Many of us may lay claim to a great business concept at one time or another, but it takes a particular type of person and special set of circumstances to actually bring it to life. For those taking the plunge, starting out as a sole trader isn’t just about the big idea. More often than not, it’s spurred on by an accumulation of little things that keep on building until they reach a tipping point – and that’s where dream turns into reality.
According to a recent report from the ASBFEO, nearly two-thirds (62.8%) of all businesses in Australia don’t employ anyone. So what is it that inspires these brave souls to go it alone? With its research into the tipping point, the Xero team unearthed the data to determine exactly that. Designed to uncover what it is that ultimately makes sole traders take that leap of faith, it also explores the challenges faced along the way.
The path to going it alone
Australians are a nation of self-starters, so it came as no surprise to see that Aussie sole traders are typically motivated by the desire to work for themselves and make their own choices. But getting there is no mean feat.
Our research revealed that the path to solo business ownership often comes down to a combination of becoming fully convinced of the opportunity, the lure of financial independence, and dissatisfaction with their current work situation. And while 43 percent have long dreamed of being their own boss, just as many are driven by external forces such as life events, lack of motivation in their career and, more recently, the aftermath of COVID-19.
As with so many things in life, becoming a sole trader isn’t always a linear process. For Anna Anagno, a Perth-based government worker turned designer and owner of sustainable jewellery business One Happy Leaf this was certainly the case.
She explains, “Mine isn’t an overnight story. It took two to three years until I felt comfortable enough to leave my corporate day job and step into the unknown.
There wasn’t much creativity in my role at the time, so I ended up creating a business making eco-minded jewellery on the side. But I had no energy when I got home from work and I started to feel like time was just flashing past me.
No matter how nice your boss is, you’re ultimately still being told what to do and how to do it. Finally, I realised I needed more freedom. I knew jewellery was what made me happy, and the business had become increasingly viable. So I made the choice to create my own rules and hours – and I haven’t looked back since.”
The challenges on the road to freedom
The tipping point report reveals that, just like Anna, many sole traders were drawn into an independent role so as to feel more motivated and inspired. Four in five (79 percent) felt negatively about their job or career before they went out on their own, with the most common sentiment being frustration over a lack of control.
Of course, along with the joys of working for yourself come challenges. Right from the initial planning through to managing customers, sole traders are responsible for every step along the way. Perhaps unsurprisingly, finance is one of the main obstacles faced in the initial planning phase, with budgeting for unknown costs a key challenge for 39 percent.
Luckily, there’s help at hand, with sole traders often turning to loved ones for support as they navigate the highs and lows of making it on their own. Anna was no different: “My husband has been my number one. He’s held me when there have been tears and he’s celebrated equally as hard when there have been things to celebrate.”
And despite a relatively low uptake of digital technology amongst solo operators, early adopters are extremely positive about its value. This was especially true of cloud accounting software; so much so that the vast majority (87 percent) saw it as being key to the survival of their business during COVID-19.
Following what has been an incredibly challenging year, it’s inspiring to see that the pandemic hasn’t dimmed the entrepreneurial spirit of aspiring sole traders, with many feeling positive about their short-term business prospects. In fact, 41 percent say the events of the past year have only increased their desire to start a business.
It’s this same resilience that’s likely to drive many soon-to-be sole traders to get their idea off the ground in 2021 and gain the freedom and autonomy they’ve always longed for.
For more insights, you can download the tipping point report.