One of the more compelling outcomes from the COVID 19 crisis that has enveloped Australia, is the significant growth in the number of people registering ABN’s. The rise of the sole trader in Australia is driven by the uncertainty of the job marketplace and increased unemployment, specifically in the middle to senior executive ranks. ABN registrations have increased by just under a thousand a week in Qld alone, a lift of 10% in previous years. So you have your ABN, What do I need to know as a sole trader?
Registering an ABN is the first step to becoming self-employed or operating a business. I have seen experienced corporate executives struggle in the world of small business. In larger corporates, resources are more plentiful than what you will find in any small business, with small business owners wearing multiple hats and fulfilling multiple roles.
The statistics are telling us this surge is happening in three key areas of business.
- Consulting Services
- Trade Services
- Online Trading eg shares, affiliate, marketing program.
While they aren’t the only businesses being started by the sole trader, it is abundantly clear that people are utilizing their skills in the development of their businesses. Technical skills are one thing, business skills are another. So let’s break down some of the key business skills if you want to build success
Developing an entrepreneurial mindset is paramount to your success. You may have waged and won battles in the corporate world, and while they seemed appropriate at the time, consider the added impetus of building a business with your finances as the ultimate risk
Political wins to aid the corporate climb fades in comparison to the world of enthusiasm, energy, and structured growth plans. Collaboration and networking take over from office politics and career success. Discipline and focus are needed to shift our mindset from the corporate to the entrepreneur.
Uncovering your why and your purpose is a recommended step in developing the foundations for your business. Articulating your purpose provides strength in those challenging times you are destined to come up against. Your purpose becomes a compass for your path and a source of inspiration during the peaks and the troughs of your sole trader journey.
You have your ABN, so why do you need a Business Name. As a sole trader, your ABN is linked to your personal name. If you wish to trade in your own name that is cool. But most businesses will create a business name to trade under. This business name must be registered. Formerly we were allowed to operate a “trading name” but as of 28th May 2012 the Australian Business Register ceased registering trading names. A transitionary process is in place until the 31st October 2023 after which all trading names must be registered business names.
Understanding the risk in business is paramount. The take up of government support was reduced because of a lack of awareness around the compliance required for small businesses, especially taxation. One business I knew, had not provided a tax return for three years, making them ineligible for government support. Distressing as it was not to receive Job Keeper, the fines imposed by the tax office for noncompliance, and the accumulated taxes from three financial years, made it a painful and heavy blow for this small business. They are still working with their accountant to work out a solution.
Not understanding your taxation obligations is a major risk, it isn’t the only risk. Businesses need insurances, licenses, and registrations. They need to comply with environmental regulations, as well as other government regulations. Who can you know can help you in these areas?
The major risk for a sole trader is the personal risk as to the legal entity. If something goes materially wrong, your personal assets are exposed. You are the legal entity. Sole traders are the simplest form of business entity, but the riskiest. Be aware, and have a risk plan.
While building a business incorporates more steps than mentioned in this article, it does provide some insight into what to really watch for. For a better understanding of the steps needed check out this infographic based on our Fuelling Your Business course at The Coach Curl Academy.
Creating your marketing message continues to be one of the challenges faced by sole traders. How will you create an emotional connection with your ideal customers? Where will you find them? How do you get your message in front of them? These questions give you an indication of the marketing strategy needed to get you in play.
Congratulations if you have created your new business and registered your ABN and planning to operate as a sole trader. I wish you every success, and if I can be of any help please feel free to contact me on 0417 197 149.