Solopreneurship means running a business solely by an individual. In other words, an entrepreneur starts and takes care of everything in the startup without having any other employees or a co-founder in this model.
A lot of people confuse solopreneurship with freelancing. The significant difference among the two is that freelancers work for others on a per hour basis or they associate with the client for a project. In contrast, a solopreneur assigns work to freelancers to perform some essential tasks and tries to build a system that earns passive income after a certain point. But there is a possibility that a freelancer provides its service to others under sole proprietorships, such as a digital marketer who increases the brand awareness and ranking for client’s websites.
Solopreneurship is gaining popularity from the past couple of years because of its undue advantages. Let’s find out what they are.
Solopreneurs are business owners and have unlimited freedom in decision making as the person doesn’t need to rely on others’ opinions. Working as a solopreneur also helps in circumventing politics in the workplace and diverts all the focus towards work.
People who choose to become a solopreneur have pliability in lifestyle and work culture. As they alone conduct the business, they can create a lifestyle and work culture according to their requirements, and can easily maintain the work-life balance. Solopreneurs don’t necessarily need to work from the office.
Minimal office space requirements
As most of the solopreneurs offer online services, their workspace requirement remains limited to a desk, chair, computer and internet connection based on their scope of work. Most of the solopreneurs either work from home or rent a small workspace in a shared office environment.
However, as there are two sides of a coin, so let’s take a look at the cons of solopreneurship as well.
Being a solopreneur deprives you of the social interactions with others. As there is only a single person involved in brainstorming ideas without any team collaboration, sometimes there comes a risk of missing a certain level of work quality or innovation, which may impact the company at a later point.
Investment is significant for any startup. In solopreneurship, the startup has to be bootstrapped during most of its journey from inception to profit generation. A solopreneur may not be able to convince giant investors for funding as they consider various factors, such as market valuation, the scope of growth, team collaboration. However, there are business loans available to help solopreneurs.
Limited scope to scale business
Solopreneurs tend to offer products or services in a specific niche and build a steady customer base so that they can manage it. But, this limits the growth in their business.
High risk involved
As a solopreneur needs to manage everything on its own from getting a business license to borrowing loans to stay afloat, the stakes are also high. There is no investor or partner involved to share the loss if the business faces a financial crunch or any legal risks, such as copyright, trademark, among others.
Is registration necessary for solopreneurship?
Registration of your company is not necessary for solopreneurship at the initial stage. You can register once you have enough resources to sustain the business.
The downside is that the business owners cannot get funding as venture capitalists and angel investors cannot invest in unregistered companies. Also, banks do not lend support if the company is not registered.
Unless you remain bootstrapped or your business starts generating profits, running a company under solopreneurship is a challenging task for a long time. If you have your business registered, investors can infuse funding into it.
Sole Proprietorship Vs. LLC
A sole proprietor owns the entire business operations and is also responsible for taxes, debts and lawsuits that the company accrues. Hence, if the business gets sued, the personal assets of the owner also come under scrutiny.
On the other hand, a limited liability corporation (LLC) offers protection to business owners against any liabilities along with the tax advantages and can be owned by investors.
Top niches to enter in Solopreneurship
Remember, not all entrepreneurs are solopreneurs, but all solopreneurs are entrepreneurs. Now that you are aware of the nuances of solopreneurship and entrepreneurship, it’s you who needs to decide which side to take.
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