The rise of the gig economy and the technology that supports it has given more people than ever the chance to work for themselves.
In fact, According to MBO Partners State of Independence in America 2019, over 41 million US citizens are engaged in some form of working for themselves.
There’s no doubt plenty more than just 41 million people who have entertained the idea that they could be their own boss and make a handsome amount of money in doing so.
In Europe, over 30 million people are self-employed.
But how hard is it to take on the world single-handedly as a business owner?
Let’s take a look at some of the key pros and cons of establishing a business and operating it without any outside help:
The term ‘solopreneur’ may draw a little bit of derision from outsiders looking in, but if you’re bootstrapping your business into existence then that’s exactly what you are.
As a sole owner, you’ll be able to take your business wherever you like. Your goals and mission statements can be tweaked with ease, and you’ll have the liberty to dictate your operational costs and supplies. You will also have full control over deciding when to scale your company.
This control over the direction your business is taking could be significant for your success, too. If, say, you sold 20% of your company to a venture capital firm, then their prospective timeline and values could be wildly different to yours – forcing the type of compromises that leave nobody satisfied.
Ownership and venture capital firms
This is particularly important because it means you have full ownership of your startup. Whereas, if you were to launch a partnership or exchange your equity in return for venture capital, then you’d have shareholders to answer to before making a key decision.
By retaining full ownership of your business, it means you have no obligation to alter the structure of your company to a more rigid format that suits venture capital firms – you can control your company the way you see fit…within reason, of course.
Solopreneurs have the ability to hire the staff that they want without the need for consultation or reporting to directors and make key business decisions without the risk of having them vetoed by a shareholder.
While there are certainly some arguments to be made regarding the appeal of sharing ownership, if you happen to be a driven individual with the ability to think clearly under pressure, acting as a solopreneur could be an ideal way of running your business.
With venture capital firms you’ll lose other peoples money
Further freedom can be found in the fact that you’re not responsible for the money of partners and stakeholders. By going it alone, founders primarily bootstrap themselves and are fundamentally responsible for their own failings.
If you enter into a partnership or accept investments from banks, crowd funders, venture capital firms or friends and family, then if your business collapses, it’ll be other peoples’ money that you lose. This scenario could bring legal challenges alongside feelings of guilt and is a great cautionary example for business owners to take fewer risks.
Better rewards for ‘making it’
The greatest reward, aside from the pride that stems from building your own success, comes from the financial windfall of ‘making it’ without surrendering equity of your company.
If you share your equity with an external investor or go into business in a partnership, you’ll stand to make less revenue from eventually selling your company than if you bootstrapped your way to success from the start.
Yes, the chances of success when going it alone are shorter, but the opportunity to directly benefit from your business’ success can be a significant source of motivation for startup owners at the same time. If you feel like the prospect of making your own revenue can drive your ambitions as a business owner, you might find that you’re more productive even without the involvement of external investors or partners.
Some solopreneurs try to promote the idea of struggle and hustling your way to success. It’s important to take their words with a pinch of salt.
If you’ve set up your own business and you’ve found that you’re having to work multiple jobs, struggling to get the sleep you need and are generally unhappy, it could be worth exploring your options for different forms of funding.
There’s little point in running your own business if the whole process is making you miserable and you’re struggling to turn your hard work into revenue.
Alternatively, some entrepreneurs enjoy the challenge of working to tight deadlines and putting in longer hours to raise money. We’re all biologically different, and if you’re like the many of us who simply aren’t able to hustle your way to success, then there’s no shame in putting your enterprise on the back-burner and prioritising your own health.
Fear of sickness
Speaking of health, another key problem when it comes to going it alone as a business owner comes in the form of avoiding days off at all costs.
Essentially, if you’re unwell, then so is your business. When no one else is on hand to take care of your operations then your endeavour becomes stagnant until you recover and get back to the wheel – so to speak.
This is another potential drawback that stems from the misconceived appeal of struggle. If you’re straddling two jobs to make ends meet, soon enough you’re likely to become fatigued – and in this case not only does your health fail but so too does your business.
Lack of insight
Another con of going it alone in business is the distinct lack of insight that you’re able to receive. If the ownership of your startup is split between partners then all involved parties can share their insights as well as bounce ideas off of each other.
Likewise, when it comes to alternative sources of funding like venture capital, firms will commonly provide invaluable and experienced insights as well as financial windfall into the endeavours they invest in.
Sadly, if a solopreneur decides to begin operations single-handedly, then they risk being blinded to the wealth of knowledge that would be available if they enlisted the help of industry professionals.
Credibility comes with big name venture capital firms
According to Inc., not having outside investors can be damaging to the credibility of a new business.
Gaining the backing of well-respected, credible investors may well be a deciding factor when customers and clients are looking to buy into your product or service. Whereas, self-funding can trigger all sorts of alarm bells for prospective buyers in terms of exposing a potential lack of resources or possible lack of business experience.
There are very few more risky ways to run a business than through going it alone as a solopreneur. New business owners can profit from the freedom, flexibility and possible future financial windfall by building a startup single-handedly, but risk losing out on a wealth of insights, credibility and financial buffers offered up by gaining external investment.
Fundamentally, there are no right or wrong ways to run a business, and the best entrepreneurs out there tend to know themselves very well – and their limits too. When considering how to operate – and fund – your business, take a moment to consider the full implications of your ownership and make a decision that best suits your personality, work ethic and ambition.