“Should I stay a solopreneur or should I build a full-fledged firm (or an agency or a company)?

This is a $100K question.

Why $100K?

As I’ve explained in my previous post, “The Ultimate Roadmap: How to Instantly Reduce the Amount of Uncertainty in Your Entrepreneurial Journey,” (link) you can make up to $100K without a solid business model or structure or even a clear long-term vision.

You don’t believe me?

Well, all I can tell you is that I’ve seen countless amounts of people who have done it. Either you take my word for it, or don’t believe me. Your choice.

But here is the thing. Once you reach this revenue mark consistently for more than 2 years or so, possibly up to $200K, you will have to face a question like this one to gain clarity on “where to go from here?”

The good news is this is great timing to ask yourself this question for 3 reasons:

1.    You have enough confidence at this point that your business generates revenue. In other words, you have your proof of concept down.

2.    It’s unlikely that you are in a dire, survival mode, so you can spend some quality time making a sound business decision.

3.   It’s not too late to clean up your business that grew organically, without a massive cost, to mold your business into your desired version.

To top it off, I’m making this outlandish claim that you will be able to make this decision in under 1 hour after reading this post.

Yep, you heard me. Under 1 hour.

Any successful entrepreneurs you may look up to will tell you this, your business growth is heavily dependent upon how fast you can make sound business decisions (and take required action accordingly.) 

It’s because being stuck in the space of indecisiveness is the silent killer of all businesses as it causes stagnation. Money, in case you didn't know, loves speed and hates stagnation. This is why I’ve designed this post to ensure that you will be able to make a quick but solid decision for your business.

Here’s the spoiler alert:

If you are wondering, “Which is better – staying as a solopreneur or building it up to be a firm?”, the only answer I can give you would be, “It depends.”

The bottom line is there is no right or wrong way. Either can work for you. More importantly, there's nothing you "should" do. Instead I’m a huge advocate of the idea of you doing what you want to do.

What it comes down to is getting seriously honest with yourself and answering this question instead:

What do I ultimately want from my business?

Don’t worry, I will guide you through “how to” answer this question so that it will be a meaningful exercise, as I realize that this is a big & vague question.

But before diving in, let’s get some basics out of the way.

The Definition of Solopreneur and a Full-Fledged Firm (or an Agency or Company)

When I say “definition,” I don’t mean the universal definition.

Instead, I want to clarify that these are my interpretations of the 2 terms that I will use to write this post so that there is no confusion.

A solopreneur is someone who:

●        Does not have any full-time employees on payroll other than himself.

●        May hire independent contractors on an “as needed” or “project-by-project” basis.

●        May not have a dedicated physical location for his business.

On the other hand, when I say a “full-fledged firm,” it means that it has:

●        A full-time staff on payroll plus some independent contractors.

●        A physical office location (or fully remote.)

●        His role is to be the one to bring in revenue opportunities and hardly work directly on his core business.

The major difference is whether you have full-time employees on payroll while other factors are not always black & white.

For example, a solo consultant may have a physical office location she leases, purely because that is her preference. On the flip side, I’ve seen established firms maintain most full-time employees working remotely.

There is one more definitive difference between solopreneurs and full-fledged firms, but I am going to set this one aside for the next section. So, read on!

Circling Back: What Do You Ultimately Want from Your Business?

Now that we have the important definitions out of the way, let’s get back to the question which will determine your decision of whether or not you stay a solopreneur.

This question can be rephrased as “Why did you start your own business anyway?” If this question is easier for you to answer, you can go with this one. At the end of the day, there’s not much difference between these 2 questions.

Now, here’s what I want you to do.

Take out a piece of paper & start writing your answers without giving too much thought. What you want is your “unbiased” true thoughts coming from your gut. I highly recommend you don’t cheat by going down the rest of this post before doing this first.

Keep in mind, the first word, description or sometimes a number you choose is the closest to what you truly believe. Once you start to see how others answer the same question or what’s listed below will muddle your judgement.

Deal? OK, I’ll wait.

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Here are the 8 most commonly known answers to these questions and what the implications are.

1.     Freedom & Flexibility – You value freedom & flexibility over the hustle of managing people & the pain of scaling.

2.     Legacy – Your vision is to build an equitable business that's not all about you.

3.     Brand – You value you as a brand (authors, thought leaders, Instagram/YouTube brands – It’s all about you.)

4.     Mission – You have a mission that calls for impacting as many people as you can.

5.     Curiosity – You want to see how big you can build up your business beyond what you thought you were capable of.

6.     Investment – Your vision is more about having a portfolio of businesses you can buy & sell easily.

7.     Financial Support – You only want to contribute enough to support your family financially without killing yourself.

8.     Everything/Hybrid – You are after world domination – Gary Vaynerchuk style.

You may have written down answers using different phrases. Do your best to pick the closest out of these 8 so that it is crystal clear which to choose.

If you answered somewhere along the line of #1, #3 or #7, staying a solopreneur would be the best route to take.

If you answered somewhere along the line of #2, #4, #5, #6 or #8, your goal would be to build a full-fledged business.

That’s it. Pretty easy, right? 

Just in case, let me explain why it plays out this way although you may already have a pretty good idea.

#2, #4, #5, #6 or #8 requires you to be “detached” from your own business, thus you need a team of dedicated & committed staff to carry out its operations so that it can run without you.

This is the other “definitive difference” of being a solopreneur vs. scaling up a full-fledged business I mentioned earlier that I was setting aside.

You might argue that #6 doesn’t belong on the list because one can start by buying businesses outright to build a portfolio of businesses. I agree with this…just partially.

Here’s my counter-argument: You wouldn’t be questioning if you should stay a solopreneur if you just got off Wall Street with a fat severance payout & ready to buy up a few revenue-generating niche authority websites to build your own private equity company. Correct?

In this case, your first business needs to be designed in a way to be added to your portfolio, or it is going to be the cash cow that buys up other businesses. For this reason, you would likely build it so that it runs without you. That’s why #6 stays.

End of discussion.

You may also argue that #8 requires no need to detach yourself in this case.

Here’s my counter-argument: I’ll use Gary’s company as an example. Gary Vaynerchuk’s personal brand will live on with him forever, and he can easily sell Vaynermedia as a stand-alone company to be viewed as a media brand. Oh yes, he has all that worked out so that he can buy Jets as he declared.

Am I being sarcastic?

Not. At. All.

Actually, he is the only one I can name who strategically balances all parts of his businesses to be super sustainable. I can’t say the same for, say, Oprah. People love Oprah so much, they could care less about her Harpo Productions which is not an agency like Vaynermedia although Harpo does produce movies & non-Oprah talk shows i.e. Dr. Oz.

OK, enough of me killing your objections, yes? Let’s bring it all back down to your case.

As you can imagine, the setup for solopreneurship will not allow you to detach yourself from your own business. You are the face of the company & you do most of the work.

Now, let’s go over pros and cons for both remaining a solopreneur and building up a firm so that you have full understanding of what you’re getting yourself into.

Staying a Solopreneur Pros & Cons

Solopreneur Pros:

✔    You only have to be financially accountable for yourself as it’s easier to let go of contractors.

✔    You can focus more on non-monetary values i.e. work less, take a longer time off, etc. 

✔    You can be very nimble & intuitive on making business decisions. 

Solopreneur Cons:

●   Your capacity limit is low where you may tap out quickly.

●   Selling your business may be harder without agreeing to an "earn-out" deal.*

●   If you go down i.e. getting a flu, your business will slow down.

●   It may be difficult to get loans & mortgages by missing out on building business credit.

Building a Firm Pros & Cons

Building a Firm Pros:

✔    You can intentionally design a business that runs without you (so that you can sell or hand it down to your children.)

✔    You can pursue other interests knowing your current business is self-sustainable.

✔    You can sell your business without getting into an “earn-out” deal.*

Building a Firm Cons:

●   Requires lots of upfront investment (not just money but time & energy) involved to ensure you are building a high-functioning business.

●   Ongoing maintenance issues like keeping your employees happy, as well as fortifying the current business model from competitors will never go away.

●   The never-ending battle of keeping your overhead cost low will come with the package.

*Earn-out: When you sell a business, there will be a clause to keep you in the business for a set amount of time until it starts to operate without you. It ranges from 1 year up to 5 years. If you want to sell it off and move on, this will be the hurdle. This is the clause you don’t want to see in the agreement.

Still Not Sure? Here are Some Helpful Resources

Some of you have the tendency of “waiting a little longer until something better comes along.” I’m not one of those people, but no judgement here. There’s nothing wrong with that in general.

If you happen to be one, then I still want to help you make a decision faster. As I mentioned earlier, running a successful business consists mainly of a series of fast iterations of “making a decision, committing to it & taking action.”

This is the reason I don’t want you to take this “wait it out & see what happens” approach when it comes to running a business.

To combat this, I have some books I recommend you pick up.

If you are leaning towards staying as a solopreneur:

“Company of One” by Paul Jarvis

“The Million-Dollar, One-Person Business” by Elaine Pofeldt

If you are leaning towards building a full-fledged business:

“Built to Sell: Creating a Business That Can Thrive Without You” by John Warrillow

“Scaling Up: How a Few Companies Make It…and the Why the Rest Don’t” by Verne Harnish

“Clockwork: Design Your Business to Run Itself” by Mike Michalowicz

Additionally, if you are still having doubts whether your business is currently scaleable, you can check out this guide to help you understand if your business is scale ready (link.) Understanding this can ultimately inform your decision to stay a solopreneur or become a fully-fledged firm.

Last Words: Your Decision Doesn’t Have to be Permanent

You will evolve as a business owner over time. It is very possible that you will change your mind in the future, and that is perfectly OK.

What’s not OK is to stay oblivious. Regardless of what you may or may not do in the future, clearly understanding what your options are can set you apart from the rest of wantrepreneurs.

Let’s just say that you thought you wanted to enjoy freedom & flexibility in your business. Subsequently, you decided to perfect your solopreneur business model.

But shortly after, your vision and value has shifted to building a mission-driven full-fledged business. All you need to do is to rebrand or close down parts of your business to create room for the new business model to take off.

This is something most entrepreneurs go through after surviving the first 3 years of their businesses.  Instead of worrying about changes you may or may not have to make, make a decision now by acknowledging what you feel aligns with you (or how you want to align yourself for the foreseeable future), and get to work.

To help you assess whether you are aligned with your business strategically and emotionally, I have another post that offers a quick & fun exercise. (link)

Let me know if you have any questions about this topic or any other topics you want me to cover this year. I always love to hear from you!