Starting a business alone has lots of advantages – you have the freedom to take it in the direction you want, it eliminates conflict in decision making and it may increase your ability to make fast decisions. However, there are also important disadvantages to be aware of. This article explores some of the primary disadvantages of being a solo entrepreneur (or solopreneur for short).
No one to develop ideas with
Possibly the primary limitation of launching a business by yourself is that you will have no one else to develop ideas with. You are responsible for coming up with a strategy bu yourself, developing a business plan, and launching your firm.
Of course, there are ways to meeting and developing relationships with other entrepreneurs, who may be able to help you with decision making – providing advice and support which may improve your decision making. Nevertheless, all decisions rest with you – and while it is important to build support from others, ultimately outsiders will never be as involved as if you were to have a partner dedicated to launching your business.
The need to become skilled across all parts of the business
Another disadvantage of being a solo entrepreneur is that you need to become skilled in all areas of your business. If you had a startup team, you likely will have a diverse skill set, spanning multiple areas. Even if the team is largely comprised of individuals from a particular orientation – software developers for example – your team will still have different skills that can complement each other, and compensate for any individual’s deficiencies.
The need to develop a broad skill set can be a challenge, not only because of the time required to learn a broad range of different areas but also because as a generalist, you are unlikely to reach the skills as someone who has a concentrated skill set. For example, While you may be able to manage your business social media account sufficiently well, you may not be as proficient as someone who is specifically trained in that area.
Beyond the need to become skilled across a large range of areas, is the physical constraint of insufficient time that you may run into. There is a fixed number of hours in the day, and while it is often possible to identify certain low-value-add job activities that you may be able to reduce or scrap, you still will run into the issue that you are a one-person firm.
The time constraint can play out in several ways: it can reduce how fast you are able to expand the company, and it can mean that you may have to forgo some opportunities that you don’t have the capacity to take on.
May not match all investor expectations
A final limitation of being a solo entrepreneur is that this may not align with the expectations of investors. Typically investors are interested in companies that have the possibility of substantial growth – if your long-term intention is to keep the company as only yourself, this is may not align with their ambitions, increasing the difficulty associated with raising capital.
This need not be a problem – you may not have any need for external financing or want to retain full ownership of your company. A key thing to remember though is that there needs to be an alignment between your objectives for the firm, and the growth expectations of investors. If you want to remain a single-person firm, gaining investments from investors who are interested in high company growth, will almost certainly lead to conflict between you and them.
Final thoughts: Consider what is right for you
Something to keep in mind when considering whether you want to launch a business alone, or bring others on board, is to determine what is right for you. It is sometimes easy to fall into the trap of thinking that ‘success’ means gaining VC support, IPO’ing the company, and being the next ‘unicorn’ mega-success. While this may be some people’s vision of success, and certain investors will specifically target this form of growth, you can still generate a comfortable living as a single individual company. Indeed, there are substantial benefits of running your own firm beyond the financial incentive. Ultimately, consider your priorities, and make decisions regarding the ultimate size of your business that match with your ambitions.