FORWARD. Good luck on completing your apprenticeship and for the future. Russell Holtham General Manager - Operations HIA Apprentices

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2 FORWARD I am delighted to provide you with the following information, WHAT NEXT I am sure it will be of considerable benefit to you and will help you with your future plans. Since HIA Apprentices inception we have been committed to providing the best opportunity for young people to gain recognised skills and qualifications. Making decisions on your future career path will be paved with all sorts of options from being directly employed to being self employed. HIA recognises that one of the concerns when commencing your chosen vocation is identifying whether to become an employee or an independent contractor and then knowing what and where to gain help. Issues such as taxation, superannuation, and insurance and workers compensation are critical when working out your charge rates if working as a independent-contractor. Our commitment to being the best in the business would not be complete without providing you with this guide. I trust you will find it a valuable and useful resource. Good luck on completing your apprenticeship and for the future. Russell Holtham General Manager - Operations HIA Apprentices Version 8 February

3 This booklet has been produced to provide completing HIA Apprentices with some guidance for their future direction. All the material presented is of a general nature only and you should do further research and follow up with the relevant authorities for specific advice. Remember at the completion of your apprenticeship you remain a member of the HIA for a further 12 months. That means that all the services and advice that the HIA has to offer are available to you. The topics covered are Introduction Page 4 Employment approach Page 7 Trade contracting Page 21 The pitfalls Page 41 Not staying up to date Page 42 Continuing your career development Page 43 Growing a sub contracting business Page 50 Where to get advice Page 53 Version 8 February

4 So you re completing your apprenticeship. Congratulations What's next? When you have successfully completed your apprenticeship or traineeship, there are a number of pathways you can take on your way to a rewarding career. Your qualifications will be nationally recognised. Ongoing employment If you have been happy working with your current host, and they are willing to keep you on, you can become a full-time or part-time employee. On completing your apprenticeship or traineeship, your wages will need to change to the appropriate rate for qualified workers in your occupation. However, your host is not obliged to offer you ongoing employment. Getting a job with another employer You can use the skills you have acquired through your apprenticeship or traineeship to get a job with another employer. Your training record, your Apprentice Experience Register and the qualification you obtained through completing your apprenticeship or traineeship can be used as evidence of your skills and knowledge when applying for jobs. Be prepared When applying for a job, you need to make a good impression. An up-to-date resume that is professional and free of errors is a must. If you are invited for an interview, you will need to make sure you arrive on time, are well presented, and have a good idea of what you are going to say. Have some evidence of the type of work you have been doing, your Apprentice Experience Register is a good place to start. Search these websites for more tips on how to get a job: Version 8 February

5 Finding a job: 1. Search the Internet - more jobs are advertised on the Internet than anywhere else. Some sites to try include: Apply for jobs advertised in the newspaper - search the careers or jobs section of your local newspaper. 3. Contact employers directly - you can do this either in person or through a letter 4. Use personal networks - talk to your family, friends or teachers to see if they know anyone who has a job vacancy 5. Contact a Job Service provider - these organisations can provide you with a list of job vacancies in your local area. Telephone or visit Providers.aspx Starting your own business On completion of their apprenticeship, some qualified tradespersons choose to set up their own business and work for themselves. Those people who have completed a traineeship may also have the option of using the skills they have acquired to start their own business. It is important to be aware of your legal, regulatory and financial obligations when starting a business. It is a good idea to get specialist advice and training in the day-to-day operations of a business, including record keeping, sales and marketing, and managing staff. Some of these areas will be touched on in the following pages. You should also contact the HIA and talk with the Workplace Advisor/IR Legal and visit for information on basic issues you need to know about when you re new to business. Visit hia.com.au and check out the Introduction to Business Plans hia.com.au/hia/content/is/bis/bp_bus_plan.aspx Version 8 February

6 Further study On completion of your apprenticeship or traineeship, you will have received a certificate-level qualification for example, Certificate III in Carpentry. You can use this qualification to help you go on to further study by gaining credit towards a higher level certificate or diploma course. Your record of skill development and work experience may also help you if you apply for a university level course. The HIA also provides courses in topics that may be of interest that will help improve your knowledge of the industry. Certificate IV in Building is a good place to start. Contact HIA Training Services in your region. Work licensing Will you need a work licence? In some states you will be required to obtain a trade contractors licence to be able work in the housing and construction industry. If you are undertaking an electrical apprenticeship or a plumbing and draining apprenticeship, you may need to apply for a work licence before the end of your apprenticeship. You can contact the HIA and talk with the Workplace Advisor/IR Legal and your state and territory licensing bodies for further information. Australian Capital Territory New South Wales Queensland Victoria South Australia Western Australia or Builders Licensing Australasia and follow the links: Version 8 February

7 The Employment Approach Version 8 February

8 Introduction When you were employed as an apprentice with HIA Apprentices you had all your employment conditions and needs looked after. Once you complete your apprenticeship with HIA you will need to find your own employment or start your own business. If you decide to seek employment it is important that you understand how you are going to be employed and the employment conditions that will apply. How will you be employed? As an employee, you will be employed in one of the following categories: (a) (b) (c) (d) daily hire employee; full-time weekly hire employee; part-time weekly hire employee; or casual employee. At the time of engagement an employer should inform you, in writing, of the terms of their engagement and in particular whether you are to be a daily hire, full-time, parttime or a casual employee. Daily hire employment A daily hire employee will generally be entitled to the same terms and conditions as a weekly hire employee (described below) however a daily hire employee can be terminated on one day s notice because of this, daily hire employees normally receive a special loading as a part of their pay to compensate them for periods of unemployment between engagements. Full time weekly hire employment A full-time weekly hire employee is an employee who works an average of 38 ordinary hours per week. A weekly hire employee will generally work on a regular and systematic basis and will have an expectation of ongoing employment. Full time weekly hire employees are entitled to receive minimum entitlements such as paid annual leave and personal leave (which covers sick and carer s leave). Version 8 February

9 Part time weekly hire employment Part-time weekly hire employees are much the same as full time weekly hire employees but work fewer than 38 ordinary hours per week and have reasonably predictable hours of work. Part-time employees will generally receive paid leave entitlements that are proportionate to the hours worked. Casual employment A casual employee is ordinarily someone who is employed on an irregular basis, with no set roster or routine. There is no guarantee of ongoing employment and staff are usually retained on a as needs basis. Casual employees are paid by the hour and have no entitlement to paid annual leave, sick leave or some benefits associated with continuous full time employment. There is also no entitlement to, notice of termination. A casual employee can also refuse offers of work at any time due to other commitments. Most awards and agreements attach a casual loading to the standard hourly rate to compensate the employee for the loss of sick and holiday benefits. Under the Modern Building and Construction General On-site Award 2010 (which currently covers on-site employees of Pty Ltd companies, and employers in the building industry in Victoria, the ACT and Northern Territory) the casual loading is 25% (subject to transitional arrangements). Where the work of a casual employee becomes regular and systematic and where there is an expectation of ongoing employment, then they may become permanent employees. The Building and Construction General Onsite Award gives employees who are working on a regular and systematic basis the right to convert their employment to permanent status after 6 months of continuous service. Individual state and territories may vary please check with your local Industrial Relation Department or call HIA for advice. Fixed term employment Another type of employment situation may apply if you are employed under a fixed term contract. This means that your employment will come to an end on the expiry of the term of the contract. Version 8 February

10 Labour hire Labour hire is a more complex form of employment relationship. It is where an agency supplies employees to work at a workplace controlled by a third party (the host), usually in return for a fee from the host. With labour hire arrangements, the three-way relationship between host, agency and worker will continue for the period of the assignment. Workers may be engaged under labour hire as employees or non-employees (independent contractors). Labour hire workers may be denied access to the benefits of the collectively negotiated labour agreements of the principal business and these businesses may deny responsibility for the welfare of this class of worker, particularly in the areas of health and safety and training. The problems for injured labour hire workers are compounded in that they are less likely to have a specific work site that they can return to for rehabilitation and return-to-work duties. Workers may be engaged under labour hire as employees or non-employees (independent contractors or dependent contractors). Employers gain considerable benefits from engaging workers as non-employees. Workers engaged this way are not entitled to forms of paid leave and cannot contest an unfair dismissal; employers do not need to provide superannuation or workers compensation cover. But the labour hire agencies do.. Employment conditions As an employee it is important to understand your employment rights and responsibilities. Your conditions of employment will depend on who your employer is and the employment instrument which covers your employment. Whether your employer is incorporated (a company) or unincorporated (sole trader or partnership) and which State or Territory they operate in will determine whether your employment conditions are governed by the federal industrial relations system or the state industrial relations system. The federal system Since 01 January 2010 the new National Employment Standards (NES) apply to all employees with the exception of employees of unincorporated businesses in Western Australia. What are the National Employment Standards? The National Employment Standards (or NES ) are a set of ten minimum employment standards that all employees are entitled to, even managerial or non-award staff. These minimum standards are summarised below. Version 8 February

11 Can the NES entitlements be changed? Terms in awards, agreements and employment contracts cannot exclude or provide for an entitlement less than the NES, and have no effect. What if an award or an agreement applies that provides an entitlement which is greater than the NES entitlement? Awards and agreements may provide for additional annual leave entitlements over and above those provided in the NES. If this is the case, your employer must provide the greater entitlement to you. 1. Hours of Work You do not have to work more than the following number of hours in a week unless additional hours are reasonable: full time employees 38 hours; other employees the lesser of: o 38 hours; and o your ordinary hours of work in a week. 2. Flexible Hours If you are a parent, or have responsibility for the care of a child, you may make a written request for a change in working arrangements to assist in caring for the child if the child: is under school age; or is under 18 and has a disability. Your employer may only refuse the request if you have reasonable business grounds to do so. 3. Parental Leave An employee is entitled to 12 months of unpaid parental leave if: the leave is associated with: o the birth of a child of the employee or the employee s spouse or de facto partner; or o the placement of a child with the employee for adoption; and the employee has or will have a responsibility for the care of the child. 4. Annual Leave All employees (except casual employees) are entitled to: 4 weeks annual leave for each 12 months of service; 5 weeks annual leave for some shift workers for each 12 months of service. Version 8 February

12 5. Personal/Carer s Leave and Compassionate Leave Paid personal/carer s leave All employees (other than casuals) are entitled to 10 days paid personal/carer s leave for each year of service. You can take this leave: if you are not fit for work because of personal illness or injury; to care for or support a member of your immediate family or household who requires that care or support due to personal illness or injury or an unexpected emergency. Unpaid personal/carer s leave You are entitled to 2 days of unpaid carer s leave for each occasion if paid personal/carer s leave is not available to you (i.e. because you have exhausted their paid entitlement or are casuals). Paid compassionate leave Employees, other than casuals, are entitled to 2 days of paid compassionate leave for each occasion when a member of their immediate family or household: gets an injury a personal illness that poses a serious threat to his or her life; or dies. Compassionate leave can either be taken as: a single continuous 2 day period; or 2 separate periods of 1 day each; or any separate periods to which the employee and his or her employer agree. Unpaid compassionate leave A casual employee is also entitled to take compassionate leave in the circumstances described above, however this entitlement is unpaid. 6. Community Service Leave An employee is entitled to be absent from work if they engage in a community service activity. This includes: jury service (including attendance for jury selection); a voluntary emergency management activity such as an activity involving a natural disaster where the employee is a member of an emergency services body (e.g. fire fighting, civil defence, rescue body) and the body requests assistance (or it would have been reasonable for such a request to have been made had circumstances permitted this). If you are is absent from work on account of jury service and you are not a casual employee, you are entitled to payment at your base rate of pay for your ordinary hours of work for the period of leave for up to 10 days in total. Version 8 February

13 The amount that you would normally receive from your employer would be reduced by the total amount of jury service pay that has been paid, or is payable to you. 7. Long Service Leave For a transitional period, employees will generally be entitled to long service leave in accordance with State or Territory long service leave laws. Eventually, long service leave entitlements will be covered by a uniform national long service leave standard. 8. Public Holidays Employees are entitled to be absent from work on a day that is a public holiday in the place where the employee is based for work purposes. Permanent employees will be paid at their base rate of pay for the employee s ordinary hours of work on the day/part-day. Can I be asked to work on a public holiday? You can be asked to work on a public holiday if the request is reasonable. You may refuse the request if it is not reasonable or the refusal is reasonable. 9. Termination and Redundancy The NES also sets out special entitlements to redundancy and termination pay however your entitlements will depend on your type of employment and whether there is an industry specific redundancy scheme in your award. 10. Fair Work Information Statement The Fair Work Ombudsman has published a Fair Work Information Statement which details the rights and entitlements of employees under the federal system and how to seek advice and assistance. Your employer must give you the Fair Work Information Statement before you start or as soon as soon as practicable after you start. You can download the Fair Work Information Statement from the Fair Work Australia website: As you can see there is more to employment than just getting a wage. Version 8 February

14 While the NES applies nationally, unincorporated businesses in Western Australia remain outside of the NES. If you are in WA you will need to look at your employer s business structure and if they are an unincorporated business, the relevant industrial relation legislation which applies in the state and the relevant award for your industry will determine your minimum employment conditions. General Award Information What are awards? Awards are legally binding documents outlining the wages and conditions of employment for groups of employees in an industry or occupation. Awards can be negotiated by unions, employees, one or more employers, or an employer association. What do awards contain? Awards may contain a variety of matters that include but are not limited to: 1. Who the award applies to; 2. Pay rates and penalty rates; 3. Job classifications covered by the award; 4. Hours of work for full-time, part-time and casual employees; 5. Leave entitlements; 6. Allowances. Awards are legally binding Employers and employees cannot contract out of an award by agreeing to lesser conditions or agreeing to ignore their award. Agreements providing for pay and conditions in excess of the award are allowed. Version 8 February

15 Individual Flexibility Agreements Under the Modern Award, employers and employees have the opportunity to enter into individual flexibility agreements (IFA), to vary certain terms of the applicable Modern Award provided the employee covered by the IFA is better off overall. In particular, flexibility terms within modern awards allow IFAs to vary: Arrangements for when work is performed (such as working hours); overtime rates; penalty rates; allowances; and leave loading. An IFA made under an enterprise agreement can only vary the matters set out in the flexibility term of the agreement which will be determined when the agreement is made. However it is important to note that an IFA cannot contain unlawful terms, such as terms that may be discriminatory. An IFA must: Be in writing, name the parties to the agreement and be signed by the employer and the individual employee (and, if the employee is under 18 years of age, the employee s parent or guardian); State each term of the award/agreement that the employer and the individual employee have agreed to vary; Detail how the term has been varied; State the date the agreement commences to operate; and Detail how the agreement results in the employee being better off overall. Considering whether an employee is better off overall on the IFA compared to the Modern Award or enterprise agreement the IFA varies will usually involve a comparison of the employee s financial benefits under the IFA with the benefits under the award or enterprise agreement. The employee s personal circumstances and any non-financial benefits may also be considered. An IFA can generally be terminated by agreement or by either party giving the required notice. The Modern Award requires 28 days notice however this may be different in an enterprise agreement (but no more than 28 days). An IFA will end if a new enterprise agreement begins operating. Version 8 February

16 Enterprise Agreements (EA) Enterprise Bargaining in brief Enterprise Bargaining is about introducing change in the workplace - with everyone sharing the benefits. It is an opportunity for an employer and their employees, either directly or through their union representatives, to undertake cooperative negotiations. Enterprise bargaining is a way to discuss how work is performed, conditions and productivity improvements that will benefit both employer and employees. This can foster a culture of change in the workplace which can be a valuable tool in the process of continuous improvement. It can assist in the creation of vital, responsive and flexible enterprises and improve productivity and efficiency. Enterprise Agreements Negotiating an Enterprise Agreement is a very difficult and prescriptive process and may require legal advice or the appointment of a bargaining representative. Both employees and employers have the right to appoint a bargaining representative. Enterprise Agreements set out the minimum conditions of employment for employees engaged in particular types of work in the same way as an award does. They have the same legal force as an award and must be approved by Fair Work Australia. However, unlike most awards, enterprise agreements are specific to a particular enterprise or project and can be tailored to suit the special needs of that enterprise. Enterprise agreements are negotiated voluntarily between an employer and the employees concerned, or the bargaining agents for the parties (which may include a union). There is a detailed process for setting up an enterprise agreement involving notification, negotiation, preparation, voting, and approval by Fairwork Australia. More information is available at Other entitlements However this is not where the employment relationship stops. Aside from the industrial instruments, employers also have responsibilities with respect to: workers compensation; long service leave; superannuation; PAYG withholding. Version 8 February

17 Things to consider if being employed Completing an apprenticeship opens the way for you to make choices about how you are going to work and progress your career. You should look at all employment options and decide what is best for you. However you should ensure that you are employed correctly and that the minimum standards are being met. You can contact the HIA and ask the Workplace Advisor /IR Legal person, or you can access information on rates and conditions through the governments Departments of Employment and Industrial Relations. Federal Western Australia Contractor/Employee If you have decided to work as an independent contractor, you will need to work out what you should be paid. There are many things to consider. The first thing is, are you really a contractor? If you are told to get an ABN you will need to ensure that you are in fact a independent contractor and not an employee. It is always good to seek advice by first talking to a HIA Workplace Advisor /IR/Legal Advisors or by going to Giving an ABN does not automatically mean you are a contractor, so you will need to consider the nature of your employment. It is important to determine how you are employed because there are different taxation obligations depending on whether you are an employee or an independent contractor. Visit the ATO web site and check out What is Personal Services Income?-sole trader. You can then self assess using the results test to determine if you are an independent contractor for tax purposes If you are intending on running your own business, this opens up a wide range of compliance obligations and it is recommended that you contact an HIA Workplace Advisers to learn more about your obligations. As an employee, whoever you are working for will be responsible for withholding tax on your earnings, paying superannuation, holiday pay, sick leave, the long service leave levy and providing workers compensation insurance. Version 8 February

18 To find out what you should be paid go to the relevant websites listed below: Version 8 February

19 Calculating your worth Many apprentices start out in business as a contractor without taking into consideration what they should really be charging or being paid. So where should you start? Imagine your ex- host says, come and work for me and I will pay you $20 an hour What will you earn out of that once you have taken out all your expenses? Don t forget, as a contractor you don t get paid if you don t work. The best way to calculate an hourly rate is to work out the number of billable hours you will work over the year. There are 52 weeks in a year which you need income for, but when you take away holidays, sick leave and public holidays you actually earn your income in 46 weeks and that is if you are not sick. Remember working as a sole trader you will have to maintain records, pay your tax and contribute to superannuation. It is advisable to have an accountant do your tax returns. Say you work for 52 weeks, no holidays etc what would you earn? Remember if you don t work you don t get paid. Version 8 February

20 Income 52 weeks based on a 38hr week= 1976 hours Superannuation Guarantee 9% 4 th year Self $20.00/hr $15.50/hr $30, $39, Paid by employer $ Rules apply you pay $3, Taxable Income $33, inc travel $35, Income Package including super $36, $39, =/hr $18.54 Net 52 = 1976hrs $28, =/hr $14.48 Tax on taxable income $ Medicare Levy $ Leave Provisions net 4/52 $ $0 Sick Leave Provisions net 2/52 $ $0 Public Holidays net $ $0 average 8 per year Workers Compensation Insurance or Income protection insurance Paid by employer Income protection paid by you $ Public Liability insurance/ Tools and equipment insurance As at 28/07/08 from HIA Insurance $ Services Tool and Equipment costs nil Cost to you Administration costs E.g.(Raising invoices, Accountant and Bank fees) Running Costs based on Automobile Association figures assuming you have a Ford/Holden Ute on hire purchase /petrol/ servicing/insurance/rego approx $ 200 a week over 52 weeks. If you own your car/ute = $137 a week over 52 weeks. nil Travel allowance 5 days x 52 weeks $ Cost to you A cost against your business $ Net $28, You will have to work this out depending on individual circumstances. *Medicare levy is calculated on taxable income **Tax is payable on Gross Income less your business expenses. Version 8 February

21 The Trade Contracting Approach Version 8 February

22 Who is an independent contractor? An independent contractor is someone who: Is usually engaged for a specific task or period of time. Would usually operate under a business or company name. Would usually operate for a range of clients. Would usually advertise and market their services, e.g. telephone book entry, membership of business associations. Would usually be free to determine when and where they undertook their work. Are free to accept or reject work offered to them. Provide their own insurances i.e. Workers Compensation, Public Liability, Professional Indemnity etc. Pay their own superannuation. Provide their own equipment, stationery, vehicles, phones etc. Paid for completed jobs. Rather than retainers or time. Issue invoices for payment rather then timesheets. If primarily contracting to one principal, have PPS tax deducted. Are free to engage other people to undertake the task, subject to that person being qualified and capable. Are responsible for rectification if any damage, poor work standards etc. No additional payment to rectify situation. Is entitled to decide when he leaves work. If working at a principal s premises a lease/management fee applies for floor space, power etc. Not entitled to paid leave. Sick Leave; Annual Leave; Public Holidays etc. Profits from sound management of work undertaken. Set their own pricing structure. Is, broadly speaking, in control of their activities and does not form an integral part of the business of the principal Visit HIA website view Introduction to Business Structures hia.com.au/hia/content/is/bis/bp_bus_guide.aspx Version 8 February

23 What do you need to do to be called a Sub Contractor Employee or Independent Contractor? The first thing you need to do is determine if you are an independent contractor or an employee. As a general rule, independent contractors are established in their own business, they supply materials, plant and equipment to complete work for an all up price. Employees on the other hand, are workers who are engaged to work on a labour-only basis at the direction and under the control of an employer. As mentioned earlier you can check that out yourself by going to and completing a series of tests. They are; 1. Results Test 2. Unrelated Clients Test 3. Employment Test 4. Business Premises Test If you don t pass the results test, you need to apply an additional rule called the 80% rule to work out if 80% or more of your income comes from one client. 80% Rule According to the ATO if 80% or more of your Personal Services Income comes from one client, your business will need to apply for a personal services business determination from the tax department. Where a contractor does not receive more than 80% of their income from one source they can make selfdetermination by applying the results test themselves. Version 8 February

24 The main tests To be classed as a contactor, the ATO requires that you satisfy one of the following tests to operate a Personal Service Business (PSB). Test 1 Results test To work out if the Personal Services Income rules apply, work through the results test first. Your business will pass the results test in the income year if you can answer yes to all three of the following questions for at least 75% of the Personal Services Income. 1. Under your contract or arrangement, will your business only receive payment when the work has been completed, that is, after producing the contracted result? 2. Does your business need to provide the equipment or tools necessary to do the work? 3. Do you have to rectify defects in the work, or is your business liable for the cost of rectifying defects? Test 2 - Unrelated clients test In order to pass this test a contractor must receive income from two or more clients who are not associates of each other, or of the business itself. The Act states that no one client can be responsible for at least 80% of the income. If more than 80% of income is received from one client the self-assessment option is not available and the tests need to be applied by the Tax Commissioner. Income must also be from services provided as a direct result of the business making offers of invitations to the public. Test 3 - Employment test To satisfy this test, a contractor must engage an employee or subcontractor who performs at least 20% of the businesses principal work, by market value. This test is also satisfied if an apprentice is engaged for at least half the tax year in question. Version 8 February

25 Test 4 - Business premises test To meet this test a contractor must have business premises at all times during the income year. Premises must be used to conduct the off-site activities relating to producing the personal services income. For example, accounting, estimating and ordering. In addition, the contractor must have exclusive use of the premises; they must be physically separate from premises used for private use and be physically separate from clients' premises. Additional test If a contractor fails all of the above tests, the Tax Commissioner can still determine that the contractor operates a Personal Services Business by applying additional tests. The additional tests are only available to the Commissioner and not to the individual contractor for self-determination. The Commissioner may make a determination that the contractor is operating a Personal Services Business if satisfied that: 1. The contractor was paid for producing a result and not paid an hourly rate or 2. The contractor supplies plant and equipment or tools of trade, or 3. The contractor is liable for rectifying any defects of their work. The incentive to hire subcontractors is either to reduce costs or to mitigate project risks. In this way the general contractor receives the same or better service than the general contractor could have provided by itself, at lower overall risk. Many subcontractors do work for the same companies rather than different ones. This allows subcontractors to further specialise their skills. What you shouldn t do? You should not work for an hourly or daily rate and just supply your Australian Business Number. This is usually not enough for you to be classified as a contractor and the taxation implications for you will be severe, including increased taxes and loss of some business deductions. Version 8 February

26 Use the flow chart to see if your income is affected To work out if your income is affected by the changes to the tax law follow the steps outlined in the flow chart below. If the personal services income is paid to a company, partnership or trust, the words you and your refer to that entity. Last Modified; 12/03/2010, Sourced from Australian Government Australian Taxation Office: Version 8 February

27 What you need to consider 1. Having a business plan 2. Your business structure 3. Taxation issues 4. Insurances 5. Contracts 6. Employment 7. Industry norms 8. Equipment 9. Advertising Getting started Get your plan together It is often said that if you fail to plan, you plan to fail. That is certainly true, especially in business. Before you go out and start your business, get a business plan together. You have to know what you want to accomplish in business and how you are going to keep the business going with cash flow. First, think about what type of work you will be doing. What do you have the most experience in? Can you perform the work without help or do you need to hire someone? Take a look around your community and assess what niche would be the most successful and the easiest to get going. You can always expand into more competitive niches once you have some business exposure and a client base that will help support you. For example, starting a custom cabinet business in an area that has a few well established companies would be a tough venture. Versus, starting a company that specialises in replacing rotten windows in an area that has an abundance of old homes and not many companies to service them. These are just some examples. Version 8 February

28 Now sit down and think about how much capital you are going to need to get going. To do that, you need to know: 1. What type of work will you be doing (framing, second fix carpentry, cabinets, decks, tiling, bricklaying) 2. What type of tools will you need (air compressor, nail guns, saws, mixer and cutters) 3. What kind of vehicle will you need to comfortably carry out your tasks? 4. Do you need a work shop or storage space? What are the going rental rates? 5. How will you market your business (newspaper ads, website, radio) and what will the cost be? There are a lot of web sites available on the internet to help you with business planning. After you get this information together, you will be well on the way to getting your business started. Business structures An important first step in setting up a business is to consider what the most appropriate business structure for your business is and what your personal needs are. There are a number of different business structures to choose from: sole trader, partnership or limited partnership, trust and proprietary limited company. Some of the factors to consider when choosing the structure most suitable for you are: 1. legitimate tax minimisation; 2. establishment fees and maintenance costs; 3. asset protection; 4. type of business. Remember - you're not locked into any structure. You can change the structure as your business changes or grows. You should seek advice from your accountant when deciding which business structure is appropriate. Version 8 February

29 What are the different business structures? Sole Trader A sole trader is the simplest business structure and consists of an individual trading on their own. They may operate under their own name or with a registered business name and a bank account. The sole trader controls and manages the business, keeps the after tax profits and is responsible for all debts and liabilities. Most apprentices start in business this way. Partnership A partnership is formed when two or more people (up to 20) go into business together with a view to making a profit. They may operate under their own names or with a registered business name. Limited partnerships involve passive investors who are not involved in managing the business. Proprietary Limited Company A company is an independent legal entity able to do business in its own right. The shareholders own the company and directors run the company. The directors of a company, as well as company employees, can be shareholders. Trust A trust is a business structure whereby the trustee holds property and earns and distributes income on behalf of the beneficiaries. One of the most common types of trusts is a discretionary trust. ABN The Australian Business Number (ABN) was introduced on 1 July 2000 to enable businesses in Australia to deal with a range of government departments and agencies using a single identification number. The ABN is a public number that does not replace your tax file number. ABN registration details become part of the Australian Business Register (ABR), which the ATO maintains on behalf of the Commonwealth. You can access the publicly available information contained in the ABR through the ABN Lookup web site. To register online, visit Version 8 February

30 Why should you apply for an ABN? The Australian Business Number (ABN) is your key to a quicker and smarter way of dealing with other businesses and government. The ABN: 1. Helps you claim goods and services tax (GST) credits. 2. Facilitates a single business activity statement. 3. Lets you claim energy grants credits that you qualify for. 4. Stops businesses deducting pay as you go (PAYG) withholding tax from payments to you. 5. Allows businesses to easily confirm your details for ordering and invoicing purposes. If your business has an annual turnover of $75,000 or more, you must register for GST and you'll need an ABN to do this. If your business has a lower annual turnover, it's up to you whether you register. You can apply on line at or get the forms from the Tax Office or your local Business Enterprise Centre (BEC) but you need to be carrying on a business not just working as an employee. Taxation issues Understanding how taxation applies to your business is an important consideration in starting and managing a commercial enterprise. As a business you also have certain reporting and record keeping requirements that must be met. Taxes include: Federal taxes such as income tax and Goods and Services Tax (GST). State taxes such as pay-roll tax, land tax and stamp duties. The following information covers general taxation requirements and is not intended as an exhaustive list of taxation obligations. Always seek professional advice. Federal taxes The Federal Government levies a range of taxes affecting small businesses, including income tax, GST, and a number of other taxes, including capital gains tax and fringe benefits tax. It also provides for a number of rebate schemes. The Australian Taxation Office (ATO) administers federal taxes that apply to all Australian States. Further information can be obtained by ringing or accessing their website at Version 8 February

31 Income tax As an individual sole trader, partner or company you are required to register for a tax file number. Individual sole traders do not need a separate tax file number and should use their individual tax file number. You don t need to complete a separate return for your business. You can use your personal income tax return for this purpose. On the other hand, companies and partnerships need to register a separate tax file number. A partnership needs its own tax file number for lodging its annual income tax return, though tax is levied on the partners and not the partnership. Pay As You Go (PAYG) The PAYG system applies to the process of a: 1. Taxpayer paying instalments towards their estimated income tax liability on business and investment income (the PAYG instalments system); and 2. Third party (usually an employer) withholding amounts from certain payments (usually salary or wages of an employee) (the PAYG withholding system). Under tax law, a person carrying on the business must keep records that record and explain all transactions. You are obliged to make PAYG instalment payments on your business or investment income during the year towards your estimated end of year income tax liability. The amount of the instalment varies from business to business and is often dependent on your previous year's income. Instalments may be made on a monthly, quarterly or annual basis. Certain conditions apply for electing a quarterly or annual basis for payment. Businesses also need to withhold amounts from certain payments under PAYG withholding. The most common types of payments you need to withhold amounts from are payments of salary or wages to employees. Another common payment requiring withholding is a payment to a supplier that fails to quote an Australian Business Number (ABN). If you are required to withhold from a payment, you must register for PAYG withholding. PAYG instalments and withholding are reported and paid by completing your Business Activity Statement (BAS), (if you are registered for GST), otherwise on your Instalment Activity Statement (IAS). Version 8 February

32 Goods and Services Tax (GST) GST is a broad-based tax of 10% on the sale of most goods, services and anything else consumed in Australia. GST is levied at all stages of production, from manufacturing to distribution to retail. Businesses must register for GST to be entitled to charge GST and claim input tax credits. As stated previously, businesses with an annual turnover of $75,000 or more must register for GST. Businesses that do not exceed the registration threshold may voluntarily register for GST. While every registered business will charge GST, the final consumer ultimately bears the burden of the consumption tax. This occurs by the operation of an input tax credit system. A registered business will charge GST on its sales. However, any GST paid for purchases of the business will be credited back to the business. Therefore, business will, only pay the difference between the GST collected from sales and the GST paid on purchases. If you are registered for GST you must supply a proper tax invoice that documents the sale of goods and services and states that GST is included to your customer/builder etc. The tax invoice must include your ABN, the word tax invoice, the date issued, a brief description of goods and services supplied, the GST amount and the total GST inclusive. A registered business is also required to lodge a Business Activity Statement, either monthly, quarterly or annually, to report the amount of GST collected on sales as well as to claim their input tax credits. The difference between these two amounts is either payable by or refunded to the business. Most small businesses do this quarterly. For more information on GST refer to the ATO website. or phone If you are not registered for GST you cannot supply a tax invoice or claim a credit for the GST you pay, therefore you should supply a simple invoice that includes your business name, ABN, the customers details, details of what you supplied and a price. Whatever the case all business income and deductions must be recorded. Some tips on how to avoid business failure: 1. Don't underestimate the capital you need to start up the business. 2. Understand and keep control of your finances - income invoiced is not the same as cash in hand. 3. More volume does not automatically mean more profit - you need to get your pricing right. Version 8 February

33 OH&S As an apprentice you learnt about the need to work safely and comply with your employers instructions. Your host had a responsibility to provide a safe and healthy workplace and HIA Apprentices carried out regular workplace inspections. As a business owner you have a number of obligations to meet. OH&S Acts In Australia, states and territories have responsibility for making laws about occupational health and safety (OH&S) and for enforcing those laws. Each state and territory has a principal OH&S Act, setting out requirements for ensuring that workplaces are safe and healthy. These requirements spell out the duties of different groups of people who play a role in workplace health and safety. OH&S Regulations and Codes of Practice Some workplace hazards have the potential to cause so much injury or disease that specific regulations or codes of practice are warranted. These regulations and codes, adopted under state and territory OH&S Acts, explain the duties of particular groups of people in controlling the risks associated with specific hazards. Note that: 1. Regulations are legally enforceable. 2. Codes of Practice provide advice on how to meet regulatory requirements. As such, codes are not legally enforceable, but they can be used in courts as evidence that legal requirements have or have not been met. Workplace health and safety authorities in each state and territory and the Australian Safety and Compensation Council (ASCC) have responsibilities for enforcing the OH&S legislation. They provide information and advice on safety and health at work and education and training. You can get information about your OH&S obligations and other valuable OH&S resources both in hard copy and online from their websites or by contacting HIA Safety Services. Australian Capital Territory New South Wales Queensland South Australia Victoria Western Australia Version 8 February

34 Insurance Whether working for yourself or employing others consider what type of insurance you need for your business. Your insurance requirements can vary considerably depending on the type of business you operate. Some insurers offer insurance package policies specially tailored to cover your business needs. There are also individual products that may be relevant to the particular nature of your business. Which types of insurance support makes good business? It is good practice for every business to have insurance that covers other risks associated with personal injury and property damage. There are three broad types of business insurance: 1. Asset and Liability insurance protects your assets and revenuegenerating capacity e.g., tools and equipment. 2. People insurance provides cover for you and your employees. If you are self employed you won t be covered by Workers Compensation, so you need to cover yourself for accident and sickness insurance through a private insurer. Income protection or disability insurance covers part of your normal income if you are prevented from working through sickness or accident. 3. Public Liability insurance protects you and your business against the financial risk of being found liable to a third party for death or injury, loss or damage of property or pure economic loss resulting from your negligence. This insurance may be the difference between continuing business or going into bankruptcy and loosing EVERYTHING. HIA Insurance Services are familiar with the special needs of the construction industry and can assist you with your choice of cover. Remember if you employ someone you are also reasonable for Workers Compensation insurance. Version 8 February

35 Workers Compensation Insurance Workers' Compensation is a large expense for small businesses. It is a compulsory insurance policy that all employers must pay on behalf of their employees and certain types of contractors, depending on which state your business is operating. Workers Compensation insurance provides valuable protection to workers and their employers in the event of a workplace-related injury or disease. Through Workers Compensation, injured workers can receive weekly payments to cover loss of earning capacity, payment of medical expenses and vocational rehabilitation expenses, where necessary, to assist them return to work. Prevention of injuries is the most effective way of reducing business costs. Managing safety and having good systems in place will aid in removing the risk of injury to you and your employees. Further information is available from your relevant state authorities. Version 8 February

36 Superannuation As an apprentice, HIA Apprentices paid superannuation payments into your super fund. If you intend to operate as a sole trader you can continue to contribute to your fund and claim a full deduction for personal superannuation contributions. If you are employed by someone, then they must contribute 9% of your ordinary times earnings to a superannuation fund. If you employ someone then you must contribute 9% of their ordinary times earnings to a superannuation fund. It may also be payable in relation to payments made to contractors whose services are labour only or substantially labour. In most cases, you will be required to offer employees and or contractors a choice of super fund. The person you are paying the 9% for may also choose the fund it is paid into. Version 8 February

37 Business expenses and record keeping Record keeping is one of the most overlooked yet vital business management activities involved in running a successful business. Without good records you are likely to miss out on income, be unable to manage your cash flow, incur penalties from suppliers for late payment of bills and potentially face fines and legal action if you are not compliant with legal and regulatory requirements. Here are some simple tips on record keeping: 1. Keep your business and personal expenses separate You need to know what qualifies as legitimate business expenses and what doesn t. Be sure that your business record management reflects this accurately. 2. Keep a separate bank account for your business and if using a credit card, get a separate one for your business expenses. 3. Get receipts or invoices for all business expenses and keep them in a monthly file at the end of the month attach these to your bank statement, and make sure none are missing. Use this information to enter into your record keeping system or to give to your bookkeeper. 4. Keep a log of your business travel in your vehicle. Note the kilometre reading on the odometer at the beginning of the financial year and then enter the kilometres by date each time you use the vehicle for a business purpose. Keeping your log in the glove box or on the dash of your vehicle will make this easy. If you have more than one vehicle that you use for business purposes, keep a log in each. 5. Keep all your business records for a particular tax year together and in one place. It is easiest to keep these broken down by month, and once input, file them in plastic sleeves in a ring binder or in manila folders. 6. Keep your business records for at least five years after they are prepared, obtained or the transactions completed (whichever occurs later). If you get audited or need to prove anything to the tax office, you are required to have kept your records. It is also useful if you choose to sell your business. The Australian Taxation Office website offers a wealth of advice and information on keeping good records. A copy of Record Keeping for Small Business can be down loaded from their website or by calling if you would like a hard copy posted to you. The HIA Guide to Business Success, Business Edge Series 1 is also a good reference source when starting a business. Version 8 February

38 Maintaining a diary During your apprenticeship you were given a Work Experience Register to record your activities and to teach you the importance of maintaining records. In business a diary can be a lifeline. It is not only a tool to keep track of appointments, contacts and daily activities but also helps with managing your paperwork effectively. You should get into the habit of making time available to plan your year and each project. Diarise due and review dates. Scheduling time into your work routine to incorporate your paperwork will help you prevent problems from arising in the future. Diaries are available from the HIA.. Version 8 February

39 Quotes and written contracts If you intend to work as a trade contractor there are laws that may deem you as an employee of a builder. There are laws that apply Australia wide such as PAYG and superannuation, as well as state laws such as Workers Compensation. Therefore, to protect your independence you should enter into a written contract rather than relying on a verbal agreement or handshake. Project trade contract This documents sets out the basic terms and conditions for performance of the work and establishes that trade contractors are required to have an ABN number, a licence and public liability insurance. Period trade contract Used in conjunction with a Work Order, it sets out the terms and conditions on which work will be done for a builder by a trade contractor for a set period. Work order Used in conjunction with Period Trade Contract Conditions, this contract enables you to set out a work description and costs. All the conditions of the Period Trade Contract Conditions are then automatically applied. There are many more contracts available for your business from Standard Building Contracts to Renovation and Extensions. Check the HIA Store on hia.com.au or ring your local HIA office. Version 8 February

40 Protecting your independence as a contractor Contracting arrangements Be aware of contracting arrangements where an employer attempts to disguise an employment relationship as an independent contracting arrangement, usually for the purposes of avoiding responsibility for employee entitlements. Under the contracting provisions of the Independent Contractors Act 2006, an employer cannot: 1. Intentionally disguise a person s employment or an offer of employment, as an independent contracting arrangement 2. Make a knowingly false statement for the purpose of persuading an employee to become an independent contractor. The Act provides serious penalties for breaches of these provisions. Employees and independent contractors can request assistance from the Fairwork Ombudsman on or if they feel their rights have been breached. The Independent Contractors Act 2006 in conjunction with the Workplace Relations Legislation Amendment (Independent Contractors) Act 2006 protects the freedoms, rights and entitlements of independent contractors. The act can be viewed by accessing Where to from here? If you choose to start your own business and be self employed, having access to accurate and up-to-date information is vital for building your business. Don t forget that as a member of the HIA you can get assistance and advice on what you need to do to operate your business. The web site is an excellent resource for information and links on starting your own business. The HIA publication Guide to Building Business Success, part of the HIA Business Edge series #1 is also a valuable tool. Version 8 February

41 The Pitfalls The excitement of completing an apprenticeship and the opportunity to make your own decisions is what the past few years have been all about. Now you will be responsible for making all your decisions. While that may not seem to be a problem there are some pitfalls that you need to be mindful of: Cash flow If you become a subcontractor you will find out first hand that the industry can be both financially rewarding and frustrating. This is especially so for sub-contractors who perform specialised parts of a contract. Problems can however arise when the main contractor is late with payments and your cash flow is affected. A regular cash flow is vital for any business and disputed payments can have a drastic effect for a company and can even cause it to fall into receivership. To avoid this know your legal rights to payments as this is crucial for the ongoing viability to your business. Avoid using expensive bank overdrafts; it is against the law to trade when insolvent. Contractor employer work The construction industry can be cyclical in nature with periods of immense activity and periods where jobs can be slow. Budgeting and planning become an important aspect of your business activity. Some contractors have the feeling of being exposed to undue competition and tendering constraints. Don t get caught up in bidding wars for work, it is not unreasonable to make a profit. You don t want to work for nothing. Don t do what you don t want to do. Watch out for arrangements where an employer attempts to disguise an employment relationship as an independent contracting relationship. This could arise because they want to avoid responsibility for paying legal entitlements due to employees, such as minimum rates of pay and leave entitlements and Workers Compensation. There are tax implications if you are classified as an employee by the tax department. You are entitled to make, vary, extend or terminate an agreement. It is illegal to apply undue pressure to influence a person s decision on these matters. The undue pressure may be for the purpose of influencing you to either make a decision or not make a decision. Version 8 February

42 Not staying up to date Not staying in touch with industry advances and trends can also inhibit the growth of your business. Doing research, attending industry trade nights and being a member of HIA will help you stay in touch. During your apprenticeship you completed a Certificate III in Carpentry or Bricklaying. You should continue your learning and go on to do your Certificate IV in Building, talk to HIA Training Services. They can advise you on a number of courses that will help you as your career progresses. Always look to learn something new. Version 8 February

43 Continuing your career development Completing your apprenticeship and moving into a new job or starting your own business is exciting and at the same time full of challenges. While we have covered what you need to consider when looking for a job or starting your own business there are a couple of other things that you should take the time to think about, they are YOU and how YOU are going to develop YOUR career. Most of us have dreams and ambitions. Successful people translate those dreams into reality. It is accepted that writing down well-formed goals helps you cross over from dreams to reality. What do you do if you perhaps lack a skill or are a little under-confident about achieving something? This is where having your own personal development plan can help you Think through your job/career goals. Focus on further developing knowledge and skills for your current position and or future job/business opportunities. Think about how to better utilise your strengths, talents, experience, and passion in your work. The process is much like what you went through when putting together your business plan but is about identifying what YOU need to develop to take YOUR career to the heights you want. Ideally to help you with your Personal Development Plan you need to have a mentor. What is a mentor? A mentor is someone who is an experienced and a trusted advisor. Someone who is successful in the field you want to pursue. Someone who you aspire to be like. Many apprentices start bricks and mortar businesses after having worked for someone else and through this employee/employer relationship, they've learned something of what it takes to run a business (even so, enormous numbers of bricks and mortar businesses fail within the first five years). That s where a good mentor can really help teach you the ropes and guide you on the best ways of approaching your business, as well as what works and what doesn't work. What would be the sense in taking advice from somebody who has no experience? When a person has an excellent mentor who is available to teach and guide them, they are already a leap ahead of those who don't. Version 8 February

44 Personal Development Plans (PDP) Introduction Personal development is taking control and responsibility for your part in your world. A Personal Development Plan (PDP) is a development tool that identifies activities that will help you enhance your knowledge, skills, and abilities. The PDP process provides an opportunity for you to share with a mentor your goals as well as communicate your strengths and developmental needs. You can work with them to develop realistic goals and activities to achieve and they can assist by providing feedback and suggestions. The process of making an effective Personal Development Plan first involves you asking yourself the following questions: 1. What direction is my business going and what will it need from ME in the future? 2. What are my goals over the next five years? (This question is crucial to providing a motivational focus for everything you do.) 3. What are my greatest strengths and how can I build on them more effectively. 4. Do I have any serious weaknesses that make it difficult to do my job or will prevent me from reaching my goals? After answering these questions, you should try to identify developmental opportunities that will help you build on your strengths in such a way that you can better help you reach your goals. Talk to HIA Training Services they may be able to help with short courses in the areas you want to develop. Completing a Personal Development Plan should be a joint effort between your mentor or someone you work for and yourself. It should consider your business needs, technology changes, expected turnover, program plans, etc. It should not be a "wish list," but a realistic working document. A Personal Development Plan reflects your personal and career development needs and interests in the context of your business needs and your job. Version 8 February

45 Analyse your needs The first step in analysing your needs is to do a self-assessment of your interests, preferences, values, and skills. Talk with your mentor As you review your needs, think about where you are at the moment and where you aspire to be. Talk with your mentor and decide on the goals that are the best fit for you, your business, and the future. Your mentor may be able to pinpoint the needs of your business, your strengths and weaknesses and then help you apply your new knowledge back on the job. You can discuss your mid-long range career goals and how you can work towards those goals within your current employment situation. Look into strategies for your development (See Further study and Not staying up to date) Find ways to measure your success This is the most important step. In order to develop a skill or improve your competency in a certain area, you have to practice what you have learned and have an opportunity to build your competence. Talk with your mentor about the skills you have acquired and about the ways in which those skills have enhanced your job performance and how they can be used to help you grow in the future. Completing a personal development plan (PDP) GOALS Short term goals What areas do you want to develop over the next year? Perhaps you want to learn more about a particular task, or further develop a skill or area of knowledge. Mid term goals This is a statement of what you hope to achieve within the next 2-5 years. Examples could be managing a particular project, adding a new responsibility to your job, developing a new skill or area of knowledge. Version 8 February

46 Long term career goals This is a statement of what you hope to achieve 5 or more years out and may include enhancing your skills in a current area of your responsibility, making a lateral transfer, moving into a new type of work, or taking on greater responsibilities in your current career. As you develop this section: Consider your career goals An important component of the individual development plan is your development for the future. Identify career development strategies that will prepare you for the future: Review your career development goals (where do you want to be in 5-10 years). Consider feedback received from others. Review your self-assessment. Skills and competencies What particular skills, competencies or areas of knowledge do you want to develop in relation to your goals? Consider the competencies required in your current role and identify areas for development. A starting point may be to collect information about the competencies you need to achieve results. Talk to HIA Training Services they may be able to help you. Review any information you have about competencies required for your current job or business. Review other sources of information on competencies, including those listed in training packages Review your business plan, work goals and personal performance plan. Understanding how your job relates to your work or business goals will help you focus your plan. Do a self-assessment considering what's required of you in terms of skill, knowledge and competencies and how you are currently performing. Consider feedback received from others (such as performance assessments, customer feedback) and from your mentor. Version 8 February

47 Identify your learning priorities Once you have identified the skills, knowledge and competencies required, set your learning priorities based on the areas you feel you need to develop. Consider: Technical/job specific knowledge and skills needed now and in the future Which developmental area will have the greatest impact on your performance Which barriers may arise to prevent you from reaching your goals and how you might overcome them What strengths, talents, experiences, and passions you want to use more What support (e.g. dollars, time) you will need Learning on the job and formal learning options How you best learn Tips: Include the actions you are going to take to increase knowledge and skills to do your current job and meet your performance plan goals. For example, if there are jobs that are new to you, your learning and development plan may include some short courses Consider both job specific (technical) expertise and overall competency development, further training Consider the direction you want to take your business in. Ask yourself if there are any changes taking place that may impact your business learning and development priorities Gather feedback and discuss options with your mentor. Version 8 February

48 Personal development template This plan should be updated whenever there has been a change - either when a goal is achieved or modified or where a new need is identified. The original version should also be retained for discussion with your mentor. Priority 1 What development needs do I have? Explain the need. Etc How will I address them? Explain how you will take action, and what resources you will need? Training Etc Date by which I plan to achieve the development goal The date you set for achieving the development goal. Outcome How will business change as a result of the development activity? Completed Agreement from your Mentor that the development need has been met Version 8 February

49 Career Pathways Bachelor of Technology Construction Manager Building Surveying Infrastructure Building Inspector Quantity Surveyor Clerk of Works Building Estimator Construction Manager Diploma in Building Building Surveyor Building Design & Drafting Built Environment Certificate 1V in Building Self Employed Builder Self Employed Sub Contractor Site Manager Foreman Leading Hand Qualified Tradesperson Apprenticeship Certificate 111 in General Construction Pre- Apprenticeship Certificate 11 in General Construction Pre- Vocational Training Certificate 1 in General Construction Version 8 February

50 Growing a sub- contracting business From small beginnings big things grow; Working in residential construction as a sub-contractor is full of challenges and opportunities. When you reach full capacity and begin turning business away it s time to consider the future direction of your business. How do you go from being a one or two man operation to a multi team business with the ultimate goal of managing a number of sub- contractor teams? There are many ways to grow your business, having a vacancy and looking for someone to fill it sounds simple but usually takes a bit of forward thinking. Having a business plan and a strategy for growth will provide you with direction of where you want to take your business and how it is going to get there; having a plan will also help you keep on track. Once the decision to get extra help and grow your business has been made there are options available. You may want to bring in a partner who can share resources and contribute their knowledge and knowhow to the business or you could simply employ an apprentice and grow your business from the ground up. Having a strategy for workforce growth is about having the right people in the right place at the right time. It s a plan of action to achieve particular goals. Your strategy could be to use apprentices in resourcing your business. A simple growth strategy like the one below lays out what you need to think about. Strategy Growth Strategy Business Plan Resource Strategy HIA Apprentices Workforce Workforce Supply Future Business Partner As part of your strategy you can use apprentices and develop them into your business as it grows. They will help you in earning your income and learn your ways of doing business, eventually becoming a sub-contractor or a partner in your business. Your strategies could include such things as recruiting, training, contracting out and succession planning. HIA Apprentices can help you in these areas. Version 8 February

51 A growth plan for sub contractors Reasons for growth Some sub-contractors may be happy to work by themselves calling on a mate when they need extra help. Others will find that to improve their productivity they need a more permanent arrangement. As productivity increases there will be more opportunity to take on bigger and better jobs and grow your team. There can be a number of benefits in growing your business for example, 1. Life Balance, To share the load and create some free time for you and your family. 2. Time Off, Your business keeps going even if you have a day off or are sick. 3. Perception, You have the ability to take on the larger jobs 4. Growth, Increased ability to attract quality customers 5. Security, The ability to earn an income into old age If you are a one man operation the plan below shows how you can gradually build your team. As productivity increases you can increase the size of your team. When your first apprentice graduates he can become a sub-contractor or partner in your business. Taking on a second apprentice is all part of your succession plan, should your first apprentice choose to move on you will have already trained his replacement. You, Single operator You hire a 1 st yr apprentice Now a 2 nd yr Now a 3 rd yr Graduates and becomes a partner or subcontractor Time to take on a new 1 st yr Your business continues to grow and you need to increase your resources. How will you manage the growth? To make things easy we have developed a growth plan that details how you can grow your business in a sustainable manner. Version 8 February

52 Growth Plan for a Sub-Contractor Business Day 1 12 mths 24 mths 36 mths Split into 2 teams You & your business 1 st yr 2 nd yr 3 rd yr Apprentice Graduates Stay You Grad App 2 nd yr 1 st yr 2 nd yr 3 rd yr Apprentice Graduates Partner Sub- Contractor 1 st yr 2 nd yr Stay Grad App 3 rd yr 1 st yr Partner The growth plan is based on a natural growth over time. Initially you start with a 1 st year apprentice. As your 1 st year apprentice gains more experience and your productivity increases you and your partner may think of taking on another apprentice having a succession plan in mind to build your team further. 1. An example of this is when your first apprentice turns second year and you take on another 1 st year. 2. As the original 1 st year turns third year you bring in another new 1 st year apprentice and begin training them to take over some of the tasks. Freeing up your senior apprentice to develop and take on more responsibility. At this point you would have 1 new 1 st year, one 2 nd year and one third year. 3. Once the first apprentice completes his training there is an opportunity to employ him as an employee or engage him as a sub contractor to your business. You could even make him a partner. If this is not done experience has shown that they usually only stay for six to 12 months and then move on. At this point you level of supervision has risen in the team allowing you to take on another new apprentice into your team. All the while developing and growing your business. As more work flows in and the more productive you become you may want to split your team into two and run more than one job at the same time thereby increasing productivity and profit. Your goals may be to eventually be able to move on to supervising your tradespeople and managing your business fulltime. So if you want to grow your business develop a strategy and incorporate a plan for Growth and Succession Planning. Make HIA Apprentices part your strategy to grow, give us a call and see how we can help. Version 8 February

53 Where to get Advice

54 HIA Membership The HIA brand is a powerful tool with HIA members responsible for over 80 per cent of new homes and renovations activity in Australia. Display the HIA members the best in the business logo on all your contracts, stationary, vehicles, clothing and advertising. Get your HIA member stickers from your nearest office or downloaded the HIA member logos from the Members Area at hia.com.au/member centre/member downloads/logos Safety Services Get access to a national team of safety experts to help manage workplace safety and minimise OH&S liability. For all your OH&S risk assessment and safety solutions call Technical Information and Support With local and state government building regulations changing almost daily, help is just a phone call away Industry Information and Updates Keep up-to-date with regular HIA communications and publications: Building News, e-news, BPN News and Housing magazine. Ask your local HIA office about advertising opportunities. Training Services Looking for help to get licensed or accredited? Want a professional image? HIA can help: information nights, short workshops, seminars or nationally accredited training courses. Call HIA Training Services on or visit training at hia.com.au/training Apprentices and Recruitment Need a reliable apprentice? Looking to get into the building industry? HIA can help find the right person to meet your needs. Call HIA Apprentices on or visit apprentices at hia.com.au/apprentices Version 8 February

55 HIA Shop Get paid with HIA plain English contracts. Run your business more efficiently with HIA stationery. Use HIA branded clothing to look more professional and site signs to comply with legal & safety requirements. Get all this at your nearest HIA office or shop online at hia.com.au/store. Business Partner Support Does your spouse or partner need help with running the business? The Business Partner Network can provide help, information and advice to give your business the edge. Call the HIA Business Partner Network on or visit business partner at hia.com.au/business partners Legal Services Trouble getting paid? Having issues with industrial relations, workers compensation, union disputes and contracts? HIA has over 25 legally trained professionals ready to help. Get the right advice with HIA legal services. Call Kitchens and Bathrooms HIA supports kitchens and bathrooms professionals with specialist services and advice such as Kitchens & Bathrooms e-news and the HIA Kitchens & Bathrooms Awards. Call or visit Kitchens & Bathrooms at hia.com.au/kitchens & bathrooms GreenSmart Is your business talking green? HIA GreenSmart is an industry-driven initiative which promotes an environmental responsible approach to home building and design. For information on the HIA GreenSmart Accredited Professional two-day course covering energy efficiency, water efficiency, stormwater and waste management skills call or visit GreenSmart at hia.com.au/greensmart Version 8 February

56 Insurance Services HIA Insurance Services is a specialist broking service with over 20 years experience in the building industry. HIA Insurance Services can provide you with the right insurance solutions at highly competitive prices: home warranty, contract works, public and products liability, subcontractor and trade liability, tools and equipment as well as general and motor vehicle insurance. Call or visit hiainsurance.com.au Government Lobbying Support the future of the housing industry and ensure your voice is heard at the table by all levels of government a stronger voice, greater lobbying power and better outcomes for your business. Economics and Market Research HIA's Economics suite of regular publications, one-off reports, tailored client consultancy work and regular presentations, provide the building industry, the business community and media with the most comprehensive overview of industry conditions, emerging trends and future scenarios available anywhere in Australia. Find out more at economics.hia.com.au Events, Networking and Awards Connect with similar businesses actively working in the building industry. Maximise your membership and participate in HIA events: in-sight nights; trade nights; golf days; industry outlook breakfasts; HIA awards nights, Building & Business and Home Shows. Contact your nearest office or visit the events calendar at hia.com.au/events Building, Planning and Environmental Services Don t get lost in the bureaucratic system. Talk to a HIA specialist who can assist you with the planning approval process. Version 8 February

57 Helpful Links Job Search Licensing All Australian Capital Territory New South Wales Queensland Victoria South Australia Western Australia Business ABN TAX Wages hia.com.au (Workplace Advisors) Version 8 February

58 OH&S HIA Safety Services Australian Capital Territory New South Wales Queensland Victoria South Australia Western Australia hia.com.au Portable Long Service Leave Bodies Australia Capital Territory New South Wales Queensland Victoria South Australia Western Australia Version 8 February

59 Business Checklist Business Plan/Structure Business Name/ Registration ABN Tax File Number Goods & Services Tax (GST) PAYG Tax Bank Accounts Builders/ Contractor Licence Income Protection Insurances Public Liability Insurance Assets Insurance Superannuation Long Service Leave Business Stationery OH&S Policy and Procedures Tools and Equipment Training Needs Record Keeping/Accountant HIA Membership HIA Contracts Version 8 February

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