Striking out as a sole trader can be incredibly exciting. The world is your oyster, so to speak – you’ve got free reign over which clients you choose to take on, you’re the master of your business’s destiny, and you don’t have a boss breathing down your neck asking you incessantly about deadlines. You manage your own fate, and that can be thrilling and liberating in equal measure.
Thing is, though, sometimes being a sole trader isn’t all that. When the money worries start to pile up, the client base is looking a little thin, and the market you chose to enter isn’t doing so good, you can start to panic a little. It might look for a while as though that dream you embarked on wasn’t such a great idea after all. Well, we’re here to tell you that there are plenty of ways to both avoid this and to tackle it if it does happen. Here are some ways you can avoid an urgent cash situation if you’re a sole trader.
Take on a guarantor loan
We’ve all been there; we might not have the most positive credit rating in the world, and we’re not able to secure a loan easily. Even if you’re the head of a successful sole trading empire or your very own business, this can still rear its ugly head at the worst possible moment. With that in mind, it might be a good idea to secure yourself a reliable guarantor. A guarantor could be anyone with a positive credit rating in your life, be they a family member, a close friend or anyone. Bear in mind that your guarantor is going to bear the brunt of your debt if you can’t pay, so it should be someone you trust, but it’s an excellent way to get hold of some cash in a pinch to help your sole trading career through a tight spot. Check out TrustTwo guarantor loans for a great place to get started.
Make and keep to a plan
Depending on the nature of your business, you should know when your high points and low points are going to come. If you make and sell handmade gifts and adornments, for example, you should know that your critical sales points will probably be around major holidays, while the summer might be a bit of a lull for you. With this in mind, you should prepare more for the moments where you’re going to be doing less business; if you’ve got excess funds during those months, then the sting of not doing quite as much business or pulling in quite as many clients won’t hurt as much. There are many ways to do this, and they’ll vary depending on the nature of your business, but there’s always a way to plan ahead.
Know your business inside and out
As a sole trader, you’re expected to keep track of every aspect of your business, from stock control to accounting to administration and everything in between. Nobody said striking out on your own was easy, right? You can save a surprising amount of money simply by knowing every aspect of your business inside-out. Take regular stock of your inventory, and don’t let yourself be caught out by orders you thought you could fulfil when you actually can’t. Complete tax self-assessment forms regularly and on time and you won’t be blindsided by an unexpected bill when you need it least. Keep a running tally of all the clients you take on and whether you’re owed money; it can sometimes be a point of contention for sole traders when clients don’t pay invoices, so make sure you’re collecting. All of these are small points, but they’ll add up and stop you from being surprised by forking out cash you shouldn’t have to fork out.
Think about your expenses
When you’re a sole trader, you need to make sure you look after every single penny. One of the best ways to do this is to tighten the purse strings when it comes to expenses, if you can. Let’s say you’re a peripatetic music teacher. If you’re running a car, perhaps it might be a good idea to see if you can switch to public transport. It might take longer to travel, and you’ll definitely be less comfortable, but the money you save in the process will be well worth the downgrade. If you’re a craftsperson, perhaps your materials are costing a little too much and you could source them from less costly places. If you’re a writer or blogger, you might be able to trade in your powerful laptop for something a little less flashy, making some money into the bargain. Look at where you can make money on your current assets and expenses and you’ll be onto a winner.
Though I’m not a mom, it’s helpful!