Let’s be frank – the last few years have been tough for anyone trying to make a buck. Rising living costs, high inflation, and global uncertainty (hello fuel crisis) have made it increasingly difficult to get by, especially for those going it alone.
Sole traders are exactly that – sole – meaning they shoulder all the responsibility for keeping their business afloat with fewer financial buffers. While the perks of self-employment are plentiful, in times like these sole traders are on the fast track to burning out, often working unsustainable hours and taking few (if any) breaks.
Sound familiar? Rest assured you’re not alone, but it’s best to nip it in the bud (where possible) before it becomes all-consuming. Let’s walk through some of the warning signs and strategies to help keep the dreaded burnout at bay.
Burnout - an occupational phenomenon
Before we talk strategy, let’s get to grips with what we mean by “burnout”. What does it entail, and what are the signs you’re heading in that direction?
The word “burnout” first appeared in academia in 1969 when Harold B Bradley used the term in a criminology paper to describe the fatigued staff at a centre for treating young adult offenders.
But the concept has been around since way back, in various forms, like Berufskrankheiten in 1834 (adverse work-related effects on mental and physical health), ‘neurasthenia’ in 1869 (exhaustion of the nervous system), Erschöpfungsdepression in 1957 (exhaustion-depression) – even “Americanitis”.
Today, the World Health Organisation defines burnout as an “occupational phenomenon” resulting from chronic workplace stress that has not been successfully managed.
The key is to break burnout down into its two components: addressing the source of chronic stress, and learning to successfully manage stress that is unavoidable.
What does burnout look like?
Burnout is not a one-size-fits-all problem, but there are some core warning signs to look out for:
- Exhaustion and fatigue: Feeling drained of all energy and waking up tired, leaving you unable to cope emotionally with day-to-day problems
- Alienation: Feeling increasingly distanced, cynical, or negative about your work (or just plain numb)
- Reduced performance: Burnout can make it hard to concentrate, make decisions, or be creative
While we tend to focus on mental load when it comes to work, sometimes your body sounds the alarm long before your mind catches up. This might come in the form of recurring headaches, loss of appetite, digestive issues, persistent illness, even rashes or muscle pain.
It’s important to acknowledge these symptoms as they arise and take practical steps to avoid reaching breaking point. And remember, burnout is a master of disguise. Some brains have a sneaky way of interpreting the more common symptoms as character flaws, rather than distress signals. Don’t let the devil in your ear win!
A small amount of stress at work can be a good thing – it can motivate and focus your energy – but it can quickly become prolonged and overwhelming, especially when you’re a one-man band.
Here are some ways to help ease the load:
Simplify your business
Being a sole trader means wearing every hat on the rack. There’s no separate admin, marketing, finance, customer service, or IT department around to split responsibilities. It’s a tricky balancing act, especially when the non-billable work starts to eat into valuable money-making time.
It’s easy to stretch yourself thin when times are tough, but it’s not sustainable long-term. Finding ways to simplify your business will help create room for that necessary R&R.
Automate, automate, automate!
Emails, invoicing, and other admin tasks can quickly dominate your working week if they’re not streamlined. There are plenty of software tools at your disposal that can handle these boring, repetitive tasks like a champ.
Consider tools like Trello for task management, Calendly for automatic bookings and reminders, or MailChimp for auto-replying to enquiries or scheduling follow-up emails.
Oh, and that soul-destroying tax admin? There’s no need to DIY! Using Hnry saves sole traders a whopping 4 hours a week on financial admin on average. Hnry automatically calculates, deducts, and pays your taxes (including GST, ACC levies, and student loan repayments) as you earn.
What’s more, Hnry will file your tax returns, manage your business expenses, and automatically chase up invoices on your behalf. Think of what you could do with an extra 200+ hours a year!
Review your business strategy
Make a date with yourself to review your business strategy. It may not sound sexy, but taking the time to assess what’s working and what’s not will help focus your energy where it counts.
For example, consider ways you might boost your income by repackaging your services. Then make a plan to implement it. If you’re a gardener, you might introduce seasonal packages to encourage repeat business and simplify your offering. A videographer with regular clients might pitch for a retainer to lock in a more reliable source of income.
If work is stagnating, it’s probably time to spice up your marketing approach to attract new clients. Whether you’re creating an Instagram profile or going old school with a flyer drop, the goal is to diversify your client base.
And if all else fails, seriously consider raising your rates. While this can be a hard pill to swallow for some clients, you need to back yourself! When you’re not adequately compensated, every task can feel daunting.
When your capacity is low, it feels counterintuitive to add more to your plate, but taking the time to clarify your direction can save you hours of wasted effort in the long run.
Break up with certain clients
It’s not you, it’s them. While it’s tempting to take on any and all work that comes your way, it’s not always in your business’ best interests to say yes. It pays (literally) to be a bit selective.
If a client is consistently lowballing you, paying you late, changing the brief, or demanding more than what was initially agreed, this can quickly become all-consuming. Letting them go will free up your time to focus on the good eggs – those who respect your boundaries and pay you what you’re worth.
Future proof your finances
Few things in life are more consistently stressful than money. Having a back-up plan, or the ability to pivot, can help you weather any financial storm – even the global-crisis kind.
Build an emergency fund
Yes, the trusty rainy day fund! Studies show that having at least half a month’s expenses in emergency savings can increase your financial wellbeing by 21%. The more cash we have squirreled away, the more we can cope if things go pear-shaped. If possible, Sorted recommends aiming for a cash cushion of three to six months’ expenses.
A financial buffer is not only useful for covering unexpected expenses or emergencies, but as a form of self-insurance during periods of economic uncertainty. The ripple effect is less time spent managing, worrying about, or being distracted by your finances – and a bit of breathing room so you can focus on the job at hand. Phew!
If you’re new to the savings game, there are several ways to start building your buffer:
1. Automate your savings
The best way to build the habit is to pay into your savings before you pay yourself. If you set aside money regularly (ideally automatically) into a separate account, you’ll be less likely to spend it on smaller, optional purchases.
That’s where Hnry’s Allocations feature shines – it’s a set-and-forget system that automatically sends a portion of every pay to a separate account of your choosing. It’s perfect for sole traders with variable incomes as it works on a percentage basis, so you’re always saving no matter how much you earn each time you’re paid! The best part? You might not even notice it. Allocations works its magic before your pay lands in your regular account, so it’s truly out of sight, out of mind.
2. Save on recurring subscriptions
Some subscriptions are easy to forget about – especially when you’re not actively using them.
If you’re paying for multiple TV subscriptions or gym memberships, and you’re not currently getting the full benefit, consider putting them on pause to free up some cash. We’re all human, life gets in the way sometimes and our priorities shift.
Redirecting those funds to savings will do more for your mental health in the long-term than easy access to movies you have no plans to watch!
3. Sell some stuff
As the saying goes, one man’s trash is another man’s treasure. If you’ve got a box of unwanted Christmas gifts from yesteryear or reject impulse buys gathering dust in your garage, consider finding them a new home for a bit of extra pocket money.
You can do this online through platforms like TradeMe or Facebook Marketplace, or you could try your local second-hand retailer.
Get on top of your cash flow
Cash flow is like the middle child of the business world – overlooked at times, but ultimately what glues the family together.
Cash flow is exactly what it says on the tin – the flow of cash through a business. For sole traders, mastering your cash flow means having enough money on hand to cover day-to-day expenses (like bills, taxes, or supplies) as they arise. Timing is everything!
Cash flow = money in - money out
If you generally have more money coming in than going out at any given point, congrats! You’re cash-flow positive. But there are still a few curveballs you might be thrown as a sole trader that could sabotage your flow, even if you’re turning a profit.
If you’re consistently paid late by your clients, for example, you may end up depending on income that isn’t actually, well, coming in. Throw in a big purchase (like new equipment) or an unexpected bill you need to foot, and you’ll quickly find yourself in the negatives.
The good news is there are ways to improve your cash flow and save yourself the headache.
1. Forecast your flow
A cash flow forecast helps you predict your likely cash position for a certain period, so you can spot potential shortfalls and plan for large purchases.
Make sure you factor in both regular outgoings (such as subscriptions, utilities, and GST) and irregular expenses (like vehicle repairs or tech upgrades).
2. Save for the slower months
If your business has a busy period or seasonal spike, stash some cash away in the good months so you have more breathing room during the slower ones.
3. Get paid faster
For those with regular clients, Hnry can schedule your invoices to send automatically every week, fortnight, or month, whatever suits your flow! Better yet, Hnry will automatically chase up late invoices for you, so you can avoid those awkward conversations and keep the good vibes flowing. Hnry customers who use our invoice-chasing feature get paid 8 days faster on average than other sole traders.
When money feels unstable, chronic worry mode can kick in. Taking practical steps to help future proof your finances can make the load feel that little bit lighter.
Take time off
Taking time off as a sole trader is easier said than done – you’re the boss, employee, and HR all rolled into one. You might be concerned about the loss of income or afraid to disappoint your regular clients.
But adequate rest and recovery time is critical for maintaining that all-important work-life balance.
Commit to being ‘out of office’
When you work for yourself, the lines between work and home can get blurry fast if you’re not firm with your boundaries.
Introducing set office hours is a simple way to temper expectations and protect your valuable personal time. Don’t leave any room for interpretation – communicate your availability to your regulars, set up a daily ‘out of office’ auto-reply, and stick to your guns! If you don’t already have one, buy a separate work phone and set it to silent overnight.
If you work from home, try to structure your day as if you don’t. Establish a dedicated office space, schedule lunch breaks like you would a meeting, and initiate a shutdown ritual every day, even if it’s just a quick walk around the block.
A 10pm email here and there may seem small, but before too long it becomes your new normal.
Plan a holiday
For sole traders, taking a holiday is a little more complicated than putting in a request for annual leave. With no one else to take the reins, it does require a little more planning in advance.
Like your emergency buffer, it’s all about building up that holiday fund brick by brick, setting aside a small portion of your income with every pay (Hnry Allocations can help!). The earlier you start planning, the less you’ll notice the dent in your pocket.
You can help protect your time away from work by letting your clients know you’ll be unreachable ahead of time. That way, they can plan for your time off too – and not call you with an emergency while you’re relaxing on the beach.
And who knows, you might discover that having something to look forward to feels like a load off in itself.
Remember, burnout won’t tiptoe around your deadlines. If you don’t plan a proper break, your body will choose one for you (at a much less convenient time).
Hnry can help
The freedom and autonomy that comes with being a sole trader can be deeply rewarding, but taking care of yourself is important too. If you’re hanging on by a thread, your business may not survive the inevitable fall.
Hnry can lighten the load a little. For just 1% + GST of your self-employed income, capped at $1,500 a year, Hnry will calculate and pay all your taxes for you, including:
- Income tax
- GST
- ACC levies
- Student loan repayments
- KiwiSaver contributions (optional)
Through our automated tax app and service, you can also send and schedule invoices, track your expenses, and allocate funds to savings or investments.
Basically, let us sort the admin, so you can focus on the important things – like you, and your business. Join Hnry today.