As the prospect of entrepreneurship and sole trading becomes more and more tempting for young businessmen and women, there is – unfortunately – also a lack of knowledge on what it takes to become a successful sole trader. However, for those who are determined to educate themselves and build a career as a sole trader from the ground up, here are five top tips!
A cohesive business plan is a must for every successful sole trader – as otherwise, it can become difficult to hold yourself accountable and stay on track. A business plan will help you figure out the time frames required for certain business operations, and make sure that your work as a sole trader pays off.
When creating a business plan, include sections such as your business vision (your goals), feasibility (how you will get your business off the ground), investors (where your business funds will come from), marketing strategies (any campaigns you may have to help your business reach its target audience), as well as time frames for your business to operate.
Do adequate market research
Be sure to research what it takes to succeed in your selected industry before starting a business. Confirm that your business idea is a unique and demanded one, before committing any resources to it. For example, although your business idea may be one of a kind, if there is no demand for it in the market, it may still end up being unsuccessful. Make sure to do your market research to ensure your business idea does not result in such failures.
It can be difficult to work independently, especially if it is your first time working as a sole trader. Hence, to help keep your head on straight, it is worthwhile to socialise with others in your industry and network with certain workplace groups for advice and mentorship. You can use platforms such as LinkedIn to find professionals to connect with, and seek such individuals for advice on your business challenges as a sole trader.
Don’t forget the paperwork
Before starting your own business and working as a sole trader, first know that there are a few important documents and registrations that you will need to sign and make. In Australia, you will need to register for a tax file number (TFN) before you can start working. In some cases, you may also need to file for an Australian business number (ABN) to register your business. Make sure to have these registered before starting work as a sole trader, as not doing so can result in penalties and troubles when it comes tax time.
Budget and account for taxes
Doing your own taxes can be one of the most tiresome tasks when it comes to working as a sole trader. Not only do you have to calculate what percentage of your income needs to be paid in tax (and which taxes need to be paid by both you and your business), you will also have to manually pay it to the ATO (now that you don’t have an employer to do it for you).
If you are finding it difficult to manage your own taxes and budget your business finances, you should consider investing in a financial advisor or business accountant. Such professionals who specialise in helping sole traders will know exactly what to do, and may even give you some more tips on becoming a successful sole trader along the way!
When it comes to important documents such as invoices, it may also be helpful to invest in an invoicing system, where your records are automatically stored and secured. An invoicing system may also help make your business operations more efficient, as they can automatically send invoices for you, and filter those that are received according to your preferences.
Elle is a Sydney-based writer passionate about all things in the business, marketing and technology industries.