Staples

As the summer months approach, it’s essential to focus on our wellbeing, especially when working longer hours. Here are some tips to help you stay healthy, safe, and energised during this busy season.

1. Sun Protection and Hydration

Working outdoors or even commuting in the summer heat can take a toll on your body. Here are some key tips to protect yourself from the sun and stay hydrated:

• Wear sunscreen: Apply a broad-spectrum sunscreen with at least SPF 30. Reapply every two hours, especially if you’re sweating.
• Stay hydrated: Drink plenty of water throughout the day. Aim for at least 8 glasses and more if you’re working in the heat.
• Wear protective clothing: Light, long-sleeved shirts, hats, and sunglasses can help shield your skin from harmful UV rays.
• Take breaks in the shade: Whenever possible, take your breaks in shaded or cool areas to give your body a chance to cool down.

2. Wellbeing in the run-up to Christmas

The period leading up to Christmas can be hectic, but it’s important to maintain your wellbeing:

• Manage stress: Plan your tasks and set realistic goals to avoid feeling overwhelmed. Take time for relaxation and hobbies.
• Healthy eating: With holiday treats everywhere, try to balance indulgences with healthy meals. Incorporate plenty of fruit, vegetables, and whole grains into your diet.
• Stay active: Regular physical activity can boost your mood and energy levels. (Fencers are pretty active really.) Even a game of cricket or other sport with family in the breaks can make a difference.

3. Mental wellbeing tips

Maintaining mental wellbeing is crucial, especially during busy periods. Here are some tips to help you stay mentally healthy:

• Mindfulness and meditation: Practice mindfulness or meditation to reduce stress and improve focus. Even a few minutes a day can make a big difference. (Thinking of fabulous fence lines is always good!)
• Connect with others: Spend time with friends, family, or colleagues. Social connections can provide support and improve your mood.
• Set boundaries: Ensure you have a good work-life balance. Set boundaries to avoid burnout and make time for activities you enjoy.
• Seek support: If you’re feeling overwhelmed, don’t hesitate to seek support from a mental health professional or a trusted person in your life:

– Helplines 1737
– Lean On a Gate, Talk to a Mate
– Surfing for Farmers (if you are near the coast)
– Rural Support networks
– Or phone that friend you haven’t spoken to in a while.

4. Physical fitness and safety post-Christmas

After a well-deserved break, getting back to work can be challenging. Here are some tips to ease the transition:

• Gradual return to activity: If you’ve taken a break from physical work, ease back into it gradually to avoid injuries. Start with lighter tasks and build up your strength.
• Stretch and warm-up: Before starting your workday, take a few minutes to stretch and warm up your muscles. This can help prevent strains and sprains.
• Safety first: Ensure that all safety protocols are followed, and use the proper equipment for your tasks. If you’re unsure about something, don’t hesitate to ask for guidance.

5. Tips for returning after the break

Getting back into work mode after a holiday can be tough. Here are some strategies to help you transition smoothly:

• Plan ahead: Before your break ends, make a list of tasks to tackle when you return. This can help you hit the ground running.
• Ease into your routine: Start with less demanding tasks to gradually get back into the swing of things. This can help you rebuild your momentum.
• Stay organised: Keep a planner or digital calendar to manage your time effectively. Prioritise tasks and set realistic deadlines.
• Take care of yourself: Ensure you’re getting enough sleep, eating well, and taking breaks throughout the day. Self-care is crucial for maintaining productivity.

6. Ergonomic practices for outdoor labour

Maintaining good ergonomics is essential for preventing injuries and ensuring comfort while working outdoors. Here are some tips:

• Lift properly: Use your legs, not your back, when lifting heavy objects. Keep the load close to your body and avoid twisting while lifting.
• Use the right tools: Ensure that tools and equipment are the correct size and weight for the task. Use ergonomic tools designed to reduce strain.
• Take regular breaks: Frequent breaks can help prevent fatigue and reduce the risk of injury. Use these breaks to stretch and hydrate.
• Maintain good posture: Whether you’re standing, bending, or kneeling, try to maintain a neutral spine position. Avoid awkward postures and repetitive motions.
• Wear supportive footwear: Choose boots with good arch support and cushioning to reduce strain on your feet and legs.

7. Preventing heat-related illnesses

Heat-related illnesses can be serious, but they are preventable. Here are some tips to stay safe in the heat:

• Recognise the signs: Be aware of the symptoms of heat exhaustion and heat stroke, such as dizziness, headache, nausea, and confusion. If you or a coworker experience these symptoms, seek medical attention immediately.
• Stay cool: Use fans, cooling towels, or misting devices to help lower your body temperature. Take breaks in air-conditioned or shaded areas whenever possible.
• Hydrate regularly: Drink water frequently, even if you don’t feel thirsty. Avoid caffeinated and alcoholic beverages, as they can dehydrate you. Watch that V drink – too much sugar.
• Acclimate to the heat: Gradually increase your exposure to hot conditions over a week or two to help your body adjust.
• Wear light clothing: Choose lightweight, breathable fabrics that allow sweat to evaporate and cool your body.

Wishing you a wonderful festive season

By focusing on these aspects of wellbeing, you can enjoy a productive and healthy summer season. Remember, taking care of yourself is the first step to taking care of your work.

As we approach the festive season, we want to wish all our teams a wonderful Christmas and a joyful break. Whether you’re catching up with family and friends or simply recharging for the summer, we hope you have a fantastic time. Thank you for all your hard work this year, and we look forward to seeing you next year. Tight lines and happy holidays!

Stay safe, stay hydrated, and have a wonderful summer!

Deb and the team at Rural Safe

Published in WIRED issue 75/December 2024 by Fencing Contractors Association NZ

You may also like: Hard Hat Safety

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

You may also like: 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

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

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.

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

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