Potential advantages or reasons to expanding the firm beyond yourself
While there are a lot of advantages of being a solo entrepreneur, there can come a time where you may want to expand past being a single member. Some of the reasons why you may want to expand include:
One of the key reasons to consider taking on others is to bring on new skills that you lack. There are a lot of different things that you need to know – and while some skills can be learned – others may require more dedicated training.
Your business has grown beyond the point that you can handle
While success is great, for a solo entrepreneur, there can come a time when you can’t handle the growth. You become the bottleneck to your business and you may need to make the choice between accepting your business is going to hit a ceiling in terms of size or that you will have to take on additional employees.
Allows you to pursue other things
Finally, bringing on others can free up some time to pursue other business opportunities. Potentially you have a new opportunity, or want to semi-retire, bringing on others can be a way to allow your business to out-live your role in it.
Potential limitations of expanding your firm beyond yourself
Of course, taking on employees may not be something you want to do. Indeed, being only responsible for yourself may be part of the reason you set out alone in the first place.
Now need to support the wages of others
One of the key aspects to consider when expanding beyond yourself is that now you are responsible not only for your own salary but also for supporting another employee. Indeed, depending on your relationship with the person that you work with (i.e., as another founder, or as a paid employee), their salary may take priority over yours. It is important to make sure that the additional costs associated with the growth are outweighed by additional profits, such that you are not financially worse off by taking on someone else.
Potential for disagreements
Bringing on additional employees opens the possibility for disagreements in your firm. While by yourself you are directly responsible for all decisions, having team members means that now you need to get others on board with your ideas.
Different approaches to hiring employees to consider
Bringing on another partner
One approach to expand is to bring on another partner – someone else that is also a co-owner of your business. This approach is similar to the decision as to whether to start a business alone or with someone else – the advantage is that you can potentially gain a committed partner who may be s heavily motivated to grow the business (potentially for less money than a salary would command) – the disadvantage is that now you have someone else that co-owns your business.
Hiring an employee
The more standard approach to bringing on others – that doesn’t involve giving away equity of your business – is to hire an employee. The key limitation of this approach is that now you have to pay employee salaries out of your profits.
A final approach to expanding is to use gig workers – temporary employees that you can utilize for specific tasks. The benefit of this approach is that you can use them as needed, without the obligation of continued employment. A limitation of this path though is that you may not be able to train the gig workers so directly, nor rely on their continued commitment.