New Zealand’s independent sentiment index for sole traders has revealed improved financial performance for sole traders over the past six months, despite a decline in overall economic conditions, with sole traders urging for greater ‘ease of doing business’ over additional government support or funding.
The Hnry Sole Trader Pulse aims to provide a regular index for independent earners, who make up 19.7 percent of New Zealand’s working population, including freelancers, contractors, consultants, sole traders and the self-employed.
The March report shows a decline in economic conditions from the effects of Omicron and increased living costs over the last quarter, with a 20% decrease in sole traders describing the health of the economy as ‘good’ or ‘very good’ and urging for an ease of restrictions and unnecessary red tape for businesses.
Sentiments from sole traders sharing their frustrations included:
“Ease restrictions so that tourism can resume.” (Hospitality, West Coast).
“Just cut the red tape. What used to be 20-pages for a building consent is now over 100-pages!” (Architect, Taranaki).
“Reduce taxes. Petrol is expensive. Wages are expensive. Vehicles are expensive.” (Carpenter, Waikato).
Despite this, 31% described the last quarter as financially ‘good’ or ‘very good’. Tradies reported the highest improvement in financial performance, with 51% rating business currently to be ‘good’ or ‘very good’, an increase from six months ago. Sole traders continue to experience high levels of satisfaction in running their own business, with 55% describing their level of personal satisfaction in running their business as ‘good’ or ‘very good’, up from 49% six months ago.
The independent poll, commissioned by Hnry and undertaken by Resolve Strategic Between 28 Feb and 6 March, interviewed 500 sole traders. There are over 540,000 sole traders in New Zealand, over 35% of whom have more than one job.
The findings from the Hnry Sole Trader Pulse Report showed:
Sole Traders are more concerned about current economic conditions compared with 6 months ago, with the number of sole traders that believe the health of the economy right now is either ‘good ‘ or ‘very good’ having been reduced by over 20%.
Sole Traders are urging the Government to increase the ease of doing business, rather than offering additional support or extra funding.
Sole Traders are seeing a higher level of personal satisfaction than 6 months ago, with over 55% reporting ‘good’ or ‘very good’ levels, reflecting the confidence in the growing self-employed economy in NZ, despite the economic conditions.
Those Sole Traders using traditional accountants solely, or alongside small enterprise accounting software, are spending on average $11,000 per year on tax and financial administration – which is over 7 times more expensive than a more modern alternative.
Sole Traders are spending almost one working day per week (over 5 hours) on managing their tax and financial admin using those systems and services, resulting in an approximate $3.2 billion in lost productivity for NZ sole traders every year.
James Fuller, Co-founder and CEO of Hnry, says while the data shows the economic impact has had a significant impact on sole traders, the sector remains strong.
“Every year it is estimated that over 5 million people worldwide join the self-employed sector, and it is showing no signs of slowing down. Hnry has experienced 500% growth collectively across New Zealand and Australia over the past 18 months, and is proud to be supporting New Zealanders to not only earn independently, but also make this sector more widely understood.”
Fuller says the $3.2 billion lost in productivity for NZ sole traders every year could be significantly reduced through further understanding of this unique and growing sector, as well as wider adoption of more modern, efficient and cost-effective solutions.
“Traditionally the financial services industry has been focused on small enterprises and larger organisations, and hasn’t catered for the needs of the self-employed at all, and we can see that with the unnecessary amount of time and money being spent by some sole traders when it comes to their financial admin” Fuller says.
“Independent earners are renowned for having the skill set to overcome challenges and interestingly, the pandemic and wavering economic conditions has not dimmed the motivations for individuals to pursue earning income independently over salaried work. This highlights the freedom, work-life balance, and opportunities that working independently provides, and underpins the need for modern, digital accountancy services like Hnry.”
Media Release 14 March 2022.