OT extra cash/business

[new_guy90]

Hey guys i have just been thinking of some things lately and i thought it would be good to hear what others have done in similar circumstances. You see over the past 6 months lives been getting pretty good, new job, great boss, new ute and moved out of the parents. Im only 20 and my philosophy was i should buy the tools i want now before i get tied down with to many responsibilities as i get older D ok now the problem is with all these changes my wage only went up to allow me the luxury of moving out and the loan on my car ( no money for tools/toys for the next year till my apprenticeships over. Now Im not complaining i have 2 lathes (wood and metal) a good mig and plenty of hand/power tools for work so all in all Im happy.

Now my flat mates 22 and just started a business with some others and are doing really well like 100k contracts! He sujested i get myself an abn and use my tools to make some extra cash aswell as fund my hobbies win win i think. The problem in my head is this will be a second income and if i make something in 5 hours sell it for $200 minus materials say $80 and then tax Im working for $10 an hour and i dont know how much time ill have to work on my hobbies (

Sorry to drone on has anyone faced these choices? What did u do?

[wheelinround]

Patrick first part sounds good the move etc.

The rest sounds interesting and a possible way to make the $$$. to buy more tools. Your already working and as I see it contracted by apprenticeship so it has to come first. Would your additional workload interfere with your present work situation??
ie They tell you they have a big job on and need you to work additional hours to get it out. You have work at home which you require also to get out for a contract?

I have been there and burning the midnight oil effects the body and soul, personal life also.

You missed a lot when looking at costing.
Hours
materials
handling
insurance (if you injure yourself or a sick which effects your real job who's going to pay the bills.)
amenities, > phone, computer, advertising, power, tool replacement, wear and tear on your transport.

Remember your not at home and mum isn't there to cook, clean and wash, pay bills.

I know looks pessimistic but look with your eyes wide open and ask as you have done here.

At your age I was doing a job 50k's from home young family mortgage and being paid $10 and hr it wasn't covering travel, food let alone anything else.Edited to add This is as well as working weekends and lats year f apprenticeship and 1st year tradesman.

[Ueee]

Hi Patrick,
I faced the same dilemma some years ago, and it really depends on the person as to what is best. I found that working all day and then working for cash on weekends and after hours really ruined my love of woodworking as it was all i was doing. When i started metalworking it was not so bad, as at least it was different. The bottom line i think is that if you HAVE to do something it is not as enjoyable as if you WANT to do something, even if it is the same thing. I always charged $30/h for my time regardless of what it was, remember this has to cover electricity/tool wear/consumables (basically you overheads) and you don't just get to pocket the lot. The other cheeky thing i would do is say if i wanted x tool for $250, i would charge materials plus the $250 plus overheads. That way you get what you want.
Good luck with whatever you do.

[Grandad-5]

Hi Patrick,
Your post is hardly what I would call “droning on”, but before I even start, I can see mine will.
Because yes, I have indeed been in your position, several times in fact. Some failed miserably in terms of $ earned but reaped huge benefits to help in the next venture.

So here goes.

At about your age, I built myself a trailer for my own use. Bought an arc welder and a book on how to use it and got started. I used timber hardwood floorboards for the floor and sides. My first father-in-law was a cabinet maker and taught me how to do the timber part. Took me months to build but in the end I was tickled pink with the results. Absolutely everywhere I went with it, people stopped me to have a closer look. There was SO much interest in it that I thought there might be a business in it for me. So, I got some business cards printed up, out an ad in our local paper and started on my second trailer which I hoped to sell.
Result? Absolutely nothing. Eventually I sold the thing in the Trading Post for a little less than what it had cost me.
The lesson learnt was that having a good idea is just not enough.

The next attempt was several years later. Unemployed and needing to earn, I put an ad in the paper as a general handyman. I thought I was a pretty good all-rounder but soon discovered the vast array of skills people will expect you to have. Everything from gardening, painting, carpentry, concreting etc etc. All the jobs the trades don’t want.

As luck would have it, one job I was asked to quote on was repairing a timber deck that was rotting away. I found the all hardwood stumps and bearers were still quite sound but the joists and decking boards were past it. With a lot of info from the Timber Merchants Assoc I learnt how to repair it properly. This job led to another similar one and that job to yet another one building a new deck from scratch.

I gave the handyman game away and concentrated on building decks and later, pergolas. I was lucky. I was living in an area that most tradesmen avoided. The Dandenong Ranges in Melbourne. 9 times out of 10, I was the only trady to show up, so I got the job. I got pretty good at it and the business supported my family for about 8 years before I shut it down to build myself a house. After several years there was no need to advertise. Referrals and repeat business kept me booked out.

More recently, the city of Bendigo introduced a cat curfew. No cats out after dark. I figured there would be an overnight need for cat enclosures. There was an opening for a bright young man there somewhere but unable to find such a bright young man I did it myself. My wife and I were cat and dog breeders so I well knew how to build runs, kennels cat enclosures etc
I stuck an ad in the paper and for the next 6 to 9 months had jobs rolling in. Then I shut it down. The boom was over. Ride the wave until it hits the beach, then bail out.

Very recently, I was approached by an animal welfare group here to ask if I would consider doing it again.
There was nobody here offering anything half decent or at an affordable price and there was a definite need. I’d never been 100% happy with my previous efforts so I built a park here for my own cats to experiment on and develop techniques. So far, so good. Winter is dead quiet but the warmer months are quite productive.

So, after all that long winded explanation, I hope I now have the right tomaybe tell you the lessons I have learnt that may help your situation.

Here goes….

1. Having a good idea is not enough. You may like your product but will others like it enough to pay $ for it?
2. Every successful business more often than not starts with seeing something you want and your first reaction is….”I could do that better for the same or less money” If that thought crosses your mind, you MIGHT be onto something.
3. Ask yourself, “What is the worst that can happen, and could I survive that?” If the answer is that you must borrow heaps of money to do it, and if nothing sells it will ruin you…..walk away.
4. Opening any business will NOT make you rich overnight. If fact, you may never be rich. With hard work and careful accounting, it may however support your family in a fairly reasonable manner. But you will go through a long initiation at the start where it may actually lose money. Can you cover that?
5. At the start, quote to cover your material costs and then what you think may be a fair price that a more experienced person might quote. It will probably take you 2 to 3 times longer than you expected but you walk away with a bit of cash you didn’t have before and more experience to increase your speed on the next job.
6. Be honest with your customers. If you’re not confident of doing a good job, tell them. Even if it costs you at the start, make sure every single customer is thrilled at the finished job. If they’re not happy, you won’t succeed.
7. Start small. Get your feet wet and learn the best ways of doing things.
8. Above all else, if your primary goal is to makes heaps of money, fast! Chances are you’ll fail. If however, every job you do finds you dissatisfied with the result and you can see 10 different ways to could do better next time and you’re just ITCHING to get another job so you can show how good you really can do it, then you have promise.

Of these 6 items, numbers 2 & 3, IMHO are the key. If you can’t answer Yes to both of those…walk away.
Hope this helps Patrick and my apologies to all the others for taking your time to reading

Jim

[Wongo]

I wouldn't worry about getting an ABN. Unless you are consistently making a significant amount of money, the tax offer won't be interested in you. They certainly don’t want you to claim all your tools in the shed tax free. Go talk to your accountant.

Keep it as a hobby and enjoy it.

[dabbler]

+1 for wot Wongo said, esp. the bit about talking to an accountant. You are probably doing your personal income tax return about now, so try and find a tax agent that handles all aspects of taxation (and doesn't work from temporary setups in shoping malls).

At your age and stage, there's nothing wrong with concentrating on your apprenticeship, broadening your skill base and developing deeper skills and specialization. Learning your tradecraft is invaluable in every work sphere I reckon. In my case, I had a comfy, secure, well paying, varied job (in IT) and never took on outside jobs until my mid-30's. People knew of my skills and interests, and they found me not the other way around.

By all means take opportunities as they appear but don't sweat on seeking extra income unless you need something extra to survive and definitely don't try to keep up with your flatmate just for the sake of keeping up. There have been some really interesting points made in the posts already but you'll notice they are all just a little bit different from each other.

Good on you for thinking about your options.

[Sturdee]

Unless you are consistently making a significant amount of money, the tax offer won't be interested in you. They certainly don’t want you to claim all your tools in the shed tax free. Go talk to your accountant.

But if the extra work and money is from the same trade as his work, remember that he's an apprentice, the ATO will definitely tax him and only allow depreciation on his tools.

So go and talk to an Accountant. The advice they can give you may save you a lot of trouble.


Peter.

[rustynail]

At this stage in your life you are in a learning phase. Hopefully, this carries on for ever. If you dont need the extra bit of cash, use the available time for further education. Management courses, building deploma, quantity surveying, that kind of stuff. Too many businesses fail due to lack of good management. It takes more than a strong back to get by these days. The time will come later, when you will be glad to step off the treadmill for a while for a change of pace. Its nice to have the qualifications to allow you to do it when you want to, rather than having to rush about getting educated when you have the responsibility of a family, mortgague etc.

[new_guy90]

Wow Im very impressed with the response guys lots to think about

I got an interesting phone call from my boss today. My employment is with a group training company and my host employer is worried about work for the next few weeks. You see i have been on 2 weeks leave because Im not allowed to accumulate more than 20 days annual leave. Soooo i might be back in a machine shop running cnc's very soon again

I think for now ill just keep doing what I enjoy and then talk to an accountant

[chambezio]

As an old phart I whole heartedly agree with all the previous posts. Concentrate on your chosen trade, ask questions of your more learned workmates and above all....enjoy what you are doing and enjoy life. Aquiring tools will be an inevitable past time of any trades person (I don't like "Tradie). As you circulate through life you will come across people who will want something made that you can do. Tell them that there will be a charge! If you don't, you will end up doing all sorts of ###### jobs that no one else would touch that can probably cost you in the end.
When I was an apprentice I fell into the trap and would be working on Saturday afternoons till dark while my mates were doing stuff that young blokes do.
I also should have gone to TAFE for extra coarses so I could have gotten better paid jobs in the managerial side of the trade. I turned down a job that could have taken me in a direction that could have led to better things but...We are all wiser in hind sight.
Learn your trade well, be a nice bloke to all and keep an eye open for advancements. Don't end up in a back water.
Good luck

[wheelinround]

Well said Chambezio

I have seen many a mechanic/repairer that as an apprentice started doing cashies in their back yard and they are still doing them 40 yrs on.