When the business is you: planning for the weeks you can't work

If you’re a sole trader or the only person in your company, you already know this: when you stop, the business stops. A broken wrist for a tradie, a bout of illness for a consultant, a family emergency for a café owner — the income pauses, but the rent, the phone, the insurance, the loan repayments and the ATO don’t.

Most owners don’t plan for it because it feels gloomy. But a simple plan, made on a good day, turns a potential crisis into a manageable few weeks. This guide walks you through one.

Why is a one-person business so exposed?

Because the business’s income depends on your time. There’s no one else to pick up the jobs, answer the phone or chase invoices. At the same time, business.gov.au reminds sole traders they have “unlimited liability and all your personal assets are at risk if things go wrong”. So a gap in income can quickly become a personal problem, not just a business one.

Lenders know this too. When they assess very small businesses, “what happens if you’re sick?” is a fair question — and having an answer makes you a stronger borrower.

Step 1: know your monthly “stand-still” cost

Work out what the business costs each month if you do no work at all:

Cost	Can it pause?
Rent or premises costs	Usually not
Loan and equipment finance repayments	Not without talking to the lender
Insurance premiums	Usually not
Software subscriptions	Some can be paused
Phone and internet	Can sometimes be reduced
Staff or contractors	Depends on arrangements
ATO — GST, PAYG instalments, tax	Due dates continue; talk to the ATO early
Your own pay	The household still needs to eat

That total is your stand-still cost. It’s the number every other part of the plan is built around.

Step 2: build a buffer

A cash buffer is the simplest protection there is. Many owners aim to hold a few months of stand-still costs in a separate account that isn’t touched for day-to-day spending. Build it gradually — a set amount from every deposit — and top it up after good months.

If you’re also paying yourself on a regular rhythm (see paying yourself as a sole trader or director), you’ll find the buffer grows more steadily, because the business account isn’t being drained by irregular drawings.

Step 3: think about insurance

business.gov.au lists several types of personal insurance relevant to owners, including income protection, which “covers part of your income if you’re unable to work because of sickness or an accident”. It also describes business interruption insurance, which “pays your ongoing business costs if an insured event interrupts your business, such as a fire damaging your business property”.

Whether either suits you depends on your circumstances, your budget and the policy terms. Talk to a licensed adviser or insurance broker, and factor the premium into your cash-flow planning.

Step 4: write down who could cover urgent work

You probably can’t replace yourself, but you might be able to:

• refer urgent jobs to a trusted peer in the same trade or profession
• ask a family member to answer calls and reschedule appointments
• have a bookkeeper who can send invoices and pay bills
• keep a simple document listing passwords (stored securely), key suppliers and customers

Even one or two of these reduce the chaos significantly.

Step 5: keep debts manageable

The time to make sure your borrowing is sensible is before anything goes wrong:

• Size loans to your quiet months, not your best.
• Avoid stacking short-term debt that needs constant refinancing.
• Keep business debt in the business, not on personal cards, so problems are visible early — see mixing personal and business debt.
• Think carefully about the family home. If it secures a business loan, a long break from work puts it under more pressure. Our page on protecting the family home covers this.

If you’re considering finance now and want to structure it with these risks in mind, a short enquiry lets a specialist talk it through with you.

Step 6: know who to call if it happens

If you do find yourself unable to work:

1. Call your lender before a payment is missed. Explain what’s happened and how long you expect to be off.
2. Contact the ATO early. The ATO says that if you can’t lodge on time, “phone us before the due date so we can work together to reduce the risk of a penalty”. It also offers payment plans that let you “break down your total debt into smaller amounts”.
3. Talk to your accountant about which costs and obligations to prioritise.
4. Use free help. business.gov.au lists the Small Business Debt Helpline on 1800 413 828.
5. Tell key customers honestly and early. Most will wait for someone they trust.

Can a loan help during a break?

Sometimes, carefully. A short-term facility can bridge a defined gap — for example, while a large invoice is being paid, or for a planned absence with a clear return date and booked work waiting. But borrowing while you can’t earn is risky. If the path back to income isn’t clear, adding debt can make things harder. A good lending specialist will tell you honestly if a loan isn’t the right answer.

Step 7: review the plan once a year

Your stand-still cost changes as the business grows. A new lease, another vehicle, a bigger loan or a new subscription all move the number. Once a year — around the time you meet your accountant — recalculate it, check the buffer still covers it, and confirm your insurance and cover arrangements still make sense. It takes half an hour and keeps the plan real.

It’s also worth checking how the business is set up. If money has started mixing between personal and business accounts, it’s harder to see the true stand-still cost. The money-mixing check is a quick way to see whether that’s crept in.

What about planned time off?

Not every break is a surprise. Parental leave, a long-awaited holiday, surgery booked months ahead — these can all be planned for. Start saving the buffer early, book work around the break, tell regular customers when you’ll be away, and consider whether any loan repayments should be timed around the gap. Lenders and the ATO are generally far easier to work with when you raise a planned absence ahead of time.

An illustrative example

A physiotherapist runs a one-person clinic as a sole trader. Her stand-still cost — rent, equipment finance, insurance, software and a modest pay for herself — is about $9,000 a month. Over two years she builds a buffer of roughly three months of that cost in a separate account, takes out income protection after speaking to a broker, and arranges for a colleague to see urgent patients if she’s unavailable. When she needs six weeks off after surgery, the buffer and the colleague arrangement carry the clinic through, and she makes every loan repayment on time.

The figures are illustrative, but the approach suits almost any one-person business.

How does this help when you borrow?

When a lender asks, “what happens if you can’t work?”, you can show them: a buffer, a plan and sensible debt levels. That’s reassuring for any lender assessing a micro business — see micro business loans for the other risks lenders ask about. It also means any finance you take on is less likely to become a burden if life gets in the way.

A plan made on a good day

The best time to plan for a rough patch is when business is steady. If you’re thinking about finance as part of building your buffer or restructuring debt, the enquiry takes about 60 seconds and involves no credit check. Your details go to one specialist — not a pile of lenders — and they’ll call to understand how your one-person business works and what would help. Please answer accurately about your income and existing loans, so we can suggest an option that genuinely fits the first time.

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