As per the Australian Bureau of Statistics’ Counts of Australian Businesses 2016 report, more than one-third of Australian businesses employ less than five staff members. Most of them are sole traders.
Being a sole trader has its benefits, but it is undeniable that sole traders face several challenges in running the business. The exit rate of sole traders is quite high compared to multi-propriety firms. The reason is that, for a self-employed person, managing everything on their own and surviving the competitive environment with fewer resources is tough. But the good news is, YOU CAN MANAGE IT!
Let us know the top 7 ways to beat the sole trader challenges.
1. Remain Consistent And Focussed
The secret to making it big lies in – “Being Consistent and having an Undeterred Focus.” If you keep up the patience and do not let the demotivation cringe in, it will become easier to manage things. It is also important to remain disciplined in your work for maximum efficiency and high business productivity.
It is also essential to take breaks to refresh your mind frequently. After a few hours of rigorous work, the brain needs to relax. If you think that taking some time off is wasting time, then you are mistaken. Rather, it makes you more efficient. So, try indulging in small recreational activities like social media browsing, gaming, watching a short funny video, etc., to allow yourself more power.
2. Build Client Management Skills
One of the trickiest parts for a sole trader is to manage different clientele. Managing the clients can be challenging because some of them are too demanding while some are vague. Some business owners have to deal with many clients at a time, while some may have just a few. To sum up, you must not deter from maintaining a good relationship with clients so that they keep giving you work.
If your business growth largely depends on having maximum clients, you will have to develop a certain skill-set relating to managing clients:
1. Frequent Touch:
Do not let the client forget you. This is important to keep getting the projects over and over again. There are ways to ensure that your name remains at the top of their mind, such as sending frequent emails, a simple call, sending company newsletters, occasion-based wishes, etc.
The client should continue feeling positive about your company. Keep the clients’ morale high to get sufficient work from them. Prevent missing their project deadlines, improve quality of work, maintain transparency, and more.
3. Negotiation Skills:
One of the key aspects of Client management is negotiation skills. Listen to what your clients want and then put your proposal. Be firm yet polite. These skills will help you become a successful sole trader.
3. Effective Time Management
Another big challenge for the sole traders – how to manage time?
First, jot down all the business goals. Your goals need to be SMART:
Prioritize the tasks based on business goals. Make a to-do list and set a time for every task. It helps you stay focused and never miss discrete activities.
It also makes sense to make a weekly calendar. Start your work by looking at the calendar every morning to know how you have planned your day.
For example, you can start the day on a lighter note by going through your emails and replying to them. The task that needs more time and effort can be done in the time slot when you have the maximum ability to concentrate.
After a few weeks, analyze your time management by referring to your to-do lists.
4. Invest In Business Software
Many sole traders succumb to the pressure of multiple tasks – proprietor of the business, maintaining accounts, sales, marketing, hiring staff, etc. The best solution is to invest in comprehensive business software.
The software provides you with a dashboard with a real-time view of the outstanding bills, unfinished tasks, expected payments this week, lined-up expenditure, and a lot more.
- Many small businesses hold debts. The accounting system can make you aware of the outstanding invoices and help you improve the cash flow. Seek the help of a Sole trader accountant.
- Similarly, payroll software will automate salaries for the employees and vendors.
- The inventory management software will help you know which stock is getting over and which one is lying unused for a long time so that you can take timely action.
5. Try Economy Of Scale.
One of the biggest challenges is that the sole traders have to incur more per capita costs compared to the larger organizations. The latter can leverage economies of scale while the sole traders cannot.
As a sole trader, you need to negotiate with suppliers to cut costs to beat this challenge. It would be best if you made them understand that in a few years, when the company will grow, then you will not change your suppliers. Rather they will have more work, and hence, it is lucrative for them to support you now.
Also, check consortium to find whether you can go ahead with manufacturing economies of scale.
6. Create A Separate Business Account
Some sole traders think that all the money earned is theirs, so why maintain a separate business account! But you need to realize that you must create a business account rather than using your personal account for business transactions. A business bank account must see only your business earnings and expenditures. This enables you to manage your money more effectively. It also prevents the temptation to spend it all.
To know more, speak to the business advisor Perth.
Build a website for your small business. Advertising online is quicker, more effective, and a lesser hassle. Some platforms may help you.
Social media advertising has become a hit. As per the reports, the average Facebook user clicks about 2.5 ads per day. Spend some time on this and devise an effective online marketing strategy. It needs fewer people and impacts the sole trader business positively.
Being the Sole trader is certainly testing. But with the help of the tips mentioned above, you can manage everything efficiently and win the challenges!