The pandemic may have created an unpredictable future for small business, but it has not dampened the fighting spirit of Australian entrepreneurs.
The past 12 months have witnessed a surge of 55,900 sole traders emerging over the 2019/20 financial year to comprise 1.5 million of the 2.4 million businesses in Australia, according to Xero’s Boss Insights report.
COVID-19 has been a harrowing journey for some sectors, but it has fuelled growth and opportunity in others. Based largely on ABS data with the assistance of renowned demographer Bernard Salt, the Boss Insights report identified five quite diverse key areas of growth for sole traders ranging from “couriers to accountants, solicitors to IT and healthcare workers”.
Here are the top five industries and future opportunities open to sole traders based on the report.
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1. Transport, postal and warehousing
A revolving door of travel restrictions across the country opened up opportunities for delivery drivers for food, groceries and other couriers as well as rideshare services such as Uber.
As the popularity of online shopping boomed amid lockdowns, demand for postal and delivery services grew simultaneously, putting strain on Australia Post’s pre-existing delivery model and opening new opportunities for smaller operators.
Australia’s freight and logistics market has an estimated annual revenue of over $100 billion. Industry growth has been fuelled by the pandemic through the demand for home deliveries.
A net increase of 11,631 sole traders in this space was the result, making it the fastest growth industry of 2020. Melbourne hosted the largest increase, largely facilitated by its extended periods of restrictions.
2. Professional, scientific and technical services
Xero’s report reveals an additional 35,000 extra businesses including solicitors, accountants and IT experts. A boom in demand for IT services was fuelled by Australians making the ‘great migration’ to remote working and for bricks and mortar firms to trade online.
Interestingly, the locations for new businesses are increasingly suburban fringes and regional areas, as video conferencing, electronic form signing and cloud-based accounting platforms allow them to be managed from anywhere.
According to an IbisWorld industry report, the professional services industry is projected to expand over the next five years as business conditions improve. An expected bump in business confidence, particularly in the private non-residential construction, private research and development, and public sectors will boost demand for professional services.
A continued reliance on having a digital presence, a bump in outsourcing for IT, demand for bookkeeping and legal work is highly likely to keep up the momentum.
Click here to read the full Boss Insights report.
The pandemic and ensuing lockdowns coupled with a labour shortage cooled the construction industry’s growth over the past two years, yet the Federal Government’s HomeBuilder incentive program for new builds and the lockdown-inspired DIY craze among home-bound Australians looking to renovate has combatted this effect.
The forecast for the industry is positive according to the Australian Industry Skills Committee. The National Industry Insights Report reveals construction generates over $360 billion in revenue, and around 9% of Australia’s GDP, and has a projected annual growth rate of 2.4% in the next five years.
It also reveals the majority of businesses in this industry are either sole traders or those employing less than 20 people.
Melbourne plumber Michael Rawnsley used the lockdowns to carefully plan the start of his own venture, MGR Plumbing. He set up an Instagram account, connected with other tradies and now has months worth of work booked ahead and has hired two others. He credits the power of word of mouth for his success, and continued referrals.
His advice to those looking to start a new venture?
“The client work you choose to do shapes your business and your brand, so find the customers and projects that align with what it is that you want for your business.”
4. Healthcare and social assistance
Opportunities in health services have expanded over the past five years and will continue to do so, given Australia’s ageing population, rising private health insurance coverage and demand for both general practice and specialist healthcare providers and dental workers.
Aged and disability care workers, welfare support workers are tipped to experience the fastest growth. As a result of the pandemic, mental health is front and centre as a national issue, with the government extending its existing care plans for subsidised psychology sessions, and free telehealth sessions.
The Boss Insights report reveals 6,005 new sole traders joined this industry.
Psychologist and sole trader Christiane Jaeger started her practice in Mildura, Victoria after working with a community health organisation for 12 years. She specialises in alcohol and drug abuse, general wellbeing and issues pressing to regional residents.
Jaeger says many health professionals are striking out on their own, and she credits great relationships with local health staff and GPs for her referrals.
“Former colleagues and even new counselling staff at the community health organisation refer when they believe that a client’s presentation is beyond their competency,” she says.
5. Financial and insurance services
The financial and insurance services industry has taken a hit from the pandemic, but opportunities are there for business owners who are prepared to “prioritise purpose and transform their operations to be more agile, digital and customer centric”, according to research from Ernst & Young.
As the pandemic continues to affect livelihoods, Australians are now increasingly concerned about their financial security and looking for ways to economise.
This has opened up opportunities for finance professionals to become sole traders.
Larni Spilsbury-Vatselia is the director of Wipe It Clean, a Gold Coast-based credit repair business that helps remove bad credit ratings to allow people to be more financially unrestricted.
“I started my company after realising the industry didn’t give consumers the results they deserved,” she says.
Spilsbury-Vatselia says government policy and circumstance has offered greater opportunities in this field, and it’s likely to continue.
“I work alongside the financial industry, and I believe the reason for this industry staying afloat is the fact that the government has given consumers access to their super, first home grants, no stamp duty and 2% deposits for single parents home loans,” she says.
“My business has boomed with all the lending marketing — consumers are still borrowing money and the house market has increased.”
It’s clear that Australian entrepreneurs are finding a way to make lemonade from lemons, so to speak, as opportunities in these five industries and many more continue to grow.
And, according to the Xero Boss Insights report, as economic conditions continue to improve, it’s expected sole traders will become an important driver in Australia’s economic recovery as they are “likely to scale up, employ workers and move into the microbusiness category”.
Xero is a cloud-based accounting software platform for small businesses with over 2.7 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners.