2.3m sole traders shun growth in favour of independence and creativity
More than two-thirds (70%) of sole traders in the UK enjoy being small and don’t aspire to grow in future, with 62% saying the benefits of being a sole trader far outweigh those of being a larger business.
Xero said that many are choosing a solo career path due to the financial and creative independence it offers. The research, based on responses from 1,000 UK sole traders, found the top motivations for going solo are being your own boss (54%), having a career that suits your lifestyle (40%) and being able to create something of your own (31%).
When asked about the benefits of being a sole trader, the most popular responses were flexible working (63%), independence (49%), job satisfaction (29%), and creative freedom (25%). Half believe it’s more ethical to stay small, whilst 51% feel more supported by customers because of their size.
Donna Torres, Director of small business at Xero said: “The UK’s sole trader community is over three million strong but will grow in the next few years. The pandemic has changed many people’s priorities and encouraged them to take the leap into something new. But it should be done with eyes wide open to the challenges of staying small, particularly as the COVID pandemic and Brexit continue to impact businesses.”
Going solo comes with challenges
Despite wanting to stay small, the sector faces growing challenges. The biggest issues sole traders face are:
- Lack of employee benefits (58%)
- Financial stability (57%)
- Long hours (27%)
- Handling tax returns (25%)
- Managing cash flow (20%)
Only 8% feel they’ve been fully supported by the government during the pandemic, whilst 57% said that support has been more focussed towards SMEs and larger businesses, leaving them behind. The pandemic has taken its toll on their wellbeing too. 52% of sole traders say the past year has had a significant impact on their wellbeing, half have felt lonely during this time, and 46% felt unsupported.
Leon A. Hamilton, owner of Hamilton Dessert Co. said: “Being a sole trader allows me to be flexible and more agile. Staying small gives me full control of how I turn my passion into a business. Being able to stamp your own personality onto your product is something my customers really appreciate. Growing up my father used to say ‘people don’t buy products, they buy people’ and I see now that he was right.”
Xiaojuan Yuan, Founder of MAI DIM SUM said: “I set up Mai Dim Sum to provide high quality dim sum, with a focus on quality ingredients and sustainability. Being a sole-trader has allowed me to stay in control of the business’s direction and ensure profits and overambitious growth did not cloud our values. It’s been tough starting up during COVID-19, but my advice to others is be ready to throw everything at it and always step back to check you’re still on course.”
Adapting to a post-Covid world
Digital tools have been key in helping sole traders adapt and survive during the pandemic. A third (33%) said COVID pushed them to use new e-commerce tools, and 39% said it has led them to explore new markets for their business.
Looking to the future, 31% will no longer pay for a permanent office after the pandemic and 80% will only have an ‘at home’ office space. One in five are even considering basing themselves from abroad.
Torres continued: “Sole traders and the wider business community need all the support they can get as the UK enters the next phase of recovery. We’re working with and calling on the government to ensure businesses of all sizes have access to the right support and tools to bounce back.”