Once you’re self-employed or own a business, you’re regarded as a sole trader. A sole trader business is easy to start and requires minimal paperwork. If you’re looking forward to becoming a successful sole trader, read along to learn more.
Begin By Researching
Becoming a sole trader without performing thorough research is like fishing without bait. The business arena is brutal, and stepping into it without adequate knowledge can lead to immediate bankruptcy.
With no offense, your great business idea might not be that great. Neither is it original. That said, there’s a high chance the services you’re planning to offer might not be welcomed with open hands. These services might also be in demand but encounter great competition.
While it might be heartbreaking to learn that your ideal services are already being offered by multiple businesses or aren’t in high demand, it’s better to understand this before you venture into business. This is because you’ll continue researching a better business idea instead of throwing your hard-earned money down the drain.
That said, get into the market, research, and don’t disregard negative findings. To help you start on the right foot during your research, consider the following:
- Ask family and friends what they think about your idea. At this point, provide an example of what you want to do for better understanding. Also, ask if they have heard of such a business and, if yes, if it will benefit you. Appreciate their answers, regardless of how they make you feel since the findings will help you decide better.
- Research similar businesses and understand the challenges and benefits they’re experiencing. This can be done online or in person. Also, study how they operate, determine the mistakes you can avoid, and how you can improve the idea. It will also help to figure out why customers should choose you instead of them. If you don’t have a clear answer to this, you have a long way to go.
- Determine your target market and if the numbers are enough to make your business succeed. Think about how your customers will reach you and how you’ll communicate with them.
Why Should You Research?
Once you’ve started your research adventure, you’ll learn new things. Things that you never thought of and couldn’t have learned. The more you dig deeper into your research, the more you understand if you have a killer business idea or not. Make the required adjustments or develop a new idea, depending on your findings. The point isn’t just starting a business; it’s about providing services and products that can make you a successful business person.
Develop A Business Plan
It wouldn’t be wise to start as a sole trader without a business plan. You need to have a plan stipulating the idea behind your business, the challenges you want to solve, the goals you have and how to reach them, how you’ll fund the business, and how to make a profit.
In short, your business plan should include the following:
- An introduction
- Target market
- Time frame and goals
- Necessary equipment
- Marketing strategy
Regarding a business plan, it’s important to note that it doesn’t only help you to begin your business on the right foot and paints a clear illusion of where you’re headed, but it’ll also help you through most stages of your business easily.
Choose The Best Workplace
Most people dream of becoming sole traders to reap the benefits that come with it, for example, having control over working hours and place. However, they fail to understand that becoming a sole trader can make one lonely. For example, if you work from home, you’ll probably spend the whole day alone, resulting in loneliness and a lack of motivation. Working from home can also increase the chances of distraction, negatively affecting your productivity.
Nevertheless, if you work from home, ensure you plan work days. Groom yourself as if going to the office and reserve a working space. While you don’t have to work from nine to five, ensure your working hours are set aside and followed. You can also consider working in a co-working space to increase productivity.
Register Your Business
Freelancers are likely to be the sole traders not required to register their businesses. Any business beyond that should be registered to avoid being on the wrong side of the law.
When registering your business, you must complete a trade license and submit it to the correct office. The license will bear your legal form, bank account, personal data, and business content details.
It’s important to note that registering a business is done at a fee. Nevertheless, the fee isn’t fixed but varies depending on the trade office you’re working with. Instead of visiting a trade office personally, you can check if they allow business people to register online.
Register Your Business With Tax Office
After registering your business, the trade office will send the information to the tax office. Afterward, the tax office will send the tax registration form, which you’ll fill out with realistic information about your expected turnover. Then the tax office will determine the tax you should pay in your business founding year.
If you experience challenges providing this information, it’s advisable to consult a tax advisor. While you may want to skip the extra charges, providing inaccurate tax information might be more expensive.
Open A Business Bank Account
Opening a business account is vital. Though you might receive and make payments from a personal account, having a separate dedicated business account will prevent you from mixing business and personal savings while making it easy to determine the business’s performance.
Take Out Insurance
It isn’t a good idea to run an uncovered business. If not for your peace of mind, you should take out insurance for legal reasons. Remember, accidents, mistakes, disputes, and government inquiries do happen. Your business insurance might be the only thing you need in such an event.
Go For Payment If Necessary
When starting as a sole trader, it’s vital to understand that you might need to chase payments from time to time. Some clients might pay late, and worse, others don’t. At this point, you might get frustrated and opt to close down the business. But you shouldn’t. All you need to do is chase the payment when you feel it should have already been done. Failure to which the business might collapse.
Starting as a sole trader has benefits and downsides. For instance, being your boss means having the final words about when to work and how to do it. On the other side, you have to be responsible for everything regarding the business, even the aspects you have limited knowledge about. However, this doesn’t mean that you shouldn’t pursue your dream. With adequate information about the do’s and don’ts of the business you want to start and the help of professionals such as tax and business advisors, you begin your business and succeed.