Five businesses soloists can start on the cheap: SmartSolo
Five businesses soloists can start on the cheap
By Oliver Milman
Getting start-up funding can be tough when you’re a solo operator. Investors are often reluctant to stump up the cash.
From their point of view, putting their money on the success or failure of a single person is too risky. With no talented team behind you, there’s a worry about whether the business has the skills it needs to prosper, let alone scale quickly to provide the booming growth rates that guarantee a tidy return on investment.
This tough funding environment leads most sole traders to dipping into their savings when starting up, or putting their house on the line to try to get a bank to release some much-needed cash.
It’s imperative, therefore, that soloists keep start-up costs to a minimum. The pain of an overly-indulgent spending spree will be squarely on your shoulders should things go wrong.
But which kinds of businesses provide the best chance of keeping costs down?
We’ve picked out five areas that are set for growth and, just as importantly, are affordable for soloists to start-up in.
To see each sector, click on the tabs below.
1. Handmade and vintage goods
With the Australian eCommerce market’s value set to expand to $11.5 billion this year – with further, albeit slowing, growth set to come – there are plenty of online niches where solo operators can set up shop.
After all, all you need is a computer, transaction account, website and some stock – or a service – and you’re away.
But some sectors are doing better than others, which makes the handmade and vintage goods market so attractive for many solo entrepreneurs.
A growing consumer desire for all things retro and authentic lends itself to a low-cost business model that sees cheaply-acquired clothing or handmade products sold on at a premium, usually online.
You don’t even need to spend thousands on web development – you can sell your products via sites such as eBay or Etsy. Recent figures show that the top 2,000 sellers on eBay.com.au had an annual turnover starting at more than $120,000, with the top seller drawing in more than $12.6 million.
There are variations to the model, such as Andable, which sells handmade products with a guaranteed 10% going to good causes, and In.cube8er, a growing Melbourne-based business that displays and sells the work of Australian artists, much like a mini department store.
Isy Galey, founder of In.cube8er, says: “Craft is the new black. Handmade objects over the past three or four years have become massive. People like the authenticity involved in a handmade product.”
The most obvious journey for various professions – accountants, lawyers, IT experts, etc – into entrepreneurship is to become a contractor.
There is nothing new to the concept of becoming a hired gun but several favourable changes have arguably made it easier and cheaper than before to become a consultant.
The falling cost of technology has enabled self-employed people to market and brand themselves to a broader audience but at a lower cost. Some operate solely online, allowing them to service clients from across Australia from home.
There are concerns over the way the Australian Tax Office treats some soloists and sham contracting is something that is being aggressively targeted, but the overheads for most self-employed people can be kept to a minimum.
If you’re meeting clients face to face, invest in business cards and maybe even branded stationery – this will help build up your profile and drum up new business.
Income varies depending on your specialty. A consultant can expect to earn at least $50,000, while an IT consultant takes home as much $140,000.
3. App developer
There is a stampede among large businesses that want their own app, even if it’s little more than a marketing sop to counteract a public perception of dullness.
This has led to plenty of opportunities for solo developers to build a handy portfolio of clients, with minimal outlay other than time.
“Most people in this industry already have a computer and sometimes finding a desk is the only thing you need,” says a spokesman for the Australian Web Industry Association.
“You can quite easily work from home initially, which helps with costs. Most small business software can be bought with monthly license fees, so just set aside that money per month out of your estimated income.”
Assuming an hourly rate of $100, you can quickly recover the modest initial investment if all other aspects of your business – expertise, customer acquisition and retention – are firing. According to technology site TechCrunch, the average app development costs $6,453.
If you’re developing an app as the basis for a business of your own, the predicted growth of web-based apps, which can be applied to any different platform, is set to lower costs further.
The other option – designing individual apps for the differing Apple and Android platforms – involves a serious investment in time and money.
4. Personal trainer
Paying a personal trainer to get you in shape isn’t just something done as a twentysomething – increasingly, a wide age range of Australians are using this kind of service.
Huge demographic trends – namely our ageing, increasingly overweight population – look set to fuel the fitness boom in the years to come, which is good news for fitness-focused soloists.
Figures released by the Department of Education earlier this year showed that in the past five years, the number of fitness instructors in Australia has grown 36.7%, compared to 13.1% for all other occupations.
There are now 22,888 fitness instructors operating in Australia, and that number is likely to increase by 252% to an additional 57,592 instructors by 2020.
Other than the cost of training and insurance, overheads are limited. A TAFE-issued Certificate IV costs around $1,600.
Most personal fitness trainers work out of a health club or their clients’ homes, so investment in the equipment is usually an early outgoing.
In terms of marketing yourself, most trainers agree word-of-mouth is the most effective – and cheapest – way of raising awareness. However, many personal fitness trainers also set up a website to extend their reach.
A full-time personal trainer can expect to earn around $50,000 in their first year of operation.
5. Bed and breakfast
Australia’s tourism sector may have taken a battering in recent years due to the GFC and, more latterly, the strength of the Australian dollar.
However, the stats show that the accommodation industry is beginning to recover. A recent IBISWorld report said that the $4 billion industry’s revenue decreased by an annualised 0.3% in the five years to 2011-12, but is now set to benefit from “steady growth in both domestic and international tourism, stronger economic growth and increased traveller numbers.”
So what is the cheapest way for a sole trader to tap into this upturn? You’d find it hard to run a less capital-intensive business than a bed and breakfast.
B&B operators need to comply with a multitude of laws and licensing requirements, including planning, food safety, liquor licensing, insurance, safety, employment, hire of locums and anti-discrimination.
As a rule of thumb, you will need to install a good quality fire alarm system and may need to make changes to the kitchen/s to comply with food hygiene requirements.
You may also need to factor in the cost of any new furniture, TVs, coffee-making facilities, internet access and so on.
However, beyond those costs, a solo-run operation shouldn’t break the bank and, if you’ve got the right location and build a decent reputation online, could prove a nice earner.