If you read the business press you might think that there is only one type of business. I find the reality is much different. In the private business world where 99.99% of us live, there are four types of business that I’ve been able to identify.
I think that if you understand what type of business you are, you can identify some of the main challenges you’re likely to have. If you want to grow your business you might be able to figure out what the challenges are to make it to the next step.
The next four Thursdays will deal with the four major types of private business. Today you and I will talk about the smallest of all businesses; the solopreneurs. This type of business is typically not incorporated, nor is it an LLC. If you work by yourself you are a solopreneur.
The hardest thing about being a solopreneur is it’s lonely. You’re working by yourself and are likely a consultant or a professional service advisor like a lawyer or CPA. You might work with outside contractors to provide some services. Outsiders are not the business, you are. Without you, there is no business.
Introverts might do better at being a solopreneur than an extrovert. Introverts do well with working by themselves. Extroverts would likely have a challenge with this working arrangement. Extroverts have a strong need to be around others. If you are an extrovert, think long and hard about starting a business where it’s only you.
Staying current is also a challenge. You have to make sure that you take time out of your business to keep current with changes in your industry. If you fail to do this you could find that ten or fifteen years down the road you lose clients because there have been changes that you didn’t stay current with.
Risk factors for solopreneurs
The biggest risk you will face is if you can’t work. You would do yourself well to get a good disability policy that will pay your living expenses if you can’t work. You also need to understand that if you can’t work your business will probably go away. I recommend you find another person in your industry and situation and make an arrangement where you will each fill in if for each other when you can’t work.
Your business is likely to have little value to someone else. When you want to retire, you will have to have other assets put away to support your retirement. Working with a good financial advisor who understands retirement plan options for you is important. You will have to pre-fund your retirement so that when you want to stop working you can afford to do so. A qualified retirement plan like a 401(k) plan is a good way to do this.
Growing your business.
If you want to grow your business your first hire will likely be a personal assistant. This person will take away the activities that all businesses have but don’t create revenue. They will provide you freedom to become more efficient and spend more time doing what you get paid for.
This first hire will move you from being a solopreneur to a micro-business. You now have to pay a salary to your assistant and might want to think about moving your business organization from a Schedule C tax filer to either a Sub Chapter S Corporation or and LLC. Make sure you speak with an attorney before making this decision.
Moving towards an even bigger business
If your assistant learns your routine well, you will likely find that you have a few hours a week to think about what you can do to make your business larger. You might want to find another associate who can provide billable time for customers. Or, you might find that a second assistant will free you up for even more time to spend with your customers. Either way, you are on your way to building a more complicated business.
It’s at this stage that you need to start thinking about systems that people in your office follow. Being able to tell others what your mission is becomes important, even at this stage. If you haven’t thought about why you’re in the business you’re in, this is a good time to start. You will need to communicate your why to your associates so they know what you’re about and what’s important to you.
Most businesses started by one person start off as solopreneurs. Some decide this is where they want to stay and some will grow. The decision is yours - There is no right or wrong here. Just make sure that you think about which direction is right for you and then follow your feelings.
As you move through your business career it’s important to know what your relationship and role is to your business. I’ve written a special report that covers this. To get this report, click on the button below.