Running your own business can be an incredibly stressful yet rewarding experience. The decisions solo entrepreneurs have to make to be successful are not easy but in the long-term, they can be worth it.
Many solo entrepreneurs (or sometimes known as ‘solopreneurs’) have decided to take on the added risk of running their own business because they are tired of being someone else’s employee. In recent years we have seen more and more people deciding to go down the road of entrepreneurship.
When someone decides to go solo and run their own business, there are further essential decisions that can make the path even more difficult if not implemented correctly. It can be hard to know what decisions you need to make, and what the correct outcome should be.
However, in the article, you will find a breakdown of some core decisions solo entrepreneurs have to make to be successful. These are decisions entrepreneurs should be making in the initial stages of their first business as solo entrepreneurs.
1. Business Structure
This decision should be made early in the life of your business, and it is an incredibly important one surrounding the structure of your business. Do you wish to be a sole trader or a limited company? While there are other options, these are going to be the most common.
The type of business you have will be a large determinant for what business structure you take on, as well as your specific tax jurisdiction. There are certainly pros and cons to either option (you can also look into partnerships if you are starting a business with another entrepreneur). It is always best to discuss the tax implications of a specific business structure with a specialist accountant in your local area.
The sole trader is the most common structure of business due to the simplicity and lack of significant paperwork. For example, there are no annual accounts required and no formal registration. Irrespective of this, you should consider your options fully and assess the best outcome for you and your business not only currently but also in the future as you grow.
2. Financial Decisions
There are many financial decisions solo entrepreneurs have to make to be successful. These are important decisions to be made along the way towards your solo entrepreneur journey. This may involve small financial decisions or multi-hundred dollar decisions. The important thing is that you can start small as a business owner and work your way up. However, a small amount of cash and a good financial plan are required to be successful.
First on your agenda for decisions to be made is to make a budget for the business. How much do you currently have? What do you need to spend each month? What do you expect your income to be? Etc. Think things out logically and try to veer on the side of scepticism to some extent. You don’t want to make an overly positive budget that underestimates your expenses and overestimates your income, especially when you’re not entirely sure what to expect.
You may need to consider whether you need to take out a loan or look for investors in your business in order to get started. If you need investors, then look into local opportunities, such as angel investors in your local area. If you wish to take out a loan instead, then make sure you assess the various options that the different banks have to offer – some will likely be more favourable than others. Keep in mind that it isn’t just about the amount of money you receive, but also the repayment terms and how flexible the bank can be for you over the long term.
3. Business Location
Do you need to get an office? Many solo entrepreneurs will initially start their venture out of their own homes. This can work for some businesses but not others. This can save a significant amount of capital, especially in the early days until revenue starts coming in.
However, some things to consider are that it can be challenging to host meetings from your own home. Especially if your business caters towards higher-ticket sales. Would you as a business owner wanting to spend thousands of dollars want to have a meeting over someone’s kitchen table? Or would you want to meet someone in a Starbucks?
There are options such as WeWork locations which are an alternative. Solo entrepreneurs are increasingly taking up flexible office space, and it also allows for a significant amount of work and idea-sharing amongst the other solo entrepreneurs in the building.
These locations often provide 24/7 access, as well as access to meeting rooms. It is quite common for individuals who are new to the entrepreneurial lifestyle to realise that working in an environment like this will increase their work output. So, assess what your business needs, and then decide where you will locate it, whether that be an office, at home, a workshop, or subletting another company office.
4. Self Reliance
Do you want to rely entirely on yourself? This can produce some interesting experiences and challenges. However, it can also become quite boring, and lead to you becoming overworked and burnt out. Many solo business owners can end up quitting the lifestyle because they cannot keep up with the constant work. At the end of the day, many solo entrepreneurs will work significantly more hours than an equivalent person with a conventional job.
Therefore, an important decision to make is whether or not you will seek help and employ someone. There are also other options too. Depending on your business, you may be able to outsource certain tasks to freelancers to complete. Or, you could hire a virtual secretary so that you can spend more time doing what you do best, instead of dealing with a lot of admin on a daily basis.
It is important that you assess the investment to reward ratio. Sure, hiring someone may be expensive. However, it is a wise investment if it is the difference between your business surviving two years and surviving until you retire. A valuable employee will return significantly more value to the business than the cost of hiring them.