Tag: business advice

What is a sole trader?

Library of Congress 1911

There’s a discussion going on over at LinkedIn about what it is that makes people go freelance.  Reading the comments started me thinking about a more fundamental question.  Not “what’s so attractive about freelancing?”, but “what is a freelancer?” – or given the title of my blog, “what is  a sole trader?” And do they count as businesses?

 When is a business not a business?

This is not such a dumb question as it seems.  The most common search terms that land people at my blog are about sole trading – from the slightly baffling “Is Rupert Murdoch a sole trader?”, to the more general “What is a sole trader?”

The dictionary definition is helpful, but being a sole trader is a slippery thing to pin down. (By the way, I should say that I’m using the terms freelance and sole trader interchangeably to mean one person working for him or herself.  They aren’t necessarily the same thing.  And to be strictly accurate, I’m not a sole trader myself: I’m a Limited Company.  I just didn’t think Limited Company PR was a good title for a blog.  There’s some advice on the differences between sole trading and limited companies here)

Anyway, whatever you call me, I  am a business.  I’m registered at Companies House and with the VAT office.  I have an accountant to help me sort out my corporate tax.  My heart swells with pride when we entrepreneurs are hailed as the saviours of the British economy.  But I’m also not a business as its commonly understood: I don’t have premises (I work from clients’ offices or at home) I don’t have staff, I don’t sell a product other than the ideas I generate, so I don’t have production line, warehousing or distribution problems to solve; I don’t need much equipment (printer, laptop, phone, kettle).  I work with lots of small businesses who face all these issues, so I understand the problems.  I just know that I don’t share them.  And neither, I’d guess do many of the 3.6million other companies without staff – rather insultingly classed as “zero businesses” – which are estimated to be in operation at the moment.

Advice for Sole Traders

This seems like a small point, except when it comes to looking for ideas for developing my business.  Small business advice services are geared up to help the businesses with the staff and premises to worry about.  There isn’t much for me on the recently launched (and already much derided) StartupBritain though as my needs are pretty simple  I can work out most things for myself.   But, just in case Rupert Murdoch’s reading and is thinking of branching out as a sole trader, here’s some online advice (though I’m not a tax, insurance or legal expert, so I’d seriously advise him to check with a professional)

The sole trader’s dilemma

Being always in the market for advice that might net me a million, I read Robert Craven’s digest of what separates the successful business from the also-ran avidly.  I really liked the tip for business owners to  “work ON and not IN” the business.  It’s something  I’ve said myself to people I’ve worked with when they’re getting bogged down in day to day delivery when they should be  focusing on business strategy and development.

The problem is that for really small businesses – like sole traders – like me – the advice is hard to apply.  I have to do the day to day delivery else there’s nothing to bill people for.  And I have to do the business development, else there’s no need to worry about the day to day because there’s nothing to deliver. (And I have to do the wrangling with the accountant, sorting out the printer, paying the bills and (occasionally) patting myself on my own back too, but that’s another issue).

What happens (and I bet  I’m not alone in this) is that business development gets thought about in fits and starts, gets put on hold when it generates actual business and then fires up again in between contracts.  There must be a smoother,  less nerve-jangling and more productive way of doing things.  And yes I’ve heard the advice about consistently dedicating one day a week to business development no matter what; but try telling a client with a deadline that you can’t finish their report because you need to think about prospecting for new work and see how long you last.

Fortunately I’ve been doing this for long enough that I now have a large enough network of good clients to ensure that there’s a pretty constant stream of work coming my way, so this is less of an issue than it was in the beginning.  But even with years of experience to go on, it’s still a tricky balancing act.