7 Reasons Why Sole Traders Are Successful in Business
Sole traders are individuals who run their own businesses without any partners or shareholders. They are also known as sole proprietors or self-employed. There are many advantages of being a sole trader, such as having full control over your business, keeping all the profits, and having lower tax rates. In this article, we will explore seven reasons why sole traders are successful in business and how you can become one.
1. Sole traders have more flexibility and freedom
As a sole trader, you can decide when and where to work, what products or services to offer, and how to manage your finances. You don’t have to follow any rules or regulations imposed by a company or a boss. You can also change your business model or strategy quickly and easily if you need to adapt to the market conditions or customer demands.
Sole traders have lower start-up and operating costs. Starting a business as a sole trader is relatively simple and inexpensive. You don’t need to register a company name, pay any fees, or hire any staff. You can use your own name or a trading name for your business and operate from your home or a small office. You also don’t have to pay any corporate taxes, only income tax and national insurance contributions.
Sole traders have more personal satisfaction and motivation. Running your own business can be very rewarding and fulfilling. You can pursue your passion, express your creativity, and achieve your goals. You can also enjoy the recognition and appreciation from your customers and peers. You are more likely to be motivated and committed to your business because you are directly responsible for its success or failure.
Sole traders have more customer loyalty and trust. As a sole trader, you can build strong relationships with your customers and provide them with personalized and high-quality service. You can communicate with them directly, understand their needs and preferences, and respond to their feedback and complaints. You can also offer them discounts, incentives, or loyalty programs to encourage repeat purchases and referrals. Customers are more likely to trust and support a sole trader who is honest, reliable, and friendly.
Sole traders have more opportunities for growth and innovation. As a sole trader, you can take advantage of new opportunities and trends in the market and create innovative products or services that meet the customer needs. You can also expand your business by entering new markets, collaborating with other sole traders or businesses, or outsourcing some tasks to freelancers or contractors. You can also use online platforms, such as social media, websites, or e-commerce sites, to promote your business and reach more customers.
Sole traders have more control over their income and expenses. As a sole trader, you can decide how much to charge for your products or services, how to spend your money, and how to save for the future. You can also deduct some of your business expenses from your taxable income, such as travel costs, equipment costs, or home office costs. You can also adjust your income and expenses according to your personal and business goals.
Sole traders have more learning and development opportunities. As a sole trader, you can learn new skills and knowledge that can help you improve your business performance and competitiveness. You can also attend courses, workshops, seminars, or webinars that are relevant to your industry or niche. You can also network with other sole traders or professionals who can offer you advice, support, or collaboration.
Being a sole trader is not easy, but it can be very rewarding and successful if you have the right mindset, skills, and strategies. If you are interested in becoming a sole trader, you should do some research on the market demand, the legal requirements, the potential risks, and the available resources for your business idea. You should also plan your business goals, budget, marketing strategy, and contingency plan. You should also seek professional advice from an accountant, a lawyer, or a business mentor if you need any help.
What is a sole trader business?
A sole trader business is a type of enterprise owned and run by one person, who has no legal distinction between themselves and the business entity. A sole trader does not necessarily work alone and may employ other people, but they are solely responsible for all profits, losses, debts and liabilities of the business. A sole trader may use a trade name or business name other than their legal name, but they have to register it with the appropriate authorities.
How is the global demand for sole trader businesses?
The global demand for sole trader businesses varies depending on the industry, location, market conditions and customer preferences. Some advantages of sole trader businesses are that they are easy to set up and dissolve, have low fees and taxes, have full control and flexibility over the business decisions, and can respond quickly to changes in the environment. Some disadvantages are that they have unlimited liability, face high competition, have limited access to finance and resources, have difficulty in expanding and diversifying, and may suffer from lack of continuity if the owner dies or retires.
According to a report by the World Bank, the number of registered sole proprietorships in 190 economies increased by 7.6% from 2015 to 2019, reaching 41.8 million. The report also found that the ease of doing business for sole proprietorships improved in 115 economies over the same period. The report attributed these trends to the reforms implemented by governments to simplify business registration procedures, reduce costs and fees, increase online services and platforms, and enhance legal protections and incentives for entrepreneurs.
However, the report also noted that the COVID-19 pandemic had a severe impact on sole proprietorships, especially in sectors such as tourism, hospitality, retail, entertainment and personal services. The report estimated that the global GDP contracted by 4.3% in 2020, and that about 100 million people fell into extreme poverty due to the pandemic. The report recommended that governments provide financial support, tax relief, social protection and regulatory flexibility to help sole proprietorships survive and recover from the crisis. [4]
References:
https://www.ssm.com.my/sites/default/files/guidelines/OWNER%20RESPONSIBILITY_new.pdf
http://gst.customs.gov.my/en/SiteAssets/doc/Registering%20for%20GST%20Amend%201.pdf
https://en.wikipedia.org/wiki/Sole_proprietorship
https://www.investopedia.com/terms/s/soleproprietorship.asp
https://www.bbc.co.uk/bitesize/guides/zpx7gdm/revision/3
https://www.worldbank.org/en/news/press-release/2020/10/20/covid-19-crisis-puts-many-businesses-at-risk-especially-in-low-income-countries
https://www.gov.uk/set-up-sole-trader
https://www.startupdonut.co.uk/start-up-business-ideas/types-of-business/starting-a-business-as-a-sole-trader
https://www.simplybusiness.co.uk/knowledge/articles/2019/01/advantages-and-disadvantages-of-being-a-sole-trader/
