Running On Empty: Survey Shows Sole Traders Feeling The Pinch

Natural disasters, inflation, economic conditions and the pandemic hangover are impacting New Zealand’s sole trader sector, with almost half saying they’d struggle to cope if an unplanned major business expense came up.

New Zealand has over 400,000 sole traders making up almost 20 per cent of the country’s workforce. They work across all industries, from trades to health, the creative sector, and beyond. A recent survey by Hnry - New Zealand’s largest accountancy service only for sole traders - reveals the Auckland floods, Cyclone Gabrielle, and inflation concerns are impacting the sector’s economic outlook.

Hnry runs the Sole Trader Pulse several times a year and canvasses the wider self-employed sector. The latest results show 43 per cent would struggle to cope with unplanned major expenses, 39 per cent were impacted by the Auckland floods and Cyclone Gabrielle, and a third would need financial assistance to survive an economic downturn.

Despite the challenges facing the sole trading sector, a companion study of Hnry customers run at the same time found 93 per cent would prefer to stay working for themselves.

Self-employed event planner Karrie-Ann Tuck says that while things are certainly more difficult, sole traders have more power in their hands to find ways to navigate the current conditions.

“I don’t see myself going back to being an employee even though times are tough right now because I have the flexibility to dial my workload up or down if I need to and to work in the most efficient way for my own needs,” she says.

“My set-up allows me to work a certain amount of hours over the course of a fortnight, but to do those hours when it’s most effective for me. It means I’m more productive and can fit around things in my life. Being able to create arrangements like this as a sole trader is hugely beneficial.”

Tuck says the recognition of sole traders as a distinctive and significant section of the workforce is overdue, and support from sector specialists such as Hnry is transformative.

“I know I’m getting the right tax relief; my expenses are claimed correctly, and all my financial admin and filing is being taken care of by people who know sole-trading better than anyone else, and I’m not being lumped in with small businesses that have different financial needs,” she says.

“If those self-employed people who are feeling the pinch and running on empty aren’t getting the best support available, specifically for them, they’re not alleviating those financial pressures as much as they could be.”

The Sole Trader Pulse Survey found less than half claim all the business expenses they’re entitled to, forgoing claiming up to $5,611 in expenses per year. Sole traders also report spending an average of around 6 hours a week and $246 per month to do all their financial admin, while those using Hnry spend 1.7 hours per week and $109 per month.

Hnry Chief Strategy Officer Karan Anand says while everyone is impacted by economic conditions, sole traders have an advantage in that they can improve their own working situation.

“It’s fantastic to see Kiwi resilience coming through with Hnry’s sole traders, who want to ride out the challenging times we’re navigating so they can keep doing what they’re passionate about.

“Doing basic things - like claiming all the right business expenses - could provide a buffer to help tackle unexpected expenses. Freeing up hours spent on financial admin each week gives you valuable time to invest back into your business, yourself or your family. Seeing that 93% of Hnry customers want to stay working for themselves shows the support we offer is working,” he says

The Sole Trader Pulse was conducted between 14 and 21 March 2023 and has a maximum error margin of +/-4.4%.

About Hnry:

Hnry provides an all-in-one digital accounting service for contractors, freelancers, sole traders and the self-employed, allowing them to focus on getting the job done and never having to think about tax and compliance again. Australasia’s fastest-growing accountancy service, Hnry, takes care of invoicing, expenses, payments, taxes, and filings in an affordable, pay-as-you-go model and provides expert, on-demand support.

Founded in Wellington in 2017, Hnry has experienced record growth and now helps self-employed people in New Zealand and Australia.

Hnry has continued to win awards and accolades, including ‘Emerging Service of the Year’ at the 2019 Wellington Gold Awards, being named a finalist for ‘Hi-Tech Service of the Year’ at the 2019 NZ Hi-Tech Awards, winning ‘Supporting Gold’ at the 2020 Wellington Gold Awards and People’s Choice (FinTech Organisation of the Year) Award at the 2022 Australian Finnies. It also won the RCSA Outstanding Supplier Award for 2022.

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