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Fintech Hnry launches Sole Trader Pulse revealing the state of play for the nation’s soloists

- October 14, 2021 3 MIN READ
sole trader

New research by local fintech, Hnry has revealed sole traders were amongst the worst financially impacted by the coronavirus crisis, yet optimism remains high in the sector.

However, this sense of optimism varies state by state. With lockdown behind them NSW sole traders are feeling good about their prospects but Victorians, less so. Also, sole traders who were financially impacted by COVID are more likely to classify their mental health as “poor” or “very poor”.

Independent earners with an ABN, such as tradies, freelancers, and consultants, comprise the fastest-growing yet most underappreciated sector of the nation’s economy.

The majority of small businesses are sole traders

Australians who classify their primary occupation as “self-employed” make up 1.5 million of the nation’s 2 million-plus small businesses with total estimated earnings of around $90 billion a year. Interestingly as many larger and micro-businesses closed their doors for good during the pandemic, sole trader numbers have swelled. The number of sole traders grew by 110,000 since the start of the pandemic alone.

Pandemic impacts sole trader income

Hnry’s research found soloists finances were particularly hard hit by the pandemic with four in ten (41 per cent) saying their business is worse off since the pandemic was declared in March 2020. However, one bright spot is that one in eight have reported an increase in revenue. Sole traders in non-lockdown states are particularly positive about the prospects for business and overall economy over the coming months. Victorian sole traders, and those in rural and regional Australia, are the most pessimistic.

Government support failed soloists

Despite the government offering a number of support schemes to assist small businesses to remain afloat, many soloists didn’t qualify for these payments. Only 35 per cent of sole traders received government support during the pandemic. The majority of those who were lucky enough to receive support said it was adequate (61 per cent). Although 19 per cent said it failed to meet their needs. Around half of soloists surveyed (46 per cent) attempted to access a new loan or credit in the last 12 months, but half of that number (21 per cent) had difficulty doing so. This was most noticeable in NSW, where more than half of the sole traders trying to access credit said they found it hard.

Mental health remains an issue

Like the majority of business owners, soloists wear a lot of hats and juggle a lot of elements when running their business. While being their own boss provided some benefits the stresses of COVID were apparent. Those who were negatively financially impacted by COVID were 8x more likely to classify their mental health as “poor” or “very poor”. Sole traders in Victoria reported the highest rates of mental health concerns, with one in four rating their mental health as “poor” or “very poor”.

Karan Anand, Head of Hnry Australia, said the results are a compelling snapshot of the confidence and outlook of Australia’s sole traders as the nation looks to a post-pandemic recovery.

“The results are clear. Australia’s sole traders have been battered by the COVID-19 pandemic and rolling lockdowns, with almost half taking a hit to their business, and only one in eight having fared better than before. Additionally, access to credit or loans for sole traders over the last year proved difficult for around half of those who pursued it,” Anand said.

“But sole traders are renowned for having the skillset and the mettle to overcome challenges in their everyday operations, and these results show that there are healthy green shoots of optimism in their outlook.

“Interestingly, the pandemic has largely not dimmed the motivations for pursuing the sole trader life – freedom, work/life balance, self-starting and self-reliance. These are the underpinning reasons we are seeing a sunnier outlook, despite government support tapering away,” Anand said.

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