Economic headwinds chill Australia’s sole traders Productivity losses from time spent on tax and admin costing economy $28 billion
Thursday, 30 June 2022 – Rocketing inflation and higher interest rates, which are leading to rising prices including sky high fuel costs, have begun to stunt the growth prospects of the nation’s 1.5 million sole traders. A nationwide survey of self-employed people in Australia, the Hnry Sole Trader Pulse – the only such index to measure the sentiment of independent earners – has found 72% of sole traders say they are paying more for goods and services than they were three months ago. Sixty-one per cent say high fuel prices are having a direct impact on their business. As a consequence, most sole traders (68%) are actively seeking to cut business costs and are avoiding taking on any more debt (82%). In spite of the fraught economic outlook, morale among independent earners remains comparatively resilient. More than half report a rise in income over the past three months, whereas fewer than a quarter say it has declined compared to the previous quarter. Commenting on the survey results, Karan Anand, Hnry Australia Managing Director, said: “Winter is coming for Australia’s sole traders. The negative conditions that are immediately recognisable to everyday households in terms of highest cost of living and pressure on business are really starting to make themselves felt. “What is remarkable, however, the latest set of results of the Hnry Sole Trader Pulse is the clear willingness of this key driver of the economic engine room of Australia – that is the 1.5 million sole traders in the country – to brace for rocky conditions while still maintaining a positive outlook. “This speaks to one of the consistent reasons we hear why most sole traders choose to go into business for themselves: the ability to choose their own future, working conditions and lifestyle. Some 63% of respondents say they made a conscious decision to become sole traders. They are self-starters. That’s admirable.” $28 Billion in Lost Productivity
To compound matters, sole traders are losing the opportunity to become more productive and make even more money by having to spend the equivalent of one day a week managing their financial and tax affairs. According to the Hnry Sole Trader Pulse, sole traders are spending an average of seven hours a week attending to their finances – above and beyond their dealings with accountants, bookkeepers, and tax agents. For tradies the figure is 8 hours a week; for health workers it is 10 hours a week. Mr Anand said: “It’s astonishing. Sole traders are wasting some 12 million hours a week dealing with admin. That doesn’t just represent lost income, it’s a major loss to the economy – the equivalent of $20 billion a year. “Australia can ill afford for its sole traders to enter what promises to be an uncertain period without appropriate support to help the sector unlock its full potential. Targeted cost of living relief; a well-thought out and executed solution to supply chain issues that have been hampering fledgling businesses from succeeding; and ongoing support for measures to address the mental health of gig workers would go a long way towards helping the sector. “It’s also why Hnry exists: to give back those hours spent on admin and tax to sole traders so they can get on with doing what they do best – following their passion, building their business, and driving economic growth.” The Hnry Sole Trader Pulse is Australia’s only regular, comprehensive regular snapshot of self-employed people in Australia, such as tradies, freelancers, and consultants. Some 1.5 million Australians classify their primary occupation as “self-employed”, with total estimated earnings of around $90 billion a year. The number of sole traders is currently growing at a rate of 50,000 per annum. The latest Hnry Sole Trader Pulse was conducted by Resolve Strategic between 13-17 June. The research is carried out on behalf of the award-winning fintech Hnry, Australasia’s largest and fastest-growing digital accountancy service catering expressly to sole traders. Hnry recently won the People’s Choice Award at the 2022 FinTech Australia Finnie Awards.
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