Opportunities for people to build businesses independently have skyrocketed in the global digital economy. While people can create and run businesses entirely by themselves, many solopreneurs find that working alone leads to growth ceilings that are hard to break through. This article describes the process of business evolution and sets forth 15 key points for solopreneurs to keep in mind when considering making the leap to being an entrepreneur.

The Process of Business Evolution

We live in an age of unprecedented entrepreneurial opportunity. Due to the size and accessibility of the digital economic world, people can sell products and services at any time, from any place, across the entire globe. Apart from the economic potential of a borderless world, countless instructional materials are available on the Internet with guidance on how to build successful companies, entirely for free. The path from starting with nothing to potentially becoming a major commercial force has never been shorter.

As opportunities have increased, the ways that people can engage in commercial activities have also grown. This has created an increasingly stratified “business evolution cycle” from an initial idea to increasingly more formal and larger business arrangements.

The business evolution cycle refers to the growth of increasingly more formal and larger business arrangements.

There are often several stages in the business growth cycle, including:

• the “side hustle”
• solopreneur
• entrepreneur; and
• company.

While some of these categories can overlap and be defined interchangeably, they generally have several distinguishing characteristics.

Side hustle. A side hustle refers to work typically done outside one’s full-time job. This can involve freelancing, selling products or services, or doing different types of consulting work. Side hustles can include:

• selling products or services
• trying to monetize a hobby; or
• exploring the economic potential of a business idea.

As these activities are typically done part-time, side hustles are often limited in scope.

Solopreneur. The next step of the business evolution cycle is the solopreneur. A solopreneur is a person who forms and manages a business completely by themself. This includes developing products and services, marketing them to clients, handling all business activities, sending out invoices, and managing all the administrative aspects of the business.

Entrepreneur. While, like a solopreneur, an entrepreneur also starts a business activity, there tend to be several important differences between them. Compared with solopreneurs, entrepreneurs often:

• have at least a small team of people, while solopreneurs work alone
• develop new products, services, and business models, while solopreneurs often focus on providing traditional products and services
• target scaling up their business, while solopreneurs may prefer to keep the size of their business relatively stable
• seek external funding for their businesses, while solopreneurs generally rely on their own funds or funds that their business generates; and
• are often willing to take greater risks than solopreneurs.

Mature business. The key difference between the entrepreneurial stage of the business evolution cycle and a mature business is that the business is often more stable. This typically means

• the company is larger and has a greater number of employees
• departments or work areas tend to form, and people become more specialized
• the company has an established market presence and client base; and
• the company has significant revenues, which tend to be less volatile than revenues in a start-up or early-stage company.

Reasons to Transition from Solopreneur to Entrepreneur

Many solopreneurs face the issue of whether they should remain where they are or travel farther down the business evolution path. There are advantages and disadvantages to both business forms.

Both solopreneurship and entrepreneurship have advantages and disadvantages.

Solopreneur advantages and disadvantages. On the advantage side, solopreneurs have complete control over their business. They make their own decisions, assume responsibility for them, and enjoy 100% of the upside of what they earn and create. Having this independence is a key benefit of solopreneurship.

Another advantage of solopreneur activity is that there is typically less pressure on solopreneurs to grow their business and take significant risks to do so. Even if people have scalable ideas, many people prefer to keep their businesses small to focus on fewer clients rather than assuming the stresses of running a larger company.

There are also several disadvantages to the solopreneur model. To begin with, solopreneur models often do not allow people to fully monetize their knowledge and skills. Take, for example, a person with a health food podcast. Because of the quality of their ideas and the broad interest people have in learning more about healthy eating, they might be able to have a much wider audience and convert increased podcast growth into additional income streams. If the solopreneur continues to work alone, they may not have the ability to reach this audience or do so as quickly as they could if they were working with a larger team.

A second disadvantage of solopreneurship relates to decision-making. Regardless of its size, businesses must continually make difficult and important decisions in the face of great uncertainty. Even if solopreneurs are very smart and talented, looking at an issue from only one perspective may not lead to optimum decisions or, worse yet, make decisions that expose a business to unnecessary risk.

A third disadvantage of solopreneurship is risk exposure. The danger of the solopreneur business model is that no one to take the solopreneur’s place if the solopreneur goes on vacation, becomes sick, or simply gets very busy on other matters.

Entrepreneur advantages and disadvantages. A key advantage of the entrepreneurial model is that it can be an excellent way to quickly test innovative products and services and, if there is demand for those products, potentially scale them to multi-billion dollar businesses. This model often has far more economic potential than a solopreneurship model.

Another advantage of the entrepreneurial model is that it can be used to raise significant amounts of capital to build highly skilled teams, make substantial investments, and scale the business. Expenditures of this order are often difficult for many solopreneurs to make.

There are also disadvantages to entrepreneurship. Entrepreneurship is very risky, and a large percentage of entrepreneurial initiatives fail. Even successful entrepreneurs often go through extended periods, that can last for years, of working extremely long hours under pressure for little money and recognition. Many people find this very physically and mentally challenging.

15 Key Steps to Jump from Solopreneur to Entrepreneur

For people interested in making the jump from solopreneur to entrepreneur, there are several recommended steps to help increase the likelihood that the transition will be successful.

Step #1. Analyze business growth opportunities. As a first step, the solopreneur should carefully review its business performance and consider:

• what business growth opportunities exist that the solopreneur cannot take advantage of by working alone
• if the solopreneur is ready to commit to all the steps necessary to grow the size of their business.

Step #2. Create a vision statement. Once the solopreneur has decided that they want to grow the business, they should create a vision statement that sets forth:

• why they would like to grow their business
• what they would like to accomplish financially and in terms of impact; and
• the time frame for realizing their business growth vision.

Step #3. Identify and build the right team. The next step is identifying the team to help the solopreneur realize their business vision. This is a crucial step in transitioning from solopreneur to entrepreneur, as in many cases, the quality of the team is a decisive factor in whether the entrepreneurial venture is successful.

Many solopreneurs build teams by working with people they know and perhaps are friends with, but these people may not be the best fit for implementing the solopreneur’s business vision. Team selection should be an objective process that considers the following factors regarding potential team members:

• skills and experience
• motivation and other commitments
• expectations regarding the future of the business;
• expectations regarding compensation
• chemistry with the solopreneur and other team members.

Step #4. Create a strong business plan. Once the team is assembled, a business plan should be created. This is particularly important if the team intends to raise capital to build the business.

The business plan should contain:

• a statement of the market opportunity
• the strategy for taking advantage of the opportunity
• expected results if the company can take advantage of the business opportunity in terms of sales, revenues, and market position
• resources that are needed to allow the company to carry out the business plan
• if capital will be raised, targeted investment terms and conditions.

Step #5. Continuously improve leadership skills. Solopreneurs are only required to lead and remain accountable to themselves. In a company, solopreneurs must work effectively in a group, which means:

• being a good leader
• delegating tasks
• tracking progress; and
• keeping the team focused on business plan objectives.

To do this, solopreneurs should continuously build their leadership skills and seek feedback on how well they communicate with their teams and manage the business.

Step #6. Create policies and procedures to serve as a guide. As solopreneurs work alone have a clear idea of what they should do and how they should do it, they often do not write down policies and procedures. However, once a solopreneur begins working with others, it is easy for people to lose focus or adopt different work approaches, which can negatively affect business performance. Policies and procedures are necessary to ensure the team remains aligned as the business grows.

Step #7. Continuously strengthen the business value proposition. While solopreneurs may have successful products and services, they will likely face additional competition as they grow. This competition may be based on product quality, price, or other factors. Solopreneurs should carefully and objectively analyze the competition and see if there are ways to improve the company’s products and services so it can protect and increase its market share.

Step #8. Remain focused on the customer. Since solopreneur businesses are often small, they often provide high, personalized service levels to customers. As the business grows and customer volumes increase, it can become more challenging to offer the same level of service, which can negatively affect competitiveness.

To remain competitive, solopreneurs should focus on:

• building relationships with existing clients
• actively seeking out customer feedback and suggestions for product improvement; and
• have a formal process for evaluating that feedback and considering the advantages and disadvantages of incorporating it into products.

Step #9. Invest in sales and marketing tools and processes. Marketing is vital to growing a business. Companies should:

• develop a comprehensive marketing strategy to reach a wider audience
• seek advice and feedback from marketing and sales professionals if companies do not have core skills in these areas; and
• research and invest in tools to convert customer leads into paying clients.

Step #10. Systemize and automate to create actionable metrics and increase efficiency. As businesses grow, they can become less efficient. Companies should look for ways and technologies that can help streamline their business. Technology can be used to:

• save time
• automate repetitive tasks
• reduce errors; and
• make process improvements.

Step #11. Concentrate on financial management. As businesses expand, expenses can rapidly increase, and it is easy for companies to run out of funding before they meet their business objectives. To ensure that companies effective their cash runway, they should:

• have a disciplined process for creating and tracking budgets;
• carefully track all expenses against the budget; and
• have a plan for seeking additional funding before it is needed.

Step #12. Encourage company-wide innovation. Innovation is a key way to create competitive advantages. To become more innovative, companies should:

• stay updated with industry trends and technology; and
• create an environment where creativity and new solutions are encouraged.

An article on how companies can become more creative is here. An article on how companies can become more innovative is here.

Step #13. Seek mentorship and guidance. Regarding how skill a solopreneur is, finding a great mentor can be very useful in setting goals, highlighting potential pitfalls, and improving business performance.

Step #14. Learn continuously and stay adaptable. The transition from solopreneur to entrepreneur is an interative process where success is often the result of moving forward, moving backward, and then moving forward once again. It is a loop rather than a straight line.

To sustain a learning culture, solopreneurs should:

• recognizethat setbacks are the rule rather than the exception on the entrepreneurial journey
• analyze setbacks, try to learn from them, and apply those lessons to improve business performance in the future; and.
• be willing to make changes and pivot if market conditions or customer needs change.

Step #15. Take care of your personal well-being. The transition from solopreneur to entrepreneur can be extremely rewarding, but it can also be physically and mentally challenging. Solopreneurs should be sure to:

• take care of their physical and mental well-being.
• delegate tasks where possible;
• have scheduled times to check in with themselves and consider the impact of the business on their lives and the people around them.

One more step. Stay passionate. Don’t lose the passion that made you start down the entrepreneurial path to begin with. That is one of the greatest entrepreneurial assets.

Conclusion

An important strategic decision for people who are on the business path is whether they should remain solopreneurs or become entrepreneurs. This article set forth 15 steps for solopreneurs to keep in mind as they consider making the entrepreneurial journey.

The photo for the article, which shows Bob Beamon breaking the world long jump record at the 1968 Mexico City Olympics, came from here.