning attitude is to be firm and fixated on your goals. But also to be flexible in how you achieve them!

Imagine a key staff member has left and you need to find a great replacement. It’s hard to find staff right now. Thinking outside the box might mean training an existing team member up into the role, or offering to pay moving costs to attract someone from outside the region.

There will always be turns and bends in the pursuit of our goals, but it’s not an excuse to stop. Instead, it’s a reason to find a different way. As Ryan Holiday says: “Stop looking for angels. Start looking for angles.”

Where are you currently stuck in your business? What isn’t working? Spinning your wheels and hoping things will improve might not be the best approach.

Even if you’ve had success in the past, what’s gotten you to point A might not necessarily get you to point B.

So, look for a different way. Find a new strategy. Create opportunities and get after the results you really want.

4. They don’t expect themselves to have all the answers

Tradies sometimes think: there’s no task too big to handle if I just grind it out.

However, when it comes to nailing down the nitty-gritty of your business, you’ll run into a problem: you can’t read the label from within the jar.

How often have you seen someone stuck on how something is going to work, but then someone else has come over and almost immediately found the solution?

As billionaire real-estate investor Gary Keller says, “Any time in your life you are hitting up against the ceiling of achievement, you’re missing a person.”

It shouldn’t be a surprise that a different set of eyes sees different things. So, stop and think: how are you taking advantage of different eyes and minds in your business strategy?

Do you have a different set of eyes on your financials? Have you got other minds working with you to help take your business to the next level?

Having someone you regularly sit down with to go over various aspects of your business will force you to show up and think strategically, which will ultimately help you move forward and stay the course. So, take advantage of it!

Let’s wrap this up

The mindsets of business owners who succeed and those who don’t are very different. Make sure you can say you’re on the right side!

Remember:
Take responsibility for the big picture. Make financial decisions based on the ROI rather than the cost. Be flexible in how you get to your goals. And don’t go it alone.

If you want to improve your mindset and get better results, then check out these options:
• Become part of our community and join our free Next Level Tradie group, with lots of great tools and tips. Go to www.skool.com/next-level-tradie/about

or

• Want some personalised help with your business and mindset? Contact me for a free online chat to see how I can help you fast track your way forward. Book a time here: nextleveltradie.co.nz/nextstep/

 

Article written by Daniel Fitzpatrick, Next Level Tradie

Published in WIRED issue 74/September 2024 by Fencing Contractors Association NZ

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Lone worker points to remember

Lone working in rural and agricultural settings is a critical safety consideration. Let’s explore some key points to ensure the well-being of lone workers.

Risk Assessment

Begin by assessing the risks associated with specific tasks. Consider factors like working with machinery, livestock, or in remote areas. Employers must manage the risk to lone workers by considering health and safety risks and then put in place reasonable measures to ensure tasks can be carried out safely. This means providing training to ensure the lone worker is competent to perform the task and then deciding on the level of supervision or monitoring appropriate to the level of risk.
The Health and Safety Act has key questions for deciding on safe working arrangements. These are:

  • Can the risks of the job be adequately controlled by one person?
  • Is the person medically fit and suitable to work alone?
  • What training is required to ensure the person is competent and can work safely?
  • How will the person be supervised?
  • What happens if a person becomes ill, is injured, or there is an emergency?
  • Who will be involved, and which hazards could harm those working alone?

Assessing Risk

A good-quality safety management system is the foundation for reducing lone working risks.

  1. Tailoring your risk assessment to the specific tasks of the job
  2. Health & Safety Policy: If you run a business – with or without employees – (including partners and part-time labour), a written health and safety policy is essential. Make it high-quality and activity-specific.
  3. Training: Ensure that all workers, whether employed or family members, receive proper training for operating equipment.
  4. Communication and Monitoring: Regular communication with lone workers is crucial. While technology can help, it shouldn’t be relied upon exclusively. What type do you use or have? Does it work?
  5. Weather/Terrain: Regularly assess this. If alone, can you get help or get out of the situation if things go wrong or injury occurs?
  6. Prioritising: Prioritising safety over convenience is essential.

What extra safety measures are required if an employee works alone?

Working alone is work carried out in an area where normal means of contact (e.g., verbal, visual) with other staff are not available, so there is no one to notice if something goes wrong or to render assistance. This may include working in isolated areas on-site. The potential risk of existing hazards is therefore increased to the extent that extra precautions are needed. When working alone, you are the only person there, therefore you are the person who would most likely influence and control the risk management while on the work site.

Working alone situations:

  • Travelling alone as part of the job
  • Travelling long distances
  • Carrying out field work in remote or isolated locations
  • Working unsupervised for any period of time
  • Working late at night or doing shift work
  • Working with the general public, but away from home base and co-workers
  • Working on days with a reduced roster (e.g., public holidays)

Lone workers face different kinds of risks compared to those who work in the company of others. From personal injury and illness to confrontations, these risks are also amplified in situations where workers are left to their own devices.

Mitigating Lone Working Situations

  • Operate a buddy system to reduce or eliminate the need to work alone
  • Maintain regular contact with lone workers via phone, text, email, or live video conferencing
  • Install CCTV and security devices/alarms to monitor lone workers
  • Keep lone workers informed on the latest legislation, events, and workplace procedures
  • Give lone workers access to the latest tools and technology tracking devices, PLB’s
  • Encourage lone workers to attain a first-aid certificate
  • For remote locations, inform workers on potential hazards in the area and where they can access help if needed

Planning ahead for Lone Working situations

The employer and worker must both identify hazards in the workplace, by completing a risk assessment considering what steps are reasonably practicable to ensure the safety of the employee and implement controls. This includes:

  • If a risk of the employee suffering harm is assessed, then appropriate control measures need to be considered. Providing a VHF Radio and ensuring that it is monitored, or a remote system such as a Personal Locator Beacon (PLB) could be practicable steps. Appropriate control measures will evaluate the time necessary for an emergency response.
  • Ensure someone else knows about the workers’ day-to-day activities and an expected return time. Consider what actions shall be taken should the worker not report in, i.e., call search and rescue.
  • Check weather and environmental conditions daily.
  • Keep first aid kit up to date and fully stocked.
  • Have a high-powered LED light or strobe light in the work vehicle or on hand – rescue helicopters have equipment to pick this up if a nighttime rescue is needed.
  • Have a location board or workplace map at the office, work shed or, entry gate etc.
  • If the worker is not fluent in speaking English, make special arrangements in case of an emergency.

 

Minimum Requirements:

  • Scheduled check-in phone calls with lone workers for tasks over 3 hours.
  • If the scheduled check-in time is 30 minutes late, consider the following:

– Try contacting the worker directly.
– Send another worker to the last known location, if practicable
– Check the GPS tracker, if applicable
– Contact a nearby neighbour, manager, supervisor, etc. and ask them to check the last known location, if practicable

  • Always have a backup plan, i.e. if there is no cell coverage, use radio communications

 

Contractors/Sole traders:

  • Considerations where workers are the sole employees of the business:
  • Have a designated person i.e., partner, family, or flatmate to contact the contracted employer should the check-in time be exceeded or they do not return home.
  • Inform the designated person of their work schedule, locations, and contact details for the work site and or onsite management.
  • Keep the contracted employer informed of scheduled work locations and times.

 

Expectations of the Employee:

  • The worker must be under direct supervision until assessed as competent by a person in charge of the workplace
  • Ensure a nominated person knows where you are going and what time you will be back. Confirm that they will come and look for you if you are not back within 30 minutes of that time or a time decided by your plan
  • Take clothing appropriate for the weather
  • Take a cell phone or radio if either device works in the area you are working, or personal location beacon/tracking device
  • Self-monitor for fatigue, heat, or cold related illness
  • Do not undertake a task if there is a risk that you cannot complete it safely
  • Do not move to a new area without first advising your nominated person of this change
  • Report when safely home

 

Put the Policy in place:

  • Discuss the policy and controls with your team
  • Sign off that all employees understand what is required to stay safe
  • Plans change, and so should your working alone agreement, depending on location and job

 

IT IS A LIVE DOCUMENT:

  • review often.

 

Deb and the team at Rural Safe

Published in WIRED issue 74/September 2024 by Fencing Contractors Association NZ

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Stressed up to my eyeballs

It’s 3am, Tom owns a building business, and he’s lying in bed wide awake. Tired and stressed up to his eyeballs as persistent worries kept tumbling through his mind.

‘What’s Jack (his employee) going to say when I give him that out-of-town job tomorrow? Everything’s a problem with that guy.’

‘What if the Jones payment doesn’t arrive tomorrow? How are we going to make payroll this week?’

‘I don’t even know where to start with the cancer diagnosis the parents got last week.’

We all know that too much stress long-term is bad for your health. But it affects other areas of life too, like self-confidence. High levels of stress for long periods of time can also cause decision fatigue. Procrastination starts to creep in, and even the smallest problems can start to feel overwhelming.

There will always be some stress in business, but when it’s too much, how you manage it is vital when it’s overwhelming.
Here are some of the strategies that have helped my clients get stress back under control.

Looking the monster in the eye

Every action movie has a version of the hero’s journey. There’s a scary monster or villain you can’t quite see, seeking its next victim. Seemingly too powerful to defeat.

A hero emerges and challenges the monster. At the first encounter, the monster gets the upper hand, and our hero withdraws, overwhelmed, wounded, and defeated.

The mentor appears and shows our hero there is another way. After training with his mentor and much soul searching, he or she becomes a stronger, better version of themselves.

Equipped with their newfound knowledge and strength, our hero realises that the monster also has weaknesses. Our hero steps forward, looks the monster in the eye, and realises in that moment that with the right strategy and courage, he/she could win the day. An epic battle ensues, the monster is defeated, and the prize goes to the hero.

It’s also like that in business. I tell clients to look their monster in the eye, to see it for what it is – no more and no less – by writing down the worst-case scenarios.

Then ask, “Can I live with that?” If the answer is “Yes, I can, but don’t want to”, then work on ensuring the worst-case scenario doesn’t happen.

If the answer is “No, I can’t”, then it’s also time to get to work doing everything possible to shift the odds back in your favour so that scenario won’t happen. Or go another way. There is more than one way to kill the stress monster.

Don’t look up at the mountain just yet

Before you look ahead at the mountain, look back to see how far you have come. If you have been in business for any length of time, there are many obstacles you have already overcome. Money challenges, getting enough work, health challenges – you have fought these foes before and won. You have a business and are still trading. Many don’t get that far.
In business and life, there will always be a mixture of wins and losses. Some days you will have more wins, some days more losses. As business owners, we tend to focus a lot on the problems. That’s important because you can’t fix problems you don’t see, but it is essential to also celebrate the wins.

Just focusing on the losses will drag your confidence down and raise stress levels. So, count the wins, both big and small.

Write them down and look at them every time you are feeling overwhelmed or stressed.

Make a plan and start moving forward!

If you’re feeling stuck and don’t know what to do next: map out the options, then pick the best one and start moving forward. Even if it’s a shift in direction, it’s easier to adjust if you are already moving. Staying where you are and hoping things might get better isn’t a plan.

A client I am working with has major cash flow problems. Before we started, he was so stressed that he didn’t know where to turn next. It felt easier to go to the job site rather than face the bigger issues like cash flow, which just meant the problems kept getting bigger. Suppliers were putting him on stop credit, tax bills were starting to pile up, and things were falling apart.

He had come through a bad couple of years, and he was running out of money fast. We calculated his cash position, and it was clear he couldn’t keep juggling cash flow, the gap was too big. He could trade out of it in 12-18 months, but that was going to take too long.

He needed cash to keep trading. So, we put a plan together, and he got to work. He’s selling surplus assets, refinancing through a broker, getting his team more efficient on jobs and competing cashflow projections, so when he’s talking with suppliers, it’s clear who he can pay and when.

The plan will likely need some adjusting as the landscape changes, but he’s moving forward, and it’s working.

Control the controllable

Stress is a sign that your brain is freaking out about all the things that either might or are going wrong. Thoughts in your head might be something like, “Remember when the work dried up, didn’t know how I was going to make payroll. Better get everything under control NOW, or that’s gonna happen again”.

The problem is that you can’t control everything, so it’s an easy trap to fall into, putting time and energy into the wrong things.

For example, you can control how much time you spend getting new work, but not inflation or government policy. So, spending too much time on Facebook or listening to the media saying that the economy might be tanking again won’t get you any closer to a solution.

So, control the controllable, the levers that will improve your situation. Put your time, energy and focus into those, as they will succeed. The bonus with this strategy is that you will discover that you can control more than you realise.

Don’t try to carry everything yourself

You don’t have all the answers, no one does, and that’s normal.

So, talk with others who have mastered the areas you are weak in. Struggling with cash flow, then talk with someone who understands cash flow. Need more profit, talk with someone who understands margins.

Share your goals with the team and your partner. Get them on board with the plan.

Make sure you have a trusted mentor or coach you can call regularly, especially when problems and stress levels are feeling out of control. Getting another perspective from someone who has already been there can make all the difference.

Hit the bag, chuck the chips

Have a physical outlet to get rid of the stress in your body, such as hitting the punching bag or going for a walk. Make sure you schedule a few times a week to get rid of the tension and negative energy.

Diet is also important, so start eating healthier: food with lots of fruit, veggies and meat. Cut back on the takeaways, sugar, alcohol and chips, or even better, eliminate them completely.

Don’t do that Big Terrible Thing

I have been reading Matthew Perry’s book “Friends, Lovers and That Big Terrible Thing” and how drugs and alcohol wrecked his life and seems to have probably killed him. Such talent, it is a real tragedy.

If this is an area you are struggling in, then tell your partner, involve your doctor, and get some help now. The longer you stay on that train, the more you pay and on this train, the price is way, way too high – more than you and your family can afford.

What do you really want?

Another client has health issues that flare up when stress levels get too high. Yes, we are working on getting his businesses profitable and cash flow back on track again. But also asking the tough questions that every business owner should be asking regularly.

Can I be healthy and have the business? Is being in business still fun? Are my family getting what they need from me?

What must change to make this into the business I want? What’s my exit strategy and when would I use it?

The reality is that even the best businesses at times will be stressful. With the right plan you can minimise stress, but there will always be some.

If you are stressed out and need a better plan, then check out these options.
Join our new Next Level Skool Group and get our free Cashflow Confidence Toolkit at https://www.skool.com/next-level-tradie or Book a free Stress Buster session with me at www.nextleveltradie

Written by Daniel Fitzpatrick, Next Level Tradie

Published in WIRED issue 73/JUNE 2024 by Fencing Contractors Association NZ

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Hard hat safety

In New Zealand, hard hat safety is governed by specific standards to ensure the protection of workers in various industries.

Hard hat safety in NZ

In New Zealand, failing to comply with health and safety duties, including not wearing a hard hat when required, can result in significant penalties under the Health and Safety at Work Act 2015 (HSWA). The penalties vary depending on the nature of the offence and the type of duty holder involved.

Here are some key points:

  • Reckless Conduct: If a duty holder is found to be reckless about the risk of injury, illness, or death, they can face severe penalties, including imprisonment.
  • Failure to Comply with a Duty: If the failure to comply with a duty exposes an individual to a risk of serious injury, serious illness, or death, this can also lead to substantial penalties.
  • Infringement Notices: For specified offences against the HSWA or regulations, infringement notices can be issued, requiring the payment of an infringement fee, or allowing for an appeal in court.
  • It’s important to note that the exact penalties would depend on the specific circumstances of the violation and the outcomes of any legal proceedings. For detailed information on the penalties, it’s advisable to consult the HSWA or speak with a legal professional.

Head protection is a vital piece of PPE!

Hard hats are the main piece of head protection that protects us from potential brain damage or other head injuries that result from the impact of being hit by falling, moving, protruding, or flying objects. They also protects the head from electric shock and weather extremes, such as UV exposure/sunstroke.

How do they protect you?

Constructed with an outer shell designed to deflect or absorb an initial impact and suspension/harness inside, which absorbs and spreads the impact, hard hats minimise the effects of a blow to the skull. Some hard hats have a chinstrap, ensuring the helmet does not fall or blow off.

Wearing hard hats correctly

To provide maximum protection, hard hats must be fitted correctly and worn according to the manufacturer’s instructions. It’s important to adjust the harness cradle for comfort and ensure total contact with your head at all times. Clothing items should not be worn underneath the hard hat as they can make the harness cradle ineffective. Use the chin strap when wearing at all times.

Compliance with standards: Hard hats must comply with the standard AS/NZS 1801:1997 (or equivalent) and should be worn at all times on sites where there is a risk of objects falling from above.

Mandatory use: The use of hard hats is becoming mandatory on most sites across New Zealand.

Types of hard hats: There are different styles of hard hats available for various types of work, including industrial, working with animals, bump caps, chainsaw use, ATV riding, high temperature, bushfire fighting, peakless, peaked, and full brim.

Attachments: Some hard hats allow for the attachment of accessories like face shields, respirators, hearing protection, and work lamps.


Maintenance

Hard hats should be stored in a cool, dry environment away from direct sunlight and heavy or sharp objects.

  • They should be kept away from chemicals and cleaned regularly.
  • Store in a clean, dry area, away from direct sunlight.
  • Inspect your head protection at least weekly – check for cracks, frayed straps, dents, penetrations, and any other signs of damage. You may want to check with the manufacturer’s instructions for inspection.
  • Replace immediately if you notice any signs of damage or wear.
  • Always remove and replace a hard hat if it sustains an impact, even if damage is not noticeable.
  • Clean by scrubbing, immersing in warm, soapy water and rinsing in water.
  • A simple test you can do is squeeze the sides of the hard hat together and listen and feel for signs of cracking or stress.
  • Your hard hat should be replaced three years after first use or five years after the manufacture date. Some suspension components may need to be replaced at intervals no longer than two years. CHECK THE DATE OF YOUR HAT. RECORD YOU HAVE CHECKED IT.

 

Training to use your hard hat

That’s right – you must ensure your workers are trained in the safe use, storage, care and maintenance of the hard hat. This may include:

  • The hazards the hard hat may control and use for that risk
  • The correct way to fit, adjust the hard hat for comfort, and use the hard hat
  • How the hard hat works, its construction and the limitations of hard hats
  • Instruction on which tasks require the use of a hard hat and why it must be worn
  • Correct storage, cleaning and identifying of damage or wear of the hard hat
  • When to replace the hard hat, regular inspections recorded

Purchasing hard hats

For purchasing hard hats or related safety equipment, you can visit your safety store. Additionally, New Zealand specifies that all hard hats must comply with New Zealand or equivalent international standards to be used in NZ.

Remember, wearing a hard hat is not just about compliance with regulations; it’s a crucial practice to protect oneself from potential hazards on the job. Always follow the manufacturer’s guidelines and check with them if you have any specific questions about your hard hat.

IF IN DOUBT, THROW IT OUT.

Written by Debbie Robertson from  Rural Safe

Published in WIRED issue 73/JUNE 2024 by Fencing Contractors Association NZ

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Challenges facing the fencing sector

We all complain about rising prices and operating costs. Since 2020, costs have increased, driven by rising interest rates, wages and, of course, fuel. It’s tough being a fencing contractor or business owner in the current economic climate. Smarter financial management can help.

UDC Finance has provided finance to Kiwi business owners for over 86 years and has multiple locations across New Zealand. This allows us to combine wide experience with an understanding of both the local and national markets.
Business owners need to be smart with their finances. Here are some tips we’ve picked up from working with those in the fencing industry:

Cost control is key: Firms compete on price. Costs can be reduced by economies of scale – consider mergers and partnerships. Make sure you work with your financial partner to identify savings.

Invest in technology: Smart RUCs and online finance management tools not only save time, but they can also produce insights on waste and improvements.

Form a team: Get a good team of advisors, including an accountant, to develop a plan and continually monitor your progress against it. Ensure your advisory team is prepared to challenge the numbers you put together, doing what’s called ‘sensitivity analysis’ in the finance game.

Gear depreciates: Wear and tear, and the increase in maintenance costs can affect your bottom line. It is important that you have a plan in place to upgrade your equipment versus paying upfront. The age of the asset impacts the ongoing maintenance costs significantly. Older vehicles and heavy machinery are more likely to require more complex or costly repairs, which could also take more time to fix. Equipment issues combined with warranty expiry, failing or worn engine and driveline components, brake issues, unforeseen breakdowns, lack of follow-up repairs and tyre wear can be just some of the issues you need to prepare for.

Communicate with your funder: By having open, honest conversations early on, you can work with your funder to support delivering your plan. This can help you protect your business and ensure you are as well positioned as possible when the next upswing comes. By sharing your plan, your funder can better understand any challenges you may be facing and can work with you to overcome these.

The team at UDC would love to have a chat with fencing contractors and provide them with further information. Contact details for all UDC commercial managers can be found in the asset finance section of our website – udc.co.nz. The UDC team is located up and down the country, so you can get in touch with your local representative, who understands your region, and take it from there.

Article supplied by: UDC

Published in WIRED issue 73/JUNE 2024 by Fencing Contractors Association NZ

This article is a general market commentary and does not constitute financial advice. UDC Finance Limited lending criteria, fees, standard terms and conditions apply to any loan.

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Best practice bookkeeping for new and existing businesses

Unravelling the roles of accountants and bookkeepers

For years, accountants have been the go-to for compliance, taxes, and discussing business financials. While bookkeepers have also been around, they’ve often been seen as redundant if you already have an accountant. So why would you need a bookkeeper when your accountant can do much of the same job?

A bookkeeper is all about the details

A bookkeeper really gets to know your business inside and out, managing day-to-day tasks with precision, and is typically the pro when it comes to systems and software. From invoicing to payroll processing, chasing debtors and filing GST, they ensure records are tidy and compliant, freeing you from administrative burdens to focus on growing your business. Freeing up your time to work ON your business and generate income is a smart business decision.

Accountants, however, focus on the broader financial picture. While some may handle detailed tasks, many prioritise overarching insights, potentially missing finer operational nuances. Nevertheless, they excel at compliance, tax management, business structuring, and providing strategic guidance.

In essence, while accountants ensure compliance and offer strategic guidance, bookkeepers handle the operational nuts and bolts, making them invaluable for business success.

Choosing the right business structure

Business structure is crucial, impacting your legal responsibilities, operations, salary, and tax obligations. Changing structures – for example, going from a sole trader to a limited company, can be relatively easy, but should be done with guidance from your accountant. Each structure has its pros and cons.

Three main structures are likely to be more relevant for FCANZ members, so let’s focus on these: Sole Trader, Limited Company, and Partnership.

Sole Trader: This is the simplest option, requiring no formal registration beyond possibly obtaining an NZBN number for credibility. As a sole trader, you own all business assets and liabilities, and paying yourself is straightforward. It’s ideal for small operations with turnover under $80,000, as compliance is minimal, though you bear all business risks personally.

Limited Company: Setting up a limited company involves registering with the Companies Office, specifying directors, shareholders and shares to allocate. Shareholders own the company, while directors manage it. This structure offers legal separation between personal and business assets, reducing personal liability. However, compliance requirements are more extensive – annual financial statements and tax returns, annual renewal of company office registrations, keeping company registers, and various other tax compliance requirements such as FBT tax, Dividends, etc.

While sole trader status suits smaller, simpler businesses, for turnover exceeding $80,000, restructuring to a limited company can offer tax advantages and provide legal protection, but entail greater administrative requirements.

Partnerships: Partnerships occur when two or more sole traders combine resources and skills for a joint business venture. A detailed partnership agreement is crucial, outlining each partner’s contributions, ownership percentages, profit/loss distribution, exit strategies, and dispute resolution methods.

There are two types: registered partnerships, which have an IRD number and file partnership returns (IR7); and informal partnerships, which don’t have an IRD number and allocate income and expenses to each partner based on percentage of ownership. Income and expenses are returned in each partner’s IR3 return, and also populated in an IR10.

Partnerships can register as employers, but partners can’t be employees without IRD approval. Legal liability is similar to sole traders, based on a percentage of each partner’s ownership. Compliance involves partnership financials and individual tax returns.

When GST registration matters

You must register for GST once your turnover hits $60,000 in any rolling 12-month period, not just from one financial year or calendar year. We recommend voluntary registration if you anticipate reaching the $60,000 threshold early on in business, or if you want to include GST in your prices from the start. Early registration allows you to claim GST on initial expenses and assets you purchase during business set up. You can’t backdate GST claims on purchases prior to being registered for GST.

Navigating Provisional tax

Provisional tax means paying your future income tax in advance. There are currently four methods IRD use to calculate provisional tax, two of them being Standard and AIM (Accounting Income Method). If your Residual Income Tax (RIT) exceeds $5,000, you’ll need to pay provisional tax.

Standard Method: Is calculated based on last year’s RIT, plus 5%. Standard provisional tax is payable in three instalments through the year – August, January and May. You are protected by the safe harbour rule as long as you make all your instalments in full and on time, and as long as your RIT is less than $60,000. The Standard method doesn’t consider potential business growth or decline, and you may end up with a tax wash up at the end of the year, resulting in more tax to pay, or a refund.

AIM (Accounting Income Method): Utilising accounting software, AIM calculates actual business profit or loss every two months, aligning with bi-monthly GST. It’s beneficial for businesses with seasonal or fluctuating incomes, new businesses, or uncertain financial situations, offering flexibility and smaller, more manageable instalments.

While AIM’s precision aids cash flow management, only accountants can file AIM returns as they require regular adjustments through the year and have to be filed through practice software.

Valuing your time in business management

In business, your time is precious, potentially dictating whether you opt for accounting software or stick to spreadsheets. After all, none of us start a business to drown in admin tasks.

Software can be costly, but consider the time saved compared to manual management. From an accountant’s viewpoint, software streamlines record-keeping, GST filing, reporting and tax preparation.

Yet, spreadsheets remain an option. If you choose this route, ensure your template is comprehensive, updating it regularly and backing it up with bank statements, receipts, and invoices.

Without software, accessing real-time financial reports can be challenging, hindering your business overview and financial understanding. Manual records can also create problems when you require real time reports to provide to lenders or banks.

Keeping receipts

Recent Inland Revenue updates reduce the need for detailed records for expenses under $200. For Expenses over $200, you will need to keep taxable supply information. Software like Xero can record the required taxable supply information (a combination of receipts, bank statements, supplier agreements or contracts), simplifying this process. However, we would recommend that manual record-keepers still keep copies of receipts.

For asset purchases, follow these guidelines: Assets under $1,000 can be fully expensed, while assets over $1,000 will need to be added to an asset register and depreciated over time. Keep receipts for all asset purchases, especially if the purchase results in a GST refund. Typically, IR will query these and request verification.

When acquiring second-hand assets, the second-hand goods rule allows GST claims, even when purchasing from a non-GST registered person, as long as the asset is a business asset and will be used to generate business income.

Getting ready for year-end

When it comes to year-end and submitting your information to your accountant, it’s best to be proactive rather than wait until your accountant is chasing you.

If your annual returns are filed in a timely manner, you have more time to pay taxes and make better business decisions.
However, if your accountant requests this information, make sure you have it all ready to go!

  • Reconcile Xero to date or update your Excel spreadsheet
  • Carry out a stocktake
  • Export PDF bank statements confirming closing bank balances
  • Get together all your loan statements
  • Make sure you have asset purchase information – receipts and or loan agreements
  • Motor vehicle log books or mileage records
  • Compile Home office expenses
  • Receipts for any expenses paid with cash or personal funds

If you have a manual record system, you will also need to export bank statements for the full financial year, and potentially need to provide receipts for the bulk of your transactions.

Three methods for claiming motor vehicle expenses

Log Books: Keep a log book if your vehicle is used for business over 25% of the time. Log trips, distances, and reasons for 90 days. The book is valid for three years as long as the business doesn’t change more than 20%. Use apps or physical logs.

Claiming Up to 25% of Running Costs: You can claim 25% of fuel, maintenance, insurance, etc., without a log book. This method requires potential substantiation if requested by the IRD.

Claiming Actual Costs: Claim 100% of expenses for a primary work vehicle, including depreciation. No mileage recording is needed, but proof of expenses is required. Be ready to demonstrate the vehicle’s business use to the IRD.

 

Haley Reyners, Owner and Director of My Two Cents Accounting, leads a team of 14 Bookkeepers and Accountants. They offer hands-on services to businesses across Northland and New Zealand for over a decade. Their services include setup, training, business structuring, bookkeeping, cashflow management, software, accounting, and advisory support.

Article written by Hayley Reyners

Published in WIRED issue 73/JUNE 2024 by Fencing Contractors Association NZ

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Cashflow and costs remain key for SMEs

We’re not out of the woods yet with regard to tough economic times. What should small and medium-sized businesses (SMEs) be currently focusing on when it comes to their finances?

According to Morgan Strong, General Manager – Commercial for UDC Finance, it comes down to the two Cs – cashflow and costs.

When considering finance as an SME, you will reap the benefits if you get the basics right first time. First and foremost, have a plan. Know where you want your business to go and what you need to do to get there.

“It is important that you demonstrate you know your industry. Successful SMEs tell us that you don’t need to know everything, but you do need to have the right people in your corner”, explains Alistair. “Successful SMEs also stress the importance of good financial reporting. Make sure you have all the relevant, up-to-date paperwork on your business’ finances. As a lender, we look at the so called ‘4 Cs’ when we’re assessing a credit application – character, capability, capacity and collateral”.

Getting the best out of a lender will be easier if you understand what information a lender wants from you. Some of the key information includes:
• A basic overview of your business and its owners
• Any key changes, past or proposed
• How your business works
• Regional and industry insights, and future plans
• How much finance you are seeking and what impact this will have on
your business
• Financial information (see below)
• What security you are offering.

“A good lender should ask open questions and be a good listener”, Alistair states. “We’re interested in your medium to long-term goals; we want to understand more than the single transaction”.

Financial information is key to lenders understanding your position and ability to repay your loan. This financial information includes your balance sheet and profit & loss statements, your debtors and creditors, and your cashflow statements. A lender will also likely request financial projections.

“Finance providers like UDC need to be responsible lenders”, says Alistair. “Businesses often wonder why they are getting asked for projections when their business is making money. It is important to understand that profit is not cash. Cash is king, and it is required to pay your financial obligations ranging from loan payments through to wages”.

There are numerous types of loan payments and structures that can be considered for an SME, and a good lender will present the different options available to you. For example, UDC offers:
• Seasonal payments
• Balloon payment
• Interest rates, fixed or floating
• More sophisticated asset finance products as opposed to simple term loans.

It is no secret that times are currently tough for many businesses. UDC recognise this and has been supporting many of their customers through this downturn.

“Anyone can lend money in good times, but at UDC we pride ourselves on working with our customers, asking questions and looking for solutions”, Alistair explains. “Of course, we must have comfort that you understand your business and the implications you could be facing, but we want to work with you to come up with the best solutions. This involves having a good relationship and great communication from both parties; it’s a two-way relationship”.

If a SME gets the basics right, understands what the lender wants, understands their financial information, and clearly communicates this information, they are on the path to getting the best out of a lender in these challenging financial times.

The team at UDC Finance is focused on lending to key industries that are asset-intensive and require specialist understanding, including the road transport industry, which UDC has been working alongside for over eight decades. Contact details for all UDC Commercial Managers can be found on the UDC website. UDC representatives are located up and down the country, so you can get in touch with your local representative, who understands your region, to have a chat and take it from there.

Article supplied by: UDC

Published in WIRED Issue 72 / MARCH 2024  by Fencing Contractors Association NZ

This article is a general market commentary and does not constitute financial advice. UDC Finance Limited lending criteria, fees, standard terms and conditions apply to any loan.

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Working around water

We have many clients undertaking water fencing projects this summer. Not just swimming pools, but dams, waterways, and ponds.

What are the key things you need to think about? It’s not just ‘can I swim?’

Preplan the task ahead: This is important – what risk is there to you and the team?
Your first line of defence against water-related hazards is simple awareness.

Set the procedure: describe the methods for all work in areas where there is water below, or nearby, or where workers are required to work in water.

The intent of this procedure is to provide guidelines to minimise the likelihood of injury, to protect personnel working over water, and to prevent waterways from becoming polluted through construction or other work activities performed
over water.

Access ways and access points to places where work over or adjacent to water is carried out must be constructed to standards that reduce the risk of slips and falls. Handrails constructed to standard must be in place where practicable. All workers working over aerated water must be tethered securely to prevent falling.

General Requirements

The need to undertake any work over, in, or near water adds a further risk to those that already exist for the specific task.

WorkSafe says ‘Working near water is a critical risk, and measures need to be taken to ensure the safety of operators in New Zealand’.

In recent years, WorkSafe has investigated two fatal accidents and a number of serious incidents where the mobile plant has unintentionally entered the water. These incidents highlight the potentially tragic consequences of machines ending up in water.

“Working near water is a critical risk for the mining and quarrying sector and other sectors that work near water in large machines. The risk needs to be tackled by introducing effective controls and monitoring their effectiveness,” WorkSafe extractives chief inspector, Mark Pizey, says.

“It’s non-negotiable that critical risks such as ground failure, working at height, being hit, or trapped by moving objects, require controls that everyone understands and apply without exception.

“A discussion should be taking place in boardrooms around New Zealand about the critical risks in their business. Directors should know how their business manages critical risks and what measurement gives them confidence that controls are working.”

What creates a hazard when working around water?

Hazards to consider when working in or near water:

  • Drowning-related hazards such as rising floodwaters, fast currents and deep water;
  •  Slips and trips at the water’s edge with the risk of falling into water;
  • Near-drowning;
  • Fall impact injuries;
  • Entrapment and bodily injury.

The failure to adequately assess risk and provide systems of control that effectively manage those risks may
result in:

  • personnel injury through drowning;
  • hypothermia;
  • contact with watercraft, etc; and/or
  • equipment and material loss or damage.

The hierarchy of controls should always be applied and implemented prior to commencing any work over or near water, including the assessment as to whether the risk can be eliminated.

Appropriate precautions should be taken to prevent people and materials from falling into the water/effluent.

This commonly consists of edge protection, which meets the following requirements:

  • Conduct daily workplace examinations.
  • Know the water depth, subsurface conditions and ground conditions before you begin work.
  • Keep equipment a safe distance back from the water’s edge.
  • Guard rails with a minimum height of 950mm
  • Intermediate guard rails or other rigid barriers such that there is no unprotected gap, and toe boards with a minimum height of 150mm to prevent persons from slipping under the intermediate rail and materials from falling.
  • If fencing or guarding is not reasonably practicable, PPE must be properly planned, and workers trained and supervised.

Risk Assessment and Planning

All persons involved in any work activity over or near water shall carry out a task specific Job Safety Analysis (JSA) prior to undertaking work.

Personnel required to work over, in, or above water must do so only when they are in the company of at least one other person.

Where work is to be conducted in and around inlet valves or pumps, grills should be fixed at points where there is a risk of workers being sucked or swept into pipes/conduits.

Training

Can your team perform the task required? You need assurance all will be OK.
You may include:

  • an appropriate number of workers to be trained for rescue operations
  • workers designated to perform the rescue tasks
  • workers informed about appropriate rescue procedures
  • workers trained in rescue procedures and the use of rescue equipment
  • workers may need to be trained in cardiopulmonary resuscitation (CPR) and first aid

Personal Protective Equipment (PPE)

All personnel must wear an approved floatation jacket at all times when performing any work in, over, on, or
above the water under any of the following conditions:

  • Standing or wading in any water body, including lagoons or inlet channels
  • Outside of the confines of hand-railed platforms
  • Within 3 metres of an unprotected edge
  • Not restrained through the use of a fall restraint system

WORKING IN WATER

When working in water (standing, non-diving activities), the JSA process shall include assessment of hazards associated with:

  • Slips and falls into the water
  • Inundation by upstream waters – where water is flowing sufficiently fast to carry a person away, physical protection should be used, such as a bar or chain across.
  • Where work is on or over water, manually operated hand tools shall be suitably restrained using a tool leash that is attached to the person’s wrist.

The use of a fall restraint system where practical may also be required. Consideration must be given to the nature of the work, the materials and equipment located below and adjacent to the activity and the potential and severity for injury with and without the system.

Footwear

Consideration must be given to the type of protective footwear provided and used to provide maximum protection from slipping on wet/slippery surfaces.

Floatation Jackets

The placement of signs around the workplace is necessary to reinforce the requirement for the use of floatation jackets.

Sufficient floatation jackets should be available for all personnel who are exposed to free fall into the water. Information about types of flotation devices and jackets may be obtained from Maritime New Zealand’s website.

Measures to ensure large vehicle operators and other workers are safe include:

  • Following a ground condition appraisal, a design should be prepared, setting out measures to control ground instability.
  • Ensuring there’s edge protection, barriers, warning signs, and other suitable controls around any water-filled excavation to keep people away from hazardous zones. These controls should be moved as the excavation progresses and the hazardous area changes.

Provision of rescue facilities, which may include equipping the mobile plant with features or tools for emergency use. For example, push-out windows or window breaking tools.

Installing of bunds around water and use of lighting rigs for night work are essential for safety.

Personal Protective Equipment (PPE)

Life jackets, harnesses and equipment must be checked every time they are used, i.e., they should be checked to see that the pill is in place and the gas cylinder has not been breached.

PPE should also be regularly checked. Checks should include the general condition and automatic inflation devices. A record of these checks should be maintained. Life jackets should be maintained in accordance with the manufacturer’s instructions. Life rings and throwing lines should be checked for deterioration.

Where there is a strong current, a line fitted with buoys or similar floating objects that can support a person should be extended across the water downstream from the work location and securely anchored at each end.

THE PLAN TO RESCUE

Rescue equipment – may include:

  • lifebuoy
  • a rod or hook
  • lifeline
  • life jackets, including one for each of the rescue crew
  • audible alarm
  • maybe a boat that is available for a safe and timely rescue

Guard against drowning

If you work close to water deep enough for drowning, you should have basic rescue gear on hand, at any worksite provided, at regular intervals, and ring buoys attached to at least 90 metres of line.

Another example of simple rescue gear is a shepherd’s hook or pole to pull a drowning victim to safety.

Ensure employees working around deep water know how to swim, and someone on the job should have basic CPR training. Give everyone a chance to earn their CPR certification at least every other year and encourage people to participate.

Reduce electrocution risks

Water and electricity are not a good mix, but it’s inevitable that the two will meet at many worksites. Indoor swimming pools require electric lights, for example, plus electric tools for maintenance and repair. All electrical cords should be properly insulated to meet outdoor weather standards. Electrical outlets and circuit boxes should have ground fault circuit interrupters. These handy devices will cut the current if they sense a water-induced diversion of electricity.

 

Pre-empt hypothermia

If you’ve ever worked outdoors in cold, wet weather, you probably know the virtues of layered clothing. Layers not only make it easier to remove or add garments as the temperature changes, but they also trap warm air close to
the body.

That insulation can save your life, particularly in wet conditions.

  • When exposed to rain, snow or even the spray from hoses, a worker can experience hypothermia even when the ambient temperature is well above freezing. The risk is even greater when someone falls into cold water.
  • Everyone on the worksite should know the warning signs of hypothermia: uncontrolled shivering, clumsiness, confusion and slurred speech. Workers should be encouraged to take regular breaks, from cold, wet conditions, inside a heated building.

Biological

Working close to sewerage or effluent ponds can pose other risks, such as health and contamination. Increase hygiene awareness and how you can protect yourself. Falling in can be an added risk as you will sink more quickly and are harder to see.

Awareness and common sense can go a long way to ensuring a safe workplace, even one with water hazards. Knowledge is the most important tool at your disposal to ensure safety in the workplace. If you educate yourself on potential water-related hazards, you’ll be better able to recognise them where they crop up.

We have had the odd Ute moving swiftly toward a riverbed when the grass was not as dry as yesterday.

Take care out in the workplace teams and if you are lucky enough to build a swimming pool, we hope you get a cold beer and a dip when you have finished the job.

Take care out there team.

Article supplied by: Debbie Robertson, Rural Safe

Published in WIRED Issue 72 / MARCH 2024  by Fencing Contractors Association NZ

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Discounting: Strategic move or mistake?

In military training, they teach you how to look for warning signs that could affect the mission. They call this situational awareness.

Potential threats might include the enemy’s position, the current environment, the shape they are in mentally/physically or position if things went wrong and what the next move would be.

It’s the same in the trades business – there are always warning signs when your business is headed for trouble.

Having personally coached hundreds of trades businesses over the past twelve years, there are nine warning signs I look for. Deal with these early, and chances of success improve dramatically. Left too long, they can cause major problems at best and failure at worst.

Early warning signs:

Are you finding yourself struggling to secure enough work for your team? Or maybe you’ve noticed that the amount of confirmed work booked ahead is shrinking? When work starts to dry up, it affects the bottom line. Do you start discounting to get the work or wait it out until things get better?

It’s a situation some tradies are facing right now, and it’s not easy. But before you start slashing prices, here are a few things to consider.

Disappearing profit?

Profits and margins can disappear alarmingly fast once you start cutting your prices, and here’s why.

Let’s say your gross profit margin is around 20%. If you reduce your prices on a job by 10%, the volume of work you need to complete just to maintain the same dollar profit increases significantly.

For example, if your break-even point is $100,000 per month at a gross profit margin of 20%, and you reduce your prices by 10%, you now need $200,000 of work to reach break-even. That’s twice the work, time, and effort, for the same result you were previously getting.

It’s a stark reminder that while reducing prices might seem like a viable strategy to attract more jobs, the impact on your bottom line can be significant. Not only does it increase your workload, but it also puts a strain on you and your team, sometimes compromising quality. Too many rushed jobs that go wrong can also affect your reputation.

So, before you consider cutting your rates, crunch the numbers and understand the real impact on your business’s profitability.

What’s your target Gross Margin?

Understanding your Target Gross Margin is crucial in determining which jobs are worth your effort.

Your Target Gross Margin is the percentage of profit you aim to make

on each job after all direct costs, including wages, are subtracted. This margin should be high enough to cover your business’s overheads plus a healthy profit.

Target Gross Margin could be anywhere between 20% – 60%, depending on the trade and your position in the market – high or low end. I don’t like to see anything under 20% minimum in any trade; less than 20% is too difficult to make a profit. If you want some help to work out your target gross margin and where you should be for your business, then check out the “Pricing Strategy Session” at the end of this article.

Having a clear Target Gross Margin is like having a compass in the wilderness. Once you know where you want to head you can see clearly if you are going in the right direction and adjust. No more wasted money, time, and energy taking jobs that lose you money.

Sticking to your guns

Your large client wants a better price, what now? Don’t just take this at face value. Test, question, negotiate. Why do they think the price is too dear? What are they comparing their quote to: apples with apples or apples with bananas? Is there more in their budget, or can you adjust the brief to fit?

Show them that your price is good value and see what happens next. Some will
get it, and some won’t, that’s ok. The ones that don’t, fine, just move on to the next opportunity.

Eddie, a mentor of mine, would tell me, “15% of customers will always go for the cheapest option no matter what”. If another option is one dollar cheaper, they will take it even if the job is half as good. The clients you want are the other 85% who care about getting a quality job done right, hassle-free and are prepared to pay for it.

Remember, pricing isn’t just about numbers; it’s a mind game. The right way you present your pricing and value can make all the difference in attracting the right kind of clients and getting the work.

When my clients start telling me they are sticking to their rates, margins are increasing, and they now have plenty of good work lined up, that they don’t need every job that comes their way – I know they are on track.

Are you fishing in the right river?

Fishing is about being in the right place at the right time. The right bait at high tide will catch way more fish than at low tide when the fish aren’t around.

It’s the same with your business, are you marketing in the right places? Are you seen as the specialist or a generalist who does a bit of everything? The specialist attracts better clients and can charge more. That’s less work and more profit for you.

Being the cheapest is dangerous

If your business is based on being the cheapest, that’s a problem. Firstly, you won’t be getting the margins you need, and there will eventually be someone else out there who will do it even cheaper.

A builder client, Celeb of The Decking Guys, was in the same predicament. He was working 80 hours per week, making no money with one part-time worker and struggling to find work. His clients kept asking him for lower rates. I told him to put his rates up and start specialising.

Within 12 months, he had a team of 11 and plenty of work. Check out his story on our testimonial page at nextleveltradie.co.nz/real-results/

More options, better odds

If you are relying on getting one quote or you can’t pay the bills, you need the job, so the pressure is on you. You are in a weak position and are more likely to cave on price to get the work.

A much stronger position would be if you have five other quotes you are following up in the same week with 3-6 months of work already confirmed. Now you are calling the shots.

If a new client is relying on a small number of quotes and doesn’t have enough work, the first thing we do is help them get their pricing right and find better jobs. This takes the pressure off and puts them back in control of their business.

Don’t waste a good opportunity!

If things are on the quiet side and you’re still not getting the work you want, then this could be the opportunity to consolidate and scale back a little. Move any bad eggs on and rebuild stronger. Better to have a bit less work for a while, than working your tail off and going backwards.

If you still want to reduce your rates to get a job short term to pay the bills, then ok. But make sure that this is a short-term strategy and use it as motivation to position the business better so that you’re not caught out next time.

Sometimes, in a downturn, there will be less work for a while. The key here is to keep the business solid and profitable while looking for better opportunities, which long term is not cutting prices.

Article supplied by: Daniel Fitzpatrick, Next Level Tradie

Published in WIRED Issue 72 / MARCH 2024  by Fencing Contractors Association NZ

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Tractor safety on roads

The team at FCANZ have heard a few anecdotal stories lately about farmers getting pinged by Police while driving their tractors, so we took the opportunity to have a chat with Senior Sergeant Hugh Tait, of the Commercial Vehicle Safety Team based in Dunedin, about how fencing contractors and rural contractors can make sure they’re keeping their employees and other road users safe while out and about in the tractor.

What licence is required to drive a tractor on public highways?
Class 1 restricted as a minimum. This will allow you to operate a tractor under 40km/h on the roads. Modern tractors can exceed 40km/h so ensure your staff are aware of the limitations if they are on restricted licenses.

Are track endorsements required for track machines?
The NZTA Agriculture Vehicles guidance states that tractors are not special type vehicles, however any motor vehicle
that runs on self-laying tracks requires a T endorsement.

What conditions does a tractor have to meet to be warrantable / road-worthy / compliant?
Just the basics: if you’ve got good tyres, brakes and lights, ensure things aren’t falling off or protruding from it then it should be okay. Not necessarily clean and tidy, but the quality of the gear makes a difference. If operators are keeping on top of the little things, the big things take care of themselves.

Are you allowed passengers in the tractor cab?
All passengers should be restrained.

We’ve probably all taken the kids for a ride in the tractor on the main road at one point. If there was an accident on the road and if WorkSafe got involved, the owners manual of the tractor typically states that the passenger seat is for training purposes only. In a worst-case scenario, you’d be in serious trouble, correct?
Yes, unfortunately. Speed would be an interesting one as well. If you’re doing under 40km/h as per the dimensions of the tractor, then you’d lessen the consequences. But like you say, if the manufacturer’s instructions state it is for training only, then it’d be pretty hard to explain what kind of training you’d be doing especially with a young child in
the jumpseat.

When do you need to use lights/flashing lights on the tractor?
Ideally you’d have them operating continuously. Having headlights going and the beacon light on is good as it alerts motorists to a larger slow-moving vehicle. Steer away from having your hazard lights on. An issue we see reasonably regularly are tractors with hazard lights on trotting along nicely and then decide to turn right, across the highway. As they are slow moving the following vehicle tries to go around them, not realising that the tractor intends to turn right because the hazards have been on the entire time. Having your hazards on is probably more of a hazard than not having them on.

Do forward facing lights have to be able to be dipped? Are we able to use the big work lights across the top of the cab when driving?
When driving, your cab mounted work lights should be off. You should just have your normal road lights going which should have a dip function. Given how bright and strong work lights are, you’re likely to end up dazzling everything coming in the other direction.

Is there a counter argument for where lights are generally front, centre and bottom of the bonnet? 9 times out of 10 if you crab your bucket around, the lights are facing the cross member of the loader so you’re not getting any vision out of it either.
Agreed – that would be good justification to have the cab/work lights on, so other drivers can see it from further away. If you’ve got the ability to only put two of the four work lights on, do that. Just use common sense.

Are there any other safety issues to consider?
Cell phones: sadly they are becoming more and more present in our lives and especially so for business purposes. I am sure we have all seen people in cars, trucks & tractors on the highway using a cell phone. If you haven’t got Bluetooth or an earpiece, avoid the temptation to be on your phone whilst driving.

Hazard Panels: we regularly see more European farm machinery coming into New Zealand, which come with the Euro-standard panels, red and white, instead of orange and yellow. Distributors know they can’t leave them on there, but some of them still do. Owners need to talk to their supplier to get these replaced so the vehicle is road legal.

Should the loader be up or down when travelling on the road?
An interesting one. If you look at the guide it talks about minimising risk to other road users and making it safe for yourself. What is the safest option? You just have to work it out for yourself at the time with the equipment you have. For example, if you’ve got the bucket up, gravity can make it top heavy and unsafe for the driver. With the bucket down it enhances visibility and the stability of the vehicle, but the bucket can be well out in front of the vehicle, which is a hazard. You are potentially obstructing your lights as well. If you’ve got the bucket down, you need to be aware of the front edge and rotate up or down, ensure any spikes/tines are covered minimising risk for other road users.

What about driving tractors after dark?
Basic lighting requirements are required – headlights, tail lights and amber beacon as a minimum. As per the earlier question be aware of leaving work lights on as they are generally brighter than most and can dazzle oncoming traffic.
Anything overdimension (over 3.1M) has restrictions that apply. There needs to be a marker light on the exterior of the hazard panels, but take practical steps to do what you can to make it safe for all road users.

What are the requirements/restrictions for A-frame utes behind tractors?
Users need to be aware that fitting an A-frame to a vehicle can affect the ability of the vehicle to absorb energy the way it was designed to do, potentially reducing the effectiveness of airbags.

Safety chains need to be attached between the A-frame and the tractor, and lights are required if the ute obscures the lights of the towing vehicle.

It really is down to the operator to make sure the A-frame is in good condition. We probably get one incident per year where there is a failed A-frame and the ute has taken its own path and ended up in a paddock or hit someone/something. It would be good practice to have the A-frame inspected as part of your pre-start; around the welds, joins, couplings etc, and it can’t hurt to get an engineer to inspect annually. Our safety inspectors also talk about the connections to the chassis on the ute – keep an eye on wear/tear around these connections.

What about the towing weight for an A frame – are there any regulations for that?
No, it would be down to the tow capacity of the trailer. The quality of the metal or the boxing in the A-frame would be essential. It needs to be welded up by a Certified Welding Engineer who has experience in making A frames.

Is there a limit on pivot points?
Yes. You can’t hook a trailer on behind the ute which is attached to the A-frame. Overall length restrictions will also come into force (25m absolute maximum).

How common are accidents where tractors are involved?
Thankfully not that common but we probably get a couple a year. Unfortunately due to the size & weight of the machines there is often a fatality. When you’re working on farm roads, the rural back roads are typically smaller gravel roads and when you’ve got a tractor with duals on and at maximum width, coming around a blind corner or over the brow of a hill, that’s where accidents happen. And unfortunately, on a small gravel road you can’t do much to avoid it.

Is there anything tractor drivers can do to stop people from overtaking at stupid times?
Not really – you can’t control other drivers so you can only control your machine. People are becoming busier and in more of a rush, less patient if you like, so are prepared to overtake in silly spots. Be aware of your environment and what is coming behind you, identify safe areas and pull off where you can.
Operating heavy machinery on the road is a skill that should never be taken for granted, especially around those that are not capable or aware of the limitations of large machines.
Dashcam footage is increasing as Police receive footage several times a week from larger transport operators. Spreading the message that dashcam footage can result in fines or infringements all helps with improving driver behaviour. Cameras in vehicles can also be gold for operators when there is an accident, where the footage clearly shows the cause of an accident, reducing the risk for operators.
Further guidance on Agricultural Vehicles and A-frame towing can be found on NZTA’s website:

Article written by Heather Kawan

Published in WIRED Issue 72 / MARCH 2024  by Fencing Contractors Association NZ