Starting your own business is always an exciting venture, and one of the first decisions you must make is how you will structure it.
Many people choose to build a limited company. If you decide to build a business in this way, you will split ownership into an equal number of shares between partners. There are many advantages to choosing the structure of a limited company. Sharing responsibilities eases the stress of managing all aspects of the business by yourself, and sharing costs eases financial costs.
Yet there is another choice available, too: becoming a sole trader.
Should You Become a Sole Trader?
A sole trader is self-employed. Freelancers and consultants, for example, are sole traders.
If you choose this option, you will not have the safety net of a limited company when it comes to sharing responsibility and costs; but, on the other hand, you have complete creative and professional control of your business and keep all the profits. Additionally, it’s a quicker and easier way to becoming a self-employed individual.
2 Mistakes many sole traders don’t know they make
There are two common mistakes that sole traders mistake: not prioritizing sales and not taking productivity seriously.
1. Low Sales
Sales are an essential part of your business.
If you can get enough sales every month, your business will flourish. Conversely, if you can’t sell enough to cover your costs, then everything will fall apart.
Unfortunately, sales are time-consuming. You must generate leads, warm them up to your offer, and constantly nurture relationships with prospects and customers.
But the good news is you don’t have to do all this work yourself. A third party can help with sales automation. For instance, if your business is in the healthcare niche, an organization like Emerged, at emerged.com, can automate many of the tactics that an experienced salesperson would use if they had enough time, expertise, and resources.
2. Insufficient Productivity
In the beginning, many sole traders work from home since they don’t have any employees yet and can save money by not renting a commercial office space.
Unfortunately, working from the comfort of your own home makes it seem more like a hobby than a job.
Since no one is setting up your schedule for you, you can decide how many hours you want to spend in your home office, which is often just a spare bedroom or a corner of your bedroom or the kitchen table. And since no one is looking over your shoulder when you go to your office, you are free to do anything you like—work too little or too much, stay focused or allow yourself to get distracted, take long or short breaks.
Although you might appreciate the freedom of working from home in the beginning, it also endangers the success of your business. One danger is that you don’t do enough work to pay the bills. Another danger is the other extreme—you work too hard, exhaust yourself, and find it difficult to have enough energy to keep on top of all your projects.
The best way to avoid all these perils is to focus on productivity to increase your efficiency. Take being your own boss seriously. Create a reasonable and realistic schedule that you would expect an employee to follow, and be a gentle, firm, and fair boss when it comes to getting your work done each day.
Choose the Path Less Taken
Those who decide to start their own business struggle to manage a limited company because they lack business experience. But there’s also another option when you start your own business. You can become a sole trader. If you can manage this freedom responsibly, then this path, the path less taken, may prove the most rewarding.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.