Becoming a business owner can allow you to pursue your own ideas and build a company around personal values. Some people may take an entrepreneurial path to start their own business, while others might choose the path of a solopreneur. Understanding the differences between the two and learning what a solopreneur is can help you decide which path is right for you. In this article, we compare solopreneurs and entrepreneurs and explore the advantages of being a solopreneur.
A solopreneur is a person who builds, owns and manages a business and oversees all associated responsibilities with no employees. They're ultimately responsible for the success of the business and typically earn all the profits from the company's operations. This also means they're responsible for any business costs. Solopreneurs typically start their own business because they have an idea they want to pursue, they want greater flexibility in their schedule, or they want to be their own boss.
An entrepreneur is a business owner who creates and runs a company with a team of other professionals. Entrepreneurs typically have connections in a specific industry or have excellent leadership skills and innovation and translate those traits into a business. Entrepreneurs typically structure their businesses around teams, opting for a limited liability company (LLC), incorporated enterprise (Inc.), or another legal title that creates a team-oriented business structure.
While solopreneurs and entrepreneurs have similar functions in their companies, there are some key differences to remember. Here are a few examples of differences between solopreneurs and entrepreneurs:
One of the primary differences between these two career paths is the role these business owners have in the company. Solopreneurs are both the founders and sole employees of their companies. Entrepreneurs are team leaders or members of an executive group, where they typically serve as their company's chief executive officer (CEO). Because these roles come with different responsibilities, solopreneurs and entrepreneurs may develop skills to help them succeed.
To run their company more effectively, solopreneurs might need to focus on personal and professional development. For example, a solopreneur may want to sharpen their financial management, negotiation and problem-solving skills. Meanwhile, entrepreneurs may dedicate time to developing in the areas of leadership and project planning, and also focus on teamwork and collaboration skills.
Entrepreneurs typically look to expand the company exponentially, hoping to increase profits, brand awareness and market reach. This can mean hiring more employees or adding new locations. While solopreneurs also want their companies to grow and become more profitable, they're typically more limited in how much growth they can maintain alone. As their company grows, a solopreneur might need to hire contractors to fill skills gaps or scale back operations so they can remain the company's sole employee.
Another area where entrepreneurs and solopreneurs can differ is financial management. This requires specific skills such as money management, cost analysis, rational spending and saving habits and even investment knowledge. Where a solopreneur handles all the company's finances, an entrepreneur may act as the company's chief financial officer (CFO) or have someone else manage the finances. Because solopreneurs are directly engaged in financial management, a solopreneur may have a better understanding of managing the company's money to maximize profits.
Here are a few common benefits of being a solopreneur:
Solopreneurs typically work at their own pace and create their own schedule. This may help them have more control over both their productivity and their free time. The flexibility of solopreneurship can also help provide time for someone interested in continuing their education, such as pursuing a higher degree or certifications.
Solopreneurs have complete creative control over their ideas, projects and products or services. They typically have the advantage of not needing approval from a board of directors or company shareholders. Unless they have initial investors during their business's beginning phases, solopreneurs can take more risks without securing permission from other parties.
Solopreneurship can be an excellent opportunity for people who want to own a business without managing other people. Some people prefer working without the responsibility of managing, developing and supporting employees. This can allow solopreneurs to save labor, benefits and other costs associated with hiring a full- or part-time staff.
Owning a business as a solopreneur can mean keeping more of your company's profits for yourself. More profits can mean more opportunities to improve your quality of life or invest in other passion projects. For example, you can pursue personal development, such as furthering your education or skill set or even begin a second business.
If you're interested in solopreneurship, consider following these steps:
First, determine the products and services you want to offer and in which market. Focus on one or more of your target market's pain points or challenges that create a need for your products or services. During this phase, you can identify the values you want to represent, which industry you might fit in and what competitors are in your market. You can also use this information to determine the best name for your company.
Next, start researching the target market for your company. Consider what products or services are getting customers' attention, how competitors are marketing their products and what standard pricing is for products or services similar to your own. You can also research any requirements for starting your business, such as documents you may need to file or whether you need legal help to begin.
As a solopreneur, you can structure your business as a sole proprietorship, meaning you're the only person who owns and manages the business. If you expect to add people to your company in the future, you might also file for an LLC or Inc. license. LLCs are a more flexible option for solopreneurs, since an incorporated business's structure typically has a team of people.
You might consider your company goals, both short and long term, to provide an idea of how you expect the company to grow. Here are some examples of common business goals:
Increase revenue: There are many strategies to help you increase your revenue. For example, you may decide to improve your brand awareness through marketing campaigns and customer feedback, which can lead to higher sales.
Improve the sales funnel: The sales funnel is the pathway for your target consumers to become paying customers. With methods like communicating more frequently with potential customers and offering promotions, you may convert more people into customers.
Innovate the industry: Creating unique products and services can differentiate your brand and attract the attention of customers and industry experts. Consider making products that cater to a niche audience and use technology to create better-quality items.
Once you've determined your ideal industry, business structure and target market, begin gathering and submitting documents. These can include your articles of organization, sales tax application and application for a business license. You can check government and tax guidelines for business formation in your state and use resources like the Small Business Administration for information on funding, forms and the business development process. You might double-check your documents, fees and filings to ensure you've completed everything you need.
After submitting your documents and getting any necessary approvals, you can begin business operations. It's important to stay focused on the goals you set earlier as you run your company. However, you can be open to change as the market evolves or new information develops. For example, if you set a goal of having 100 clients in your first year but you have a client who can provide several long-term projects, you may rethink your goals. Rather than focusing on new clients, you may decide that maintaining relationships and offering high-quality products or services is a better aim.
Writer : Indeed Editorial Team - indeed.com
