Sole traders have had an especially difficult few years as inflation surges. We’ve got three tips to help lighten the load for your sole trader business.
As inflation began surging in early 2022, sole traders were initially able to offset the effects by changing their clients more. But their ability to keep up was limited: as of March this year, we appear to have hit a pricing ceiling. Only 28% of sole traders have recently raised their rates, as opposed to the 56% who did last June.
Recent research from Hnry shows that many sole traders say they’re paying more for suppliers and services, saving less, or eating into their savings. Half of all sole traders believe they’ve worked for less than minimum wage in their last year. Here are three practical suggestions to help ease the strain of inflation on your sole trader business.
How to cope with inflation as a sole trader(external link) — Hnry
Research from October 2022 shows that sole traders are only spending around half of their working week (55%) on actual work.
The rest gets taken up with things like:
Freeing up some of this time could mean taking on more projects, or working bigger contracts, resulting in a boost to your bottom line.
To get some of this time back, start by identifying the boring, repetitive tasks that you’d happily outsource.
For example, is chasing invoices taking up a lot of your time? Are you struggling to find new clients? At the risk of sounding like an infomercial, are taxes getting you down?
Good news – there’ll be a way to either streamline, automate, or use AI to take that task off your plate completely.
Once you know which tasks you no longer want to deal with, you can start finding the right solution for your needs.
That could mean anything from creating a new booking form on your website, to building an automatic sales pipeline in Excel, to working with an accounting software company that automatically chases clients who are late paying their invoices (politely, of course).
Digital Boost also has a range of courses that can help you streamline work and improve your productivity.
Booking forms(external link) — Jotform
How to build a sales pipeline(external link) — Hnry
New Zealand Business Number is a unique identifier available to every business in New Zealand. Sole traders can register for one.
If you’re a sole trader, you can use your NZBN to:
Applying for an NZBN(external link) — New Zealand Business Number
Automating now can mean you save time later. If you can free up just 2 extra hours a week, you’ll save 104 hours per year – that’s the equivalent of creating an extra 2 and half working weeks a year. What could you do with that extra time?
Claiming business expenses can save you thousands of dollars each year. If you’re not claiming everything you’re entitled to, that’s essentially savings left on the table. Less than half of all sole traders in Aotearoa say they claim all the tax deductions they’re eligible for. The average reported value of unclaimed business expenses was $5,611.
As a general rule, you can claim a tax deduction for a business expense as long as the expense relates directly to:
This, however, is just a starting point. You should also know that:
So, how do you know that you’re claiming everything you should claim?
The IRD website and our resources are good starting points for learning about expenses
Types of business expenses(external link) — Inland Revenue
Beyond that, it’s aways a good idea to talk through your expenses with an accountant (or a registered tax agent, like Hnry). They might spot something you’ve missed.
You are your business. Your business is you. If your mental health begins slipping, your business will suffer. From this perspective, taking care of your mental health isn’t just essential, it’s good business sense.
It’s tempting to work harder and longer during challenging economic times, but this is often not a good long-term strategy. If you have to put in extra hours, do your best to create time and space elsewhere to recharge.
We’ve got practical tools and tips from experts that can help you create a mentally healthy approach to business and life.
Being a sole trader can be hard, especially when you’re just starting out. Don’t be afraid to lean on your networks, and ask for help if you need it.
Despite all the challenges, being a sole trader is intensely rewarding. The autonomy, freedom, satisfaction, balance – there are so many reasons why more and more people decide to start their own business.
If you feel a bit overwhelmed, anxious or just want to talk, free services are available 24 hours a day, 7 days a week:
Helplines(external link) – Mental Health Foundation
The Mental Health Foundation’s website has a range of tips and worksheets to reduce stress. Some help you spot the signs of stress, others help you identify what you need to stay well.
Minimising and managing workplace stress(external link) – Mental Health Foundation
Ways to wellbeing(external link) – Mental Health Foundation