Taking the leap and becoming your own boss is a risky venture at the best of times, but the risks for sole traders is substantially higher than other types of businesses. It was found that sole traders are more likely to fail than any other kind of small business owners, with 20% of self-employed people abandoning their ventures each year.
It’s not hard to see way – when the cost and time pressures of establishing a business is a huge burden for just one person to carry. This may be due to the myriad of obstacles that face sole traders when they start out. Here, we’ve listed 10 of the most common challenges, accompanied by a handy tip from business experts on how to tackle each one.
Setting your own routine
As an employee, your work day would be fairly structured. You would have had set tasks to perform to reach clearly set out guidelines. As part of a working team, you could lean on others to ensure the workload was completed. Throw in an hour-long lunch and a sharp 5pm exist and there’s a high possibility that by the time you get home, work will be far from your mind. Running your own business runs on a completely different schedule. It laughs in the face of a regular work routine. As a sole trader, you’ll need to set your own workday schedule if you have any hope of being productive.
Jane Shelton, managing director of Marshall Place Associates and author of No Workplace Like Home, says:
“It’s always nice to have a steady routine in a large corporation, where the colleagues at hand to address the various competing demands of the clients and superiors. But when the only boss you have to blame is yourself, the rules of the game must change. A better way to respond to the time schedule and routine is to look at is as a question addressed by your business and marketing plans. You will find that the way that you go about the only real task of business – creating and corralling customers – relies on a systematic focus on staying within the decision-making cycle of your clients, customer and business communities of interest. If you have returned home with a good business plan, a sound support team and sufficient capital to respond to the needs, wants, hopes and expectations of your customer base, rises and falls in your cashflow will be a better indication of when to work.”
As the one and only boss, employee and opinion-giver of your business, you have a large amount of freedom to move your business in whatever direction you please. However, this can be potentially problematic if your outlandish or misguided ideas aren’t subjected to the routine checks and guidelines you would get in a well-populated workplace. While you might enjoy not having a jury of peers to challenge your ideas, it is an important part of any business. Your ideas need to be tested and analysed for flaws, and solo ventures often find this an issue and difficult to achieve due to their lack of peers.
Obtain an ‘accountability’ buddy. Cas McCullough, founder of home-based business network group, Support a Work at Home Person, says:
An accountability buddy is someone you can bounce ideas off, help you stick to your weekly goals, encourage you (and vice versa) and to collaborate with. A few months ago, a colleague and I decided to give this a try and the results have been amazing. When we started out, each week we’d email each other our goals for the week and talk via Skype twice a week to check in and see how we're doing. Now, we seem to talk on Skype almost every day. Skype has become a virtual coffee machine. We've both learned heaps and it really has helped us stay on task and we’ve started working together on some new projects.”
Whether you’re rushing between meetings, setting up computer systems in your home office or simply tackling the rep tape of getting the business up and running, there’s one thing a solo operator is in short supply of – time. Soloist often talk of being pulled in several directions at once, with no employees to delegate tasks to, and no way to relieve the pressure of doing it by themselves. One way to cut down on the time consuming tasks that clutter up your day is to outsources certain aspects such as admin and IT. But if you’re determined to take-on everything yourself, in order to successfully allow your business to grow, time management is critical.
Polly McGee, co-founder of Startup Tasmania, says that feeling overwhelmed is a normal part of being a soloist. She has put together five helpful tips on how to manage your time a little better.
“Overwhelm is a terrible feeling, and one that is easy to fall into when trying to juggle lots of competing priorities, feeling like everyone else is coping except you,” she says. Sometimes you need to play hooky from the stress, and remember that some time for play, along with the right action steps, can take the overwhelming feeling and reduce it to the manageable sum of its parts.”
Working alone is an easy trap for the self-employed to fall into. When you’re working long hours on your business, it can difficult to find the time to connect with other, even if you can aid growth by doing so. Networking with others is something that can take many different forms. Networking can be with a mentor for some formal advice, communicating with a potential business partner or simply a friend or member of your family who will sit down with you and listen as you unload you work day on them.
Jane Shelton says:
“First, make a list of your key customers so that you can ring them and ask how things are going. Ask who is buying from them, what else they are purchasing and what comments they have made about your product or service. Next, make contact with shops or customers who may be on your list to expand your business, go to see them and ask the same questions. Concentrate on the ways that your product or service fits in with other market opportunities. Third, find the small business networks in your neighbourhood, such as the local traders association or the chamber of commerce, and invest a little time in building business networks. Fourth, use social media such as Facebook and Twitter to let people know what you are doing and to exchange ideas and information to keep you at the front line of start-up activity. Finally, use StartupSmart and SmartCompany mentors as a source of support and challenge so that you stay in touch with their ways of adding value to your business and keep up with the latest in entrepreneurial endeavours.”
Are sales hitting all-time lows? Has your marketing campaign not taken off? Did you botch a job for a client and they are demanding a refund or, worse, threatening to tell everyone about it? If so, your motivation to keep going may be becoming less and less. The struggles of working for yourself can appear endless at times, making the security of low-risk jobs at business corporations very appealing. If you’re in a motivational slump, it can be hard to pick yourself up as it is likely that your attitude will have a domino effect on your business.
“If your motivation plummets, keep remembering what excites you about your business and the freedom it represents. Whether you’re converting a hobby into a money-making venture or capitalising on skills from your old job. Keep a clear vision and idea of the business to sustain you through any early difficulties. Ensure you get support from the rest of your family and they understand the difficulties you are facing so they can be part of your cheer squad, instead of thinking it’s an on-going holiday to have you at home. Making sure the family is supportive of the new business will be a major part of your success.”
In today’s society consumers are faced by a huge number of brands, each fighting for their attention. Buying decisions are made by referring to independent sources, word-of-mouth and more increasingly, the internet, which means a consumer's trust in a business can be more easily broken. This is highly problematic for small business ventures and, in particular, a sole trader. So how can one persuade the consumer to put their faith and money into a new business that has just one person running it? How does one appear authentic and trustworthy? How can you convince them that they should choose your business over the large, well-known rival?
“In the heat of a start-up, it is easy to forget to take time to closely decipher your brand’s values, and what sits at its heart. Let’s face it: who thinks about creating their authentic brand experience while in the midst of the frisson of start-up land? Being on message is, unscientifically, when you are ‘feeling’ right about what you are doing, and this is in direct relation to your interactions with your customers and clients. While expert and well-intentioned advice is frequently priceless, there is a great and liberating point when you decide to go your own way because it is just that: your own. You can’t get more authentic than that.”
If you are fresh from paid employment, there’s a high probability that you’ve never had to deal with the cut and stab of negotiations. Once you’re a sole trader, you’ll find that negotiating is part of your daily schedule. So how can you get the better price from your supplier? What services can you provide your client and at what price? Is there a better deal you can hammer out from an affiliate partner? Negotiating is not only strenuous but also time consuming. Even the sharpest business brains can find the deal-making process a drawn out one which can be frustrating.
“Negotiating is about both parties getting a deal that they perceive serves their best interest. It’s kind of like a value proposition – the outcome is the reason that people put their hand in their pocket and make a transaction. If you enter a negotiation from the perspective of what best serves the other party, then you can think about what it is you are offering them, that makes a compelling prospect for them to agree to your request.”
McGee’s top tips:
- Know what you want AND ask for it – don’t ask, don’t get style, forget the poker face and try the transparent honest broker face.
- Anticipate what the person you are negotiating with sees as the value proposition in the deal for them – meet their needs to have yours met.
- Know that this is not your only option – even if it seems like it, there will always be another deal or opportunity, be clear where your line in the sand is and don’t cross it.
- Go into the negotiation expecting and wanting the best from the conversation – this intention will keep your body language and mind in check.
- If the conversation appears to be moving into an adversarial space, reframe it and remember previous points – you can be firm and friendly, and so can they
Not only will becoming a sole trader have a huge impact on your life, it will also impact your family’s. This is because, although your partner and children may be used to you working regular hours at another workplace, they will now find you spending more time working from home and conducting meetings and other business activities at unusual hours. It can be hard for families to realize that business owners need time and space in which to run their business. Maintaining the work/life balance when the two entities (work and family) are mixed together can be a big challenge.
“Maintaining home-based relationships with your partner, family, friends and associates requires everyone on the team to know when you need assistance by setting out clear guidelines on how they can help out.”
She advises these three steps to creating the right boundaries:
- Have your kids make up a sign that says "OPEN FOR BUSINESS", another saying "CLOSED FOR FAMILY BUSINESS”. This enables everyone to understand when you are available to maintain each type of business rather than trying to let these two demands compete for your sanity.
- See if there are ways that your family can help you fill orders, take messages and understand the importance of customer service. This encourages understanding of the way in which your home office is a workplace rather than a home invasion.
- Consider which parts of your business life can be handed over to a professional manager or an accountant.
Keeping Clients Happy
Achieving business from clients over established larger rivals is one challenge, keeping them happy is another. In some instances, your client may not be aware that you’re a one-person operation whose infrastructure consists of a home-based office. Whether you’re a tradie or a web designer, you still need to maintain a professional façade in order for clients to maintain their faith in you. This can be a difficult problem if a customer calls round to your house to find you operating out of your spare room.
“Be aware of the client relationship you are managing. Some clients are simply more comfortable in their corporate world, working in an open-plan office with their colleagues, CBD location, meeting and boardrooms. But truth be told, trust in business is vital for on-going repeat business and long-term relationships with your clients, so I’d recommend being open and up-front about your working from home arrangements. If you are going to invite clients to your house, have a dedicated professional space with a meeting room type feel. Clean up the areas of the house your clients will walk through and use.”
Any smart solo operator will start their venture as small as possible- keeping overheads low and luxuries such as large office space and fancy equipment to a minimum. However, as a solo traders business grows, you will face a crossroads. Do you keeps living off the smell of an oily rag in case everything explodes, such as Dorry Kordahi who remained in his backyard shed for two years even though his business was booming, or do you expand? Knowing when to invest in your systems and infrastructure is an important step for sole traders to overcome. There may come a time when you need to leave the home office and even take on staff.
Tammy May, who started MyBudget from home, says:
“My advice to start-up business owners would be to ensure you can financially afford the additional cost of commercial rent. We had a budget per square metre for ourselves. Also, the size was based on how many offices or work stations we needed for our staff and predicted staff numbers. If you expect further growth, look for a building that has additional space that you can lease in the future. At MyBudget, we took more space within 12 months of being at our first office. When MyBudget made the step from home office to commercial office, we bought second-hand furniture, including our reception desk. Things don’t have to be brand new to start with, especially when you are on a tight budget and every cent is going back into the business. This will help to keep your capital costs down.”