So you read or heard somewhere about a Solopreneur.
But what in the heck is it?
Well, Solopreneur is a mixture of two words, Solo and Entrepreneur. It means that you are an entrepreneur that prefers to work alone or solo. If you are completely new to solopreneurship, check out our getting started guide.
The Solopreneur Institute defines a solopreneur as:
“An entrepreneur who prefers the freedom to run a business without any w-2 employees.”
This means that you can work with people, but you aren’t actually hiring employees with an office. You can hire contractors and simply pay by hour or project.
With the power of the internet and this digital age, you can have a fully operational business with contractors all around the world doing different tasks at different times to complete a common goal.
Solopreneur Definition from The Web
As solopreneurship grows, more and more websites are talking about it and creating content around it.
Google now includes it in its dictionary as follow:
“a person who sets up and runs a business on their own.”
Urban Dictionary says that solorepeneur means:
“An entrepreneur who works alone, “solo,” running their business single-handedly. They might have contractors for hire, yet have full responsibility for the running of their business.”
Free From Broke defines a solopreneur as:
“Simply stated, a solopreneur is an entrepreneur who works solo; and this makes perfect sense. “
Another popular solopreneur website, The Solopreneur Life, defines a solopreneur as:
“A TRUE Solopreneur is someone who has developed a business with NO Employees, that’s Portable, Scalable, and produces Passive Income.”
All of these definitions perfectly encompass what is truely is to be a solopreneur.
But let’s also look at the differences between a solopreneur and an entrepreneur. First, let’s define an entrepreneur:
What is an Entrepreneur?
The Merriam-Webster Dictionary, arguably the go-to authority on all things definitions, defines an entrepreneur as such:
“One who organizes manages, and assumes the risks of a business or enterprise.”
Investopedia defines an entrepreneur as follows:
“An individual who, rather than working as an employee, founds and runs a small business, assuming all the risks and rewards of the venture.”
In other words, entrepreneurship entails creating one’s own business without outside help. Most people driven by the spirit of entrepreneurship operate those businesses as general managers, chief executive officers, or managing partners. Some self-founding business owners hire others to run the operations of the businesses they own, though they almost always are directly involved in handling those operations.
You may or may not have heard of the term solopreneur. Let’s define the term and differentiate between entrepreneurship and solopreneurship.
Differences between Entrepreneurs and Solopreneurs?
Although every business expert, business publication, and source will have a different opinion on how to define the differences between these two types of business people, this is how our team differentiates between the two.
Entrepreneurs sometimes do hire employees
A major downside of hiring employees is having to file payroll taxes and provide W-2 Forms to employees for every business year they earned income. In other words, these Internal Revenue Service (IRS) documents will have to be filed every year those businesses exist.
Once businesses grow large enough to hire employees, business owners and executives strive to keep those businesses scaled to hire even more employees. Businesses with employees often outsource their payroll and tax filing needs to accountants. Although accountants are liable to get the job done correctly, they often charge a pretty penny for their services.
Businesses can earn more as they hire more employees or independent contractors. However, the responsibilities of keeping up with contractors and employees will add a ton of headaches to doing business.
Solopreneurs reap the major benefit of not having to worry about preparing IRS documents at least once every year.
Solopreneurs have to deal with less financial risk
Assume a business has 10 employees and that each of them is paid just $20,000 each year. If that business fails, the owner is on the hook for $200,000 of wages that year, not to mention any other major expenses related to business overhead or cost of goods sold.
Since solopreneurs, by definition, don’t hire W-2 employees, they are liable for less financial risk than their entrepreneurial counterparts are.
Solopreneurs ideally don’t have to worry about customer acquisition
At the beginning of their business endeavors, solo-minded business owners have to acquire customers. Once their maximum work capacities are reached, however, solopreneurs don’t have to advertise to draw potential customers in or spend time communicating with them. Solopreneurs can save hours on a weekly basis by not needing to acquire new customers to generate their ideal level of income.
Solopreneurs sometimes work in teams with other like-minded individuals
Whether they sign legal documents to form partnerships or simply work closely with one another from time to time, solopreneurs often join forces with like-minded businesses and individuals in their lines of work.
In most cases, these collaborators have different skillsets than one another. When handled correctly, such collaborations can be indefinitely ongoing, as each collaborator needs help from their co-collaborators to make ends meet.
Even if solopreneurs don’t produce goods or offer services in tandem with their collaborators, such relationships can still be financially and operationally beneficial. For example, many solopreneurs in the same locale join forces to share market research with one another. This way, they can best meet the needs of their customers.
Serial entrepreneurship can be extremely stressful
The American Institute of Stress indicates that a whopping 77 percent of United States residents are regularly faced with troublesome physical symptoms as a direct result of stress. Similarly, 73 percent of people experience psychological symptoms like anxiety, depression, and irritability from stress. 76 percent of Americans claim that “money and work” are the primary causes of their overall stress levels.
Newly-founded businesses, or “startups,” as they’re often called in today’s world of business, often fail. Since serial entrepreneurs typically spend their own money in founding businesses, they can only take so many business failures before they’re filing bankruptcy or going broke. The potential of losing financial stability can unarguably be a major source of stress. Further, being preoccupied with the countless variables related to starting and growing businesses can also cause serious levels of stress.
Entrepreneurs are infinitely more likely to face physical and mental problems in their personal lives than solopreneurs are for these very reasons.
What’s the difference? Now you know
Chances have it that you’ve never thought very long or hard about the differences between solopreneurs and entrepreneurs. After all, what’s so special about slapping one of the two names on yourself?
Prospective business owners should always do their research before going through with starting businesses. They need to know whether they’re ready for large-scale business expansion and the problems it can cause or not.
Solopreneurs simply have it easier than entrepreneurs. Which do you want to be?