Luke is my nephew, lovely lad and a painter and decorator near Worthing. He’s a lovely lad, only 23 but already he’s decided to strike out on his own and start his own painting and decorating business. And he’s determined to become known for the quality of his work. He has ambitions to become a good sized company over the coming years, though I think he realises these things must be tackled sensibly and not rushed too much.
So why would I mention Luke in a blog about cash?
Well it’s quite simple. Luke and I are on the same wavelength and his love of cash has helped him to save enough money to get started on his adventure.
Let me go back to the beginning. Luke wasn’t particularly good at schoolwork and passing exams but he always had an entrepreneurial streak that saw him earning money from an early age. I remember him pestering the family to let him clean cars when he was about 7, then he progressed to selling fruit outside the house during the summer and even made cookies to sell at his little stall.
Then when he was a little older he found a profitable niche doing something with mobile phones (I forget what!) and selling stuff to his classmates. All this activity taught him about money and of course he was dealing solely in cash.
And from a tender age, Luke saved some of his cash. I helped him open an account so he could keep his savings safe and it earned a small amount of interest when he wasn’t reinvesting into a new scheme.
So Luke learned to handle cash from a young age and I don’t think to this day he has a credit card. But that in itself can lead to problems because in this day and age – like it or not – you need to build a good credit score. And if you don’t have a credit card or any debt, then you get a bad score! Madness of course, but it’s the way of the world and a universal (almost) love of plastic.
Anyhow, Luke has his head screwed on so we recently discussed this dilemma and how he could use plastic to his advantage, whilst retaining his love and use of cash on an everyday basis. As a tradesman it’s definitely beneficial for Luke to take credit and debit cards from his customers. Most people want things right now and unfortunately that means they put it on a card. So I’ve helped the lad to set himself up with a simple method of taking money, which is then deposited straight into his bank account.
Of course there are always a few customers who prefer to pay cash and some ask for a discount. But that’s not really the way to go as these customers are expecting the tradesman to avoid paying tax and VAT in order to allow them to benefit from the black economy. Everyone likes a bargain, but you have to respect the businessman who prefers to keep things legitimate.
So when Luke is given cash he will give a full receipt and the money is paid straight into his bank account – in full. He pays tax on the entire amount and in due course will also charge VAT. At the moment his turnover is too low to have to worry, though we’ve discussed registering voluntarily to give the impression of a more established company. It might be useful if he wants to do work for other businesses, although he’ll be more expensive when doing work for householders.
Painting and decorating, though, can be quite an emotional purchase, in that the customer often chooses someone he likes and trusts rather than the cheapest price. After all, you’re likely to have one or more people in your home for a week or more, so you don’t want Mr Shady.
So Luke is doing really well and is gradually building up his customer base. I reckon it’ll take a while but he’ll get repeat custom and recommendations as time goes on. And if he keeps his head straight and makes sure the cash flows well, then I’m sure my nephew will have a terrific business in 10 years’ time.