Thinking of starting a business alone? You're probably finding it difficult to work out exactly what the advantages are. After all, it's easier when you have someone to rely on by your side, right?
In this guide, we'll give you insights into:
- The benefits of fully owning your business
- Why starting a business alone is more straightforward than starting one with a partner
- How going solo saves your business money
- How decision-making is streamlined when you're the only one in charge
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Solo Business Ownership is Rewarding
There are, of course, financial risks involved in being a solo business owner. Owning your own business means taking on a personal financial risk. However, it also means that you reap the full financial rewards of the business.
Solo entrepreneurs also receive all the praise and recognition that comes with business success. Your reputation is enhanced as you navigate the challenges of business ownership by yourself. This makes it easier for you to build business relationships and gain new clients.
As your reputation as a business owner grows, other business owners will look to network with you. This will increase your own expertise and provide ongoing benefits.
Small business ownership
Solo small business ownership can be even more beneficial than running a large business on your own. The profits from a small business tend to be minor at first. If you have a business partner, you have to share these small profits with them. Solo small business owners can keep all the profits for themselves as a reward for their time commitment and hard work.
Managing financial resources
Once you start making money, you can decide how much to pay yourself. At first, however, it's generally advisable to pay yourself a modest salary. This allows most of the profits to go back into the business while it's growing. Still, this doesn't mean you have to forego a steady paycheck.
Things Are Simpler Without a Business Partner
Having a business partner can make running your own business complicated. You need to worry about the liabilities that could arise from potential conflicts. Being a solo business owner means keeping things nice and simple.
When forming a business partnership, you usually need to open a joint business bank account. You also file joint tax returns for the business and may borrow money together for the business. If your partner is a business associate or friend, this can have big financial implications.
Your partner may prove to be untrustworthy or lax, which would have ramifications for you and your business. They may also handle their finances badly, which then affects yours – and the business as a whole.
As a solo entrepreneur, only you control your bank account, company credit cards, and the paying of taxes. This may seem like a lot of responsibility, but it's less complicated. You know you're responsible for these things and can get them done without relying on someone else.
Maintaining personal relationships
Although starting your own business has many benefits, it is also stressful – to say the least. If you start a business with a friend, the inevitable stresses involved can often damage your relationship. Many entrepreneurs start a business together as friends, only to find the friendship falls apart.
As a solo business owner, your personal relationships aren't put at risk. You can focus on the task of running your business while maintaining relationships with your friends and family.
There Are Fewer Costs, So You Can Make More Money
One of the benefits of not having a business partner is that you don't need to worry about paying them. This lowers the financial risk of starting a small business. As the profits are often minimal in the early days, this places less financial burden on the business and makes it more likely to succeed.
Small business owners with no employees don't have anyone to pay but themselves. This means that 100% of the profits are split between them and their business. Most small business owners stick to a salary of 50% or less of their profits.
When you don't have a partner, you also don't need to pay for their business expenses or rent a larger office space. This reduces the costs of starting and operating your business.
No Need to Consult With Others When Decision-Making
The decision-making process becomes much easier when you're the only one calling the shots. As a solo business owner, you're your own boss. This means you determine the best way to go about things. You choose when and where to work, which customers to target, and everything else.
Making decisions with a partner means reaching a consensus. This takes time and can slow down productivity. When you go it alone, you can make decisions quickly, based on what's best for the company. There's no need to wait around while someone else makes up their mind.
This leads to increased productivity and reduces opportunity costs. Opportunity costs involve missing out on business opportunities because your focus was elsewhere. This often occurs when your business is taking a while to make a decision about an important project or task.
When you're able to make decisions quickly, you can make sure these opportunities aren't missed.
Small Business Ownership Is More Rewarding
As well as the financial rewards, there is a huge amount of personal satisfaction that comes from starting your own business. You know that you're the creator of your products and that your vision is being realized. You're your own boss, doing what you love and taking great pride in the results of your dedication.
Although it's a lot of work, there's no better feeling than reaping the rewards of your own efforts. As your business becomes even more successful, you don't have to share the spotlight with anyone else. You'll know that you achieved it all on your own.
Establish your own values in your new businesses
Starting your own business also gives you the chance to instill your own values in the company. You can establish the rules and the culture that you want to exist in your workplace.
If you hire employees, you can help them to develop and support their personal and professional growth. This is another very rewarding aspect of starting a business on your own – seeing them succeed is sure to contribute to your personal satisfaction.
Frequently Asked Questions
Is delegating tasks important for starting a business alone?
The delegation of tasks is an important element of successful business ownership. If you're running a business on your own, then you may have employees working under you. If so, then you should entrust them with certain tasks so that you can focus on running the business.
If you run a business completely by yourself, then you have no employees to delegate tasks to. This means you need to practice effective time management to ensure that you can complete all the tasks yourself.
If I'm starting a business alone, should it be a sole proprietorship?
If you're starting a business completely by yourself without any employees, then a sole proprietorship might be an option. It gives you a good amount of flexibility. It allows you to operate a small business in the traditional sense or operate as an independent contractor.
However, it does make you responsible for any of the business's profits and liable for any of its debts. This can expose you to a significant amount of risk. In general, we recommend that business owners form an LLC instead.
How do I deal with the stress of starting a business on my own?
The best way of dealing with stress when going solo is to build a solid support network. This can include friends, family, and like-minded individuals in the business world.