Technology is no longer just an issue of working more efficiently, your competitive edge now very much depends on the extent to which you embrace it.

By Meg Crawford

In the construction industry, it’s still common for small businesses to operate manually or rely on paper.

While this was once the norm, recent reports indicate that such companies are heading in the direction of dinosaurs, while tech-savvy competitors will thrive.

This isn’t just digital propaganda. The results are demonstrable. For instance, in the Deloitte Access Economics 2017 report, digitally advanced small and medium-sized enterprises (SMEs) were found to be 50 per cent more likely to grow revenue and earn 60 per cent more revenue per employee—a major incentive for contractors and sole traders to invest in digital tools. For those focused on business expansion, the report also determined that digitised SMEs were eight times more likely to create jobs and 14 times more likely to offer new products or services. In short, businesses lift when they focus on digital technology.

Jason Loft, managing director of Protrade United, a consultancy for trade and construction businesses, agrees.

“Paper-based may have been okay five years ago, but those businesses won’t last,” he says. “If businesses aren’t prepared to embrace technology, they’re going to get left behind because properly tech-equipped businesses can produce an outcome in a much shorter time frame and provide a more user-friendly experience for the client. That’s destined to be more profitable.”

WHERE DO YOU START?

The breadth of options and the functionality now available for digital technology is mind-blowing. For example, take the raft of apps that can scan invoices and receipts from your phone, extracting line items, processing attachments and integrating data directly with accounting software. With the sheer volume of options and new technologies becoming available almost daily, it can be difficult to get your head around what a digitally-advanced business in a construction context looks like. What tech is available, what do you need and where do you start? The task can seem overwhelming.

MYOB’s head of Marketing and Digital Sales, Jane Betschel, breaks it down. “Our data shows growth and sustained success comes from digitising six core business processes: supplier management, staff management, revenue generation, work-in-progress management, cashflow and compliance,” she explains. “These are the areas where digital support is shown to benefit SMEs most. It can seem

daunting at the start. But with all good things, taking time out to get started is the key. My advice is to start small.

You’ll be much more effective if you take on one thing and fully understand it than you would be taking on half a dozen tools at once, with only top line understanding.

Her next suggestion is to nail down new technologies before moving on. “Whether you choose to take up social media, digitise your compliance requirements or invoice online, use that tool until you feel confident and at that point, your next step on the digital journey will undoubtedly become clear.

Our research shows that the time taken to set up digital tools is a barrier for one in five of small businesses. However, the data demonstrates that one of the clear benefits to digitising is saving time. So carving out a bit of time now for bigger time savings down the track is not something you will regret.”

ASK AROUND

Loft agrees. “As with any major change, implementing new technology is difficult to start, messy in the middle, and beautiful at the end. So it’s being able to go, ‘Okay, what’s the outcome I want to create?’, having the patience and investing the time.” However, he goes one step further and encourages businesses to speak to peers to gain intel.

“It’s sensible to reach out to other business owners who have used the software you’re considering,” he explains. “That way you get some practical insights before undertaking a major investment. People are often very willing to share that information.”

Betschel has another tip. “There are so many options, so make sure you do your research to source the best solution for you and your business,” she notes. “And make sure you explore the business platform providers offering trials so you can try before you buy.”

THINK ABOUT THE BIG PICTURE

Hugh Campbell comes at it from a slightly different angle. When it comes to considering purchasing and implementing new systems, the national sales director of Nexvia (a specialist cloud-based construction management software company, that focuses on end-to-end solutions), considers that software unification is key. “I was guilty of this when I ran my own construction company for many years. I’d see a product and think, ‘Great, that solves the problem directly in front of me’. But ultimately, I was just adding to my pool of software, and solving individual problems but not integrating. It creates inefficiencies.”

IF NOTHING ELSE, YOUR CLIENTS EXPECT IT

Campbell suggests also that part of the necessity for improved and integrated digital technology is driven by clients.

“Your clients are getting smarter and their expectations are a lot higher,” he explains. “With those expectations come demands for better reporting and improved transparency on projects.

Software advances can assist with most of those things. By having smarter data that’s shareable and live, it can make a huge difference on any job, whether it’s in relation to budget management, health and safety, delivery or just general communication.”

There’s more to switching from employee to subcontractor than rocking up on site with an ABN. Here’s what you need to do to become a successful subbie.

By Angela Tufvesson

So you’ve decided to become a subcontractor. Perhaps you’re ready to take the plunge after completing an apprenticeship and clocking up a few years of experience working for someone else.

Maybe you’re after greater freedom and the opportunity to work on a wider variety of jobs.

Whatever your reasons, know this: making the switch is not as easy as turning up on site under your own name. You’ll need to register your business, organise insurance and get your books and safety paperwork in order to successfully— and legally—make the transition from employee to subbie.

CHOOSE A STRUCTURE

When you become a subbie, you’re no longer employed by a company. Instead, you become self-employed—you are your own boss. The first step is to choose a business structure. Most subbies set up as sole traders and run their business with an ABN (Australian Business Number). You can also be a subcontractor working in your own company, partnership or trust.

It depends on your long-term goals as to which business structure is best, explains accountant Kirsty Fox from Tradies Accounting Toolshed. “If you’re going to be a subbie to a couple of builders, then it’s probably just as easy to be a sole trader than it is to move into a company,” she says.

“Part of the reason you’d move into a company or a trust structure is for tax planning purposes and if you’re planning to grow the business and employ staff. It really comes down to how much money you’re going to make.”

Nicole Cox, a co-founder of business consultancy Tradies in Business, says this is an ideal time to engage the services of an accountant who can help you launch and manage your subcontracting business.

“Find a good accountant who understands where you’re at right now and where you’d like to move the business towards in the next 12 months or two years, and they can help you make the right decisions around business structure and what’s going to work best for you,” she says.

SET UP THE BACK END

As a business owner, a subbie is responsible for insurance. Experts say there are three essential types of insurance you’ll need to protect yourself and your business: public liability, which covers any property damage and personal injury you cause, income protection for periods you’re unable to work due to illness or injury, and tool and vehicle insurance in the event of theft or damage.

Cox recommends using an insurance broker to help you wade through the options. “To get the right insurance that suits where you’re at right now, speaking with a broker is the best option because things are changing very quickly, particularly in our current climate.”

As for super, you’re not legally obliged to pay into your retirement savings, but it’s certainly a sensible idea—especially if you’re planning to subcontract for the long term. “If you’re younger, you have a great opportunity to build up some wealth through what essentially is forced savings,” says Warrick Bidwell, Cox’s business partner at Tradies in Business. Some super funds also include provision for life and income protection insurance.

Bidwell also recommends having safety paperwork like Safe Work Method Statements (SWMS), standard operating procedures and safety management plans ready to go as most builders will request this documentation before starting a job.

“There are some good apps and cloud based platforms that can help with ongoing management of the safety side of things,” he says.

DECIDE YOUR RATE

Of all the decisions you make as a subbie, setting your hourly rate is one of the most important. Bidwell says it’s crucial to factor your new business expenses—including insurance, accountancy fees, vehicle and tool costs, and subscriptions to digital platforms—into your rate. “It’s not enough to use the same hourly rate as what you were getting paid as an employee,” he says.

Businesses that turn over $75,000 or more annually must register for GST. Fox recommends registering early on and including GST in the rate you quote builders rather than waiting until you reach the threshold to avoid awkward conversations.

“Say you agree to $77 per hour, then you change to being registered for GST,” she says. “The rate should then go up to $84.70 per hour, but the rate you agreed upon was $77. That means you have gone from making $77 per hour to $70 per hour, as the rate is now GST inclusive.”

To avoid unexpected tax bills, Fox suggests putting 20 per cent of your earnings into a separate account as soon as you get paid to cover GST and other taxes. Software programs like Xero and MYOB can help you keep track of taxes as well as manage cashflow and keep track of debtors.

“Ultimately, it really comes down to one thing: cashflow is king,” Fox says. “You have to get your invoices out and you have to get paid.”