Xero’s new Tipping Point report uncovers what motivates Aussies to become self-employed, the hurdles to start own business and the qualities of a successful sole trader
Xero’s Tipping Point report is based on a survey of more than 800 existing sole traders with no employees and 200 aspiring business owners. The research uncovered the motivations for starting a business and the challenges they face along the way.
Australians have long felt an innate desire to carve their own path as ‘solopreneurs’. More than two in five (43%) sole traders have always planned to be their own boss, and close to one in four (23%) have maintained this from a childhood dream.
But starting a small business is not simply about coming up with a big idea. The research revealed the tipping point to business ownership is a combination of becoming convinced of the opportunity, the lure of financial independence, and dissatisfaction with their current work situation.
Trent Innes, Managing Director Australia and Asia, Xero said. “Australia is a nation of self-starters, with sole trader ventures accounting for the majority of our homegrown businesses. Xero’s Tipping Point report reveals that the Aussies who make this leap are driven by the freedom and independence that comes with working for yourself. While many of us may like to lay claim to a great business idea at one time or another, this research shows it takes a particular person and special set of circumstances to truly turn that idea into reality.”
Be your own boss
Among the biggest motivators to start your own business is the desire to gain freedom and control. Making their own decisions (47%) and working for themselves (46%) were top of the list as reasons for sole traders to branch out. Passion and creativity follow closely behind, with just under a third (32%) choosing to follow their passion and wanting creative freedom (31%).
Seeking the freedom that comes with being their own boss. Many solopreneurs were drawn into career independence due to feeling stuck in a ‘rut’ in their previous jobs or careers. Four in five (79%) sole traders felt negatively towards their last job or career before they went out on their own, with millennials aged between 30 and 39 the most likely to fall in this category. The most common feelings were unhappiness with a former manager (34%), frustrations with lack of control (32%), feeling like they were going nowhere (31%) and feeling uninspired and unmotivated (30%).
Tackling the hurdles of going solo
Along with the joys of working for yourself, there are also challenges. Unsurprisingly, finance is one of the main obstacles’ sole traders face in the initial planning phase. Budgeting for unknown costs was a key challenge for more than a third (39%) of sole traders. Other challenges included staying organised and on track (55%), driving customer acquisitions (53%), and knowing where to get started (38%).
Overcoming perceived mental obstacles – particularly the confidence to go it alone – were reported as genuine road bumps on the sole trader journey. More than two in five (44%) respondents felt they had to generate self-belief and reduce self-doubt. One in three (34%) were concerned about overcoming fear, worry and anxiety.
Luckily, there is moral support to be found amongst your nearest and dearest when you first decide to go it alone. Sole traders leaning on family members as their go-to (37%), followed by a romantic partner (29%) and a colleague/friend (27%). Beyond those in their personal circles, one in five (19%) turn to an accountant for advice when starting out.
Start own business: Top attributes
The report found that being optimistic, having a strong work ethic and being adaptable are vital characteristics for success. For those looking to start out, two in five (40%) view reliance on effective digital tools as critically important. Despite this, less than 38% of existing sole traders have a website, and among those that do, less than half (48%) can make sales transactions through their website.
While solopreneurs may be slow to adopt technology. The research found that almost two-thirds (64%) who used cloud accounting software during the pandemic believed it played a crucial role in supporting their business.
COVID-19 a catalyst to start own business
The pandemic has not dimmed the entrepreneurial spirit of aspiring sole traders, with many feeling optimistic about their short-term business prospects. In fact, two in five (41%) say the past year’s events have increased their desire to start a business.
“Australians have shown remarkable resilience in the face of the pandemic, and nowhere is this more evident than in the micro and small business sector. It’s this inherent resilience that will drive many aspiring business owners to get their idea off the ground in 2021 and gain the autonomy they’ve longed for – sometimes from as early as childhood,” Innes concluded.
Traits perceived by sole traders as critical to success
|Personal habits||Organisational habits|
|Stay positive and take things in their stride (69%)|
Adhere to a strong work ethic (65%)
Keep adaptable and open to change (62%)
Attention to self-care – mental and physical health (57%)
|Meticulous record-keeping and knowing their numbers (60%)|
Maintain a decluttered and organised operation (52%)
Always plan ahead and have contingencies (51%)
Create procedures and processes (51%)
|Time management habits||Business management habits|
|Ability to separate work and family life (51%)|
Daily goal setting (47%)
Focus on time management and task prioritisation (46%)
Establish routines (44%)
|Network regularly (48%)|
Seek advice from experts/ mentors and able to ask for help when needed (45%)
Invest back in the business (40%)
Lead by doing (38%)
Small Business Answers guide to starting a small business can be found here