The dependency of sole traders for the economy to survive seems to have become a lot more critical. Many smaller businesses are thriving thanks to the support and popularity of social media, showing an increase in the need to keep small businesses and sole traders up and running. Many sole traders have become responsible for employing small amounts of staff, which increases the flow of the economy. More employment also means that the UK becomes less accountable for the unemployed people still looking for jobs and can focus on more pressing matters. The status quo has been challenged by the innovative ideas that small businesses and sole traders bring to the job market, making them a vital part of the UK economy. Driving growth into job sectors previously only set up for more prominent corporations has opened the markets and made the contribution of sole traders and their businesses vital.
We asked Adam from Ignite SEO who works closely with sole traders, and understands the challenges that they can face. He said ” Although sole traders are the backbone of the economy accounting for 44% of economic activities in the UK, they face a lot of challenges and setbacks. I strongly advise that every person who decides to become a sole trader should go into it with proper planning.” To find out more about Ignite SEO, click here.
Changing the self-employment narrative
Many other businesses have been encouraged to rethink their plans and adapt to the change the economy has undergone, thanks to sole traders. The need for hefty bank loans has been taken out of the equation making more businesses work on self-sufficiency. There was a stigma attached to sole traders when it came to investments and making a little turn into a lot, but thanks to the booming online trade, the narrative has been changed. Sole traders have now been seen more and more as actual businesses than singular individuals making a good thing out of a bad situation. The idea was always that most sole traders are unemployed people who cannot get their ideas sold. Still, thanks again to online advertising, many are now being offered investment opportunities.
British enterprise is acknowledging confidence in businesses and paying more attention to at home or overseas economic opportunities. However, it is still flagged with red tape in certain areas, and the prohibitions that are still stuck in certain corners cannot be ignored. They are still preventing the expansion of small businesses, making it impossible in some areas for sole traders to move from home businesses without getting themselves into large amounts of debt.
The RSA did a study to determine the ability a small business has to survive. They estimated that approximately 55 per cent of small businesses don’t exceed five years from the opening date to the time they close. Without the added support that large companies receive in financial aid, small business owners have admitted that they struggle to exceed that number of years simply because they do not get any help. The government and banks don’t view small businesses as viable in specific ways, making financial backing impossible. They consider their investments in particular small businesses liabilities and refuse to fund unless the collateral matches the amount that they are giving out. Even with free limited company formation packages, sole traders struggle to cover the first five years if they do not have the capital. They also don’t have the human resources to back up their ideas.
- Sixty-three per cent of these small businesses admit that their lack of confidence causes them to struggle. They have a fear of failure based on their launch ability and sustainability after launching.
- Sixty-one per cent of sole traders admitted that they could not carry through on their original ideas. Once it has taken off, they do not have the financial means to turn the rest of their ideas into profit without defaulting on other financial commitments.
The UK economy needs sole traders to cover the areas of employment that large corporations cannot. Large companies seek out employees with vast qualifications while offering smaller salaries. Sole traders create opportunities for ideas to become a reality with little to no capital, making room for anyone with a good idea and a means to basic survival able to sustain themselves. Sole traders are a requirement for the Uk’s economy, and they should be encouraged to grow.