Do you want to start a business on your own? Be fully in charge, working independently and taking on clients or orders at your own pace? Sounds like you may want to pursue becoming a solopreneur.
What is a solopreneur?
The word solopreneur is a combination of two terms solo and entrepreneur. Basically, a solopreneur is an individual who starts and runs a business on their own with no partners or employees. They don’t retain traditional employees or partners and instead focus on work they can do alone or with contractors. Usually, successful solopreneurs invest in niches they are highly skilled in and passionate about.
What is an entrepreneur?
An entrepreneur is a businessperson who organizes and operates a business venture bearing most of the financial risk. Entrepreneurs work to create a business that can realize their idea, bringing in the right team, capital, and research to achieve long-term business growth. This means that entrepreneurs don’t necessarily have to be skilled in the area of their investment. They rely on their employees and partners to fill in gaps with the necessary expertise.
Solopreneur vs entrepreneur — what’s the difference?
How does becoming a solopreneur differ from being an entrepreneur? On the surface, they look incredibly similar. However, every solopreneur is an entrepreneur, but not every entrepreneur is a solopreneur.
This contrast will become more visible when you understand what it takes to run each of them. Let’s delve deeper into these two types of business owners to help you decide which model might work best for you.
1. Solopreneurs manage everything
Independent work is the focus of a solopreneur, meaning that they are in charge of everything. They wear every hat applicable to both the boss and employee when building their business. However, this doesn’t mean that solopreneurs need to know how to do everything.
In a scenario where they have a task they can’t do, they outsource it to someone with the desired expertise. What they don’t do is bring in employees. For example, if a solopreneur doesn’t know how to manage an email marketing funnel, they may explore automated tools that can handle the task. If a more personalized touch is needed, they may even hire an agency or contractor to manage it.
Entrepreneurs, on the other hand, are focused on building these processes into their business. Even if they do everything that solopreneurs do in the initial startup stages, they intend to grow the business to a larger team. Therefore, they eventually hire team members who take on these tasks so that they can focus on more strategic areas of the business.
Artists such as musicians start as solopreneurs. As their careers grow, they eventually hire full-time managers, security teams, publicists, etc. At this point, they transition into entrepreneurs. Their role evolves from a solo act, into that of a brand specialist, founder, owner, or boss, with several departments/employees working for them.
2. Solopreneurs typically have less financial risk
Risk-taking comes with the territory when running a business. Successful business people owe their success to taking financial risks that yield positive results. As for entrepreneurs, their business goal doesn’t entertain staying in their comfort zone.
They want their business to grow. To become sustainable and profitable. To achieve their goals, entrepreneurs have to keep on investing. They look for external funding, whether it’s by bringing in partners, reinvesting the net profits, or even taking out a loan.
In contrast, a solopreneur’s plan for making money doesn’t require much risk. Unlike their counterparts, they don’t necessarily intend on scaling their business. They’re very comfortable working within a financial risk that sustains their business.
Their goal is to maintain a level that allows them to run the business by themselves. They know the exact amount to invest and the expected profits, and that’s it.
3. Solopreneurs have a specialty
As noted earlier, entrepreneurs strive to form a team. It frees up their time to focus on growing the business rather than running it. They’re very much interested in exploring other niches, whether related or unrelated to their specialty. If an opportunity arises, they expand their business and hire someone skilled in that field.
On the other hand, solopreneurs tend to zero in on a single niche and commit to meeting the needs of a manageable clientele. They don’t have the time or workforce to explore other specializations and choose to become good at a particular area only.
For instance, a solopreneur who offers to teach a foreign language can only teach the language they know. They can take a good number of students in one-on-one or group sessions but not teach other languages. An entrepreneur, on the other hand, could successfully teach multiple languages (some of which they can’t speak a word of) by hiring specialists as part of their team.
4. Difference in growth goals
Solopreneurs and entrepreneurs take similar steps when starting their small businesses. What often differs is their reason for pursuing a business idea and what their expectations are for growth.
Solopreneurs often start a business to make a sustainable living out of a passion. Or even generate additional or ideally passive income through a side hustle. Their pursuit of growth is focused on becoming even more of an expert.
They don’t look forward to acquisitions, mergers, franchising, or licensing. Their growth is limited by how much they can handle on their own.
An entrepreneurs’ goal, on the other hand, is to build a venture that’s as profitable as possible. The moment they gain some traction, they focus on building or revising their strategy to expand. They don’t turn down an opportunity to scale, even if it demands expanding their team or opening new locations. Some do so intending to catch the eye of large companies who can buy or partner with their businesses.
5. Entrepreneurs have to focus on customer acquisition
Customers are the life-giving force of any business. Both entrepreneurs and solopreneurs have to acquire and maintain their customers. Nevertheless, at some point, their priorities around customers take different routes.
Solopreneurs want to make the big bucks just like any other businessperson, but they tend to approach that from a different angle. They concentrate primarily on meeting the needs of their existing customers to generate referrals and repeat visits. To solopreneurs, they plan to perfect their art/product and expand what they can charge based on their expertise.
For example, a fitness trainer who wants to make more money might use a bigger training room and take in more clients. But, after years of operations, they can decide to target high-end customers and probably earn more for less work.
Entrepreneurs tend to focus on growing their business as much as they can. They’re not only in constant pursuit of retaining loyal customers but also bringing in new customers and increasing profits. This requires them to develop a long-term customer acquisition strategy. One that can simultaneously maintain its current customer base while regularly bringing in a new clientele.
6. Solopreneurs easily partner with other solopreneurs
As we already mentioned, solopreneurs are typically focused on providing one type of product or service at a high level of quality. This does mean that their scope is limited. It doesn’t mean they can’t connect customers with someone who does offer what they’re looking for.
Yes, solopreneurs don’t tend to go into business with a partner. Instead, they are often willing to refer service to other solopreneurs. It’s somewhat of an unspoken partnership with other solopreneurs. Encouraging the creation of a community built on trust and complimentary services.
As for entrepreneurs, while there may be a willingness to generate off-hand referrals, it often requires official contracts. They’re much more likely to meet like-minded entrepreneurs and come up with business deals for sponsorships, promotions, etc.
Again, the difference in growth goals is what influences this opposing approach to partnerships. Entrepreneurs must be more strategic to better maintain their brand presence and find mutually beneficial relationships. Solopreneurs can be a bit more flexible and worry more about being part of a community of business owners. One that happens to send clients back and forth.
Solopreneurs still need a business plan
Still interested in going solo as a business owner? You’re going to need a business plan to do it. While you may not be pursuing aggressive growth, having a plan will ensure that you’re prepared for everything involved in running a solopreneur business.
Luckily, you can create your plan on your own with our Lean Plan Template. It’s easy to use and can be completed in as little as thirty minutes. By the end, you’ll be ready to run a business on your own and have a plan in place should you decide to eventually expand your business.