According to the ASBFEO, 88.5 per cent of Australian businesses are sole traders or micro businesses. This means that the vast majority of ventures nationwide have less than five employees.
Despite this, businesses with few employees often face specific operational hurdles related to their small size. ISB heard from sole traders and micro businesses who expressed the unique challenges that they are facing. These challenges ranged from legislative hurdles to bureaucratic struggles to difficulties finding products and services designed for few employees.
Bureaucratic hurdles
Red tape is a problem that many small businesses face, but businesses with few or no employees struggle with their own specific and overlooked challenges.
Kirk Davis is one example. The small-business owner and accountant reached out to ISB to express a problem he was facing in his professional advancement.
Davis is seeking to become an ASIC Registered Company Auditor. In order to satisfy the regulator’s requirements for registration, he must supervise junior staff in addition to being mentored for 3,000 hours. But either the small-business owner nor his mentor have staff, making it impossible for Davis to become a Registered Auditor.
“I would say it’s to demonstrate leadership or manage teams,” Davis explained. “But a registered agent doesn’t need staff or teams, so it’s more of a barrier to entry.”
Davis believes his circumstances are not only discriminatory against small businesses. He also thinks his situation can provide insight into 50 per cent reduction in Registered Company Auditors in Australia, according to ASIC’s 2023 annual licensing report.
“There is a barrier to entry which restricts small business from licensing and opportunity,” said Davis. “Considering small business is the backbone of the Australia economy, this is a problem.”
Application-form nightmares
Davis is far from alone when it comes to facing bureaucratic hurdles as a sole trader. Small-business owner Hayley Birtles-Eades, who runs the Creative Agency Beinc, contacted ISB to express her recent difficulties applying for the Export Market Development Grant (EMDG).
“As a business with zero or few employees, I found the process was not designed with smaller operations in mind,” said Birtles-Eades. “The application forms, criteria, and supporting documentation requirements seemed tailored to larger companies with more resources and staff to handle the administrative workload.”
The EMDG is a grant for SMEs. Despite this, the application asks for reports and evidence that a sole trader would not usually need to prepare or maintain, said Birtles-Eades.
“There were also significant software errors that caused considerable challenges, alongside having to contact the Government to resolve these issues,” the entrepreneur added.
Austin Rulfs, Director of ZandA wealth, said he couldn’t apply for one grant because the application required detailed payroll reports.
“I ended up hiring a consultant to help tailor my application, which was an added cost I wouldn’t have had if the process were more inclusive,” said the small-business owner.
For both these business owners, a lack of consideration of sole traders is more than just a frustration; it directly impacts their business success and livelihoods.
“It would be great to hear if other small business traders or micro-businesses have faced similar challenges, especially when dealing with systems or processes that seem to be built for larger teams,” said Birtles-Eades.
Software is sized for big business
Another difficulty mentioned by several sole traders was finding business software that catered to businesses with few or no employees.
“Software often includes features I don’t need, or is difficult to use due to its complexity and size,” Birtles-Eades explained.
“Many project management and business tools have a minimum user requirement, often starting at five users,” said Ela Gold, Owner of Vitalis Health. “Even when offered on a per-person pricing model, the costs quickly add up. For a micro-business, paying $40–$100 per person per month for five to ten different software tools is simply not viable.”
Gold pointed out that software tools are often an essential tool for small-business owners. Crucially, they mean small ventures can streamline their operations and keep up with larger companies.
“Software is often for a team, and expensive,” said Belinda Robinson. Robinson is a sole trader and owns the online marketplace ReDance. “I know I am paying for subscriptions that would be really worthwhile if I had a team of four or five members.”
These stories highlight a common thread: many systems, processes, and services are designed with larger businesses in mind, presenting challenges that sole traders and micro businesses must navigate with their limited resources.
“Running lean has its advantages, but systems and bureaucracy sometimes make it harder than it needs to be,” said Rulfs.
“It would be incredibly beneficial if more tools and services were designed with sole traders and micro-businesses in mind,” added Gold.