Australia is a nation of thriving small businesses. If you have a burning desire to start your own, registering as a sole trader is an exciting and rewarding process. Although working as a sole trader can be perceived as a challenging battle of doing everything on your own, the benefits of control, freedom and seeking value for dollar often outweigh the sometimes-lonely struggle.
The statistics speak for themselves, with more than 61% of small businesses booming as sole proprietors and continuing to show a great survival rate. But unless you set your sole trading venture up properly from the start, it can be a frustrating experience of repeatedly treading water. Getting it right from the outset will save you headaches and money. Here’s what you should be implementing:
Register Your Business Name, before it Gets Taken!
If you’re using your own personal name, you won’t need to register it. For business names, however, check to see whether your desired name is available and register it through ASIC Connect. It’s important to note that registering a business name won’t guarantee exclusiveness. It doesn’t give you ownership or legal protection of that name, it simply shows people you’re operating your business under that name.
Depending on the nature of your sole trader business, you may want to consider trademarking it to gain exclusive rights. This prevents other people from using the name, or anything similar, and gives you full control over your business branding and logo. You’ll also need to register for an ABN (compulsory) and GST (only if you’re likely to make a gross profit of $75,000+ in the first year).
Tip: If you’re opting for only the business name registration for now, it’s still a smart move to crosscheck it with anything trademarked. You can search here to ensure it doesn’t conflict with any trademarked businesses who may file a lawsuit.
Check Permits/Licensing Requirements
Some industries will require relevant permits and licenses to operate. The trades industry, for example, requires certain certifications to legally and safely perform work. Failing to obtain the right permits and licenses for the job can prove a costly mistake, particularly if legal fees are incurred. It can also be extremely detrimental to your business if word gets out, as this could potentially destroy your reputation.
Invest in Insurance
As a sole trader, you’ll be responsible for all the liabilities of the business. To keep your business protected, you’ll want to take out insurance. Different industries will require different insurance covers – always check which insurance types apply to your trade.
If you’re unable to work due to an injury or illness, the loss of income is huge for a sole trader. Not to mention, if your products, services or professional advice cause harm to someone else or their property, the legal costs can be crippling to a small business. Some examples of insurance you may want to invest in include:
- General Public Liability Insurance: Even home-based businesses will benefit from this, which protects against damages.
- Personal Accident & Sickness Insurance: Covers a portion of your income (up to 85%) if you’re unable to work due to a serious injury or illness caused by an accident. Excludes pre-existing conditions.
- Income Protection Insurance: Insures against loss of earnings through illness or injury (up to 75%).
- Professional Indemnity Insurance: Protection for businesses that provide advice, should any legal action occur as a result of such advice.
- Trade Insurance: Ensures anyone working in the trades industry is fully protected. Tool insurance (to protect against theft) will also be necessary for this type of work.
Create a Solid Marketing and Branding Strategy
It doesn’t matter how fantastic your business idea is, you’ll need a good marketing and branding strategy to generate work and position it in front of your target audience. Consider your corporate identity and create an online content marketing plan to help drive its success. After you’ve registered your domain name, make sure you have a killer website which is optimized for SEO (Search Engine Optimisation) so that potential customers can find you online via the major search engines – and have a positive onsite user experience.
Grab an Invoicing App
Invoicing on the go encourages promptness. Get into the habit of invoicing clients as soon as the work is completed with a smartphone app, so you get paid that little bit quicker. Look for one that allows you to manage expenses and track cash flow too. Xero is a great example, or try Reckon One, or Invoice by Wave.
As a sole trading business owner, it’s easy to get caught up in daily firefighting. As your venture grows, however, it’s crucial to set aside time for business development. Always be on the lookout for new ways to expand and find new clients. Invest time in networking events and surround yourself with knowledgeable experts to fuel the thirst for new opportunities that may arise.