Self-employed tradies are experiencing an extensive uptick despite other industries continuing to face hardships. San Williams unravels the difference between employment styles and why more should consider going solo.

The ‘Great Australian Dream’, whether owning a home or being financially independent, the idea of one day having a better life and a sense of success is what gets most Australians out of bed every morning. And in the 21st century, this hasn’t been more definitive than becoming your own self-made boss.

Of course, the idea of grasping one’s destiny in hand and taking the plunge into starting a business was pushed to the wayside for many with the onset of COVID-19, leaving a long-lasting dent in industries and sectors, including building and construction.

But it’s not all doom and gloom, in fact, there might be no better time to become a sole trader than right now.

Despite a slow start to 2024 and various economic pressures, like the rising cost of living, tradies have remained resilient.

There is a welcoming trend for self-employed tradies in Q2 2024 with an overall boost in areas including finance, working life and optimism, according to the latest Hnry Sole Trader Pulse, a nationwide survey of self-employed people in Australia. Hnry is a specialist accountancy company serving sole traders in both Australia and New Zealand.

“Inflation and rising interest rates have inevitably thrown a spanner in the works for independent tradies in recent years. However, our research from the past quarter tells us that hope is not just on the horizon, it’s here to stay. Just over half of self-employed tradies (51%) estimated a higher turnover or gross income in June, which is an impressive 13% uptick for those saying the same the previous quarter,” Hnry managing director in Australia Karan Anand says.

“This in part speaks to the resilient nature of self-employed Australians, who have the skills, mindset and resolve needed to weather the storm of a tough economy.”

Residing comfortably above freelance photography, design, marketing consulting and other creative industries, the latest in building and construction is a trend that Karan says is outpacing the general population.

“Building houses, roads and maintaining the assets we own will always be important for the Australian economy, and independent tradespeople are the backbone of keeping this afloat. Now that the dust has settled a bit and there seems to be more stability, tradies are seeing work pick back up and a brighter future ahead,” Karan Anand adds.

Having greater flexibility in working hours was reported to be the top reason why tradies are transitioning to becoming their own bosses. Close behind, with a 5% difference, was a sense of personal achievement.

Epitomising these figures with a 40-year career, roofer Olsen Joseph registered as a sole trader under Shelby Roofing, highlights the perks of being self-employed and why the industry continues to grow favourably in a post-pandemic world.

“Being self-employed and setting your own schedule means that, even when you’re planning your work week, you can factor in your life more and work around this,” Olsen says.

“For me personally, the big advantages to being a sole trader would have to be the autonomy and the access to tax relief in a lot of areas that salaried employees don’t get, like when purchasing a work vehicle or tools of the trade.”

Beginning his career at 15 years old, Olsen worked on construction sites during school breaks, which laid a solid foundation for his future in the trade. His sole trading career took off in 1997, subcontracting as a site manager at Patron Roofing in New Zealand before relocating to Australia in 2015.

Today, Olsen remains pragmatic about economic prospects and expresses confidence in his business’s stability, supported by a solid reputation for high-quality work and a strong network.

Reflecting on his journey, Olsen advises aspiring sole traders to prioritise financial literacy and seek ways to streamline operations.

“Industry standards aren’t being enforced properly now and we’re seeing a clear reduction in work quality, so I think focusing on producing high-quality work and building a strong reputation will pay off for those new to the industry. And don’t try to do your books and admin, it’s not worth the stress,” he says.

While tradies are encouraged to go out, get the work done and get paid, Olsen says those new to self-employment should leave the admin to the professionals. Tax and financial admin alone burn up to nine hours a week on average for independent tradies, reveals Hnry.

There are various advantages to being a sole trader but also pitfalls and risks tradies should be vigilant of as they navigate the sole trader rite of passage. Thankfully, we live in a digital age and one of the biggest distinctions today is the help of apps and platforms, meaning common challenges like finding work or creating and maintaining working relationships are more convenient and attainable.

The ProjectPay app, founded by Louise Stewart, aims to tackle the builder the payment and cashflow challenges for tradies, which have been made worse by the insolvency crisis.

“A recent report shows that Australia has had the biggest increase in builder insolvencies, more than any other country in the world. It’s quite shocking,” Louise says.

Working in global technology companies, Louise sold her first tech start-up to a Canadian pharmaceutical giant with plans on retiring until she witnessed the impacts of payment delays and insolvencies.

“My husband had run a subcontracting business for many years, he’d suffered financial losses from builder collapse and didn’t get paid at all for that work that he’d done. I thought: ‘Something’s not working right here, something’s not going the way that it should be going’.”

Bringing industry experience, including leadership roles with Subcontractors WA and the Australian Subcontractors Association (ASA), where she worked with governments on new laws to ensure payments even when builders collapse. Louise frustrated by the lack of action went to work developing a trusted construction payment platform for easy claims management and providing fast and guaranteed payments. Like a buy now pay later for construction contractors that gets them paid as soon as the work is done, not later.

ProjectPay does this by automating payments to subcontractors and head contractors, and providing the cash, ensuring they receive their payments promptly as work is completed. Homeowners pay later according to the agreed terms in their building contracts. The model effectively mitigates the risks associated with slow or non-payment, with ProjectPay taking on all the slow and no payment risks, providing a secure financial solution without charging interest.

“It’s about the builder being open-minded, to try these new digital solutions that provide them with the vital cash flow they need to run a viable business,” she says.

In addition to new-age solutions, Louise says there are fundamental tips tradies can keep in mind when conducting business, including ensuring your client’s ability to pay for the project before entering contracts (ProjectPay can do this for them) and have proper processes in place to automate accounts receivables and payables.

A proper process should also be in place to manage accounts receivables and payables (this sometimes requires a full-time employee), and to avoid business failure, ensure access to adequate working capital to make timely payments to subcontractors, even if the client has not paid yet (telling your subs you will pay them when you get paid is outlawed). ProjectPay takes all the pain away from managing this.

Furthermore, tradies should ensure they’re only using payments from clients to make payments to suppliers and subcontractors on their projects, not for unrelated projects.

Fundamental to business success is knowing how much subcontractors have been paid on projects and how much is remaining on their work contracts compared to pay received by the client and what is still left to be paid. If you are in the negative here it means you’re losing money on projects.

Lastly, it pays to have a proper variation process in place (if you’re not on top of your variations, you could be left to foot the bill and suffer losses) as well as to avoid using money intended to pay subcontractors like its personal money to spend as seen fit as incoming laws, known as statutory trusts, will attract criminal penalties if you spend money that is not yours to spend.

Though, history has provided its share of economic adversity, be it COVID-19, the Global Financial Crisis, the Black Plague, independent tradies have found a way to survive and thrive.

Being a boss and livin’ the dream can be a fulfilling venture. It may not always be a walk in the park, but thanks to support available today, with accounting agencies and digital apps taking care of time-consuming tasks and payment risk, much of the headache can be taken out, helping tradies focus on the job at hand.