As a business owners we are creators and builders. A business owner takes nothing more than ideas, dreams and aspirations and creates something out of nothing. As you walk through this process whether you’re just beginning or you’ve been in business for many years you are choosing the type of organization to create. I mention this because you can always change the type of company that you’re creating. If you start out as a solopreneur and then decided that you’d really like a team, or if you have a team and decide you’d really like to have no team at all, these are changes that you can make in your company. You simply need to form a plan and work toward that. Today I want to talk about the types of organizations you can create to allow you to see which model will best to suite your needs.
1. Solopreneur – a solopreneur is just as it sounds someone who works alone. Typically, a solopreneur doesn’t have any employees. You are a one woman or man band. You’ve created the product or service and you’re doing it all. Many solopreneurs may surround themselves with others to help. Contract labor is your ally as a solopreneur. Many times a bookkeeper/account/tax preparing will be hired. Online automated delivery systems may be used and frequently a VA or Virtual Assistant will be part of your team of contract labors. If you are a solopreneur there is often no need for an office space and working from home is a good option. Your overhead is low as a solopreneur. One of the largest expenses in business is employees. If you don’t have employees you also don’t have payroll taxes and benefits that are required by employees. The biggest limitation of the solopreneur is time. You are just one person and you don’t have the ability to do more than you have time in the day. Solopreneurships can be very profitable. Most solopreneurs are self funded. Because in many cases they are their product and their overhead is low, they don’t typically need funding to start their business.
2. Small Business – when we think of small businesses we often think of the corner store, or gift shop, a dry cleaners or florist. We think “small business.” Often these small businesses are brick and mortar. They have a shop, store or office and typically conduct business in their town and community. They may have an online presence and might even sell products or services online, but the bulk of their business is done face to face. Small businesses can and often do have employees, but not all small businesses have employees. If a small business does not have employees it is often run by a partnership, a family or husband and wife team. A small business can also be a contractor, accountant, dentist or attorney. When you think of small business think, limited service area. You can only service the people within your region. If you are a dentist in order to grow your customer base you would need to open a new office. That may mean opening a second location in the same community or it may mean opening a new office in a different community. Typically, most small businesses have growth goals and many are very profitable. Many small businesses receive funding. This funding can come from different places. It could be money that the founder has saved up, it could be a loan from a friend or family member or it could be a loan from a bank such as a government back SBA (Small Business Administration) loan.
3. Startup – Paul Graham, founder of Y Combinator an early stage funding organizations in Silicon Valley, CA says this about Startups. “A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.” So what does growth mean? Growth means offering your product or service to a huge number of customers and staffing your company with a huge number of people to service the distribution of that product or service. When we think of Startups we think big scale. Often, start ups will seek funding from angel investors or venture capitalist. This is a type of funding for a new or growing business. It usually comes from venture capital firms that specialize in building high-risk financial portfolios. With venture capital, the venture capital firm gives funding to the startup company in exchange for equity in the startup.
These are three types of organizations you may want to build. There of course are many others, such as franchises, online product companies, Ebay or Amazon selling companies and many other types of organizations. Consider the type of company you’re forming. Think about what you want in life. Your business should be an extension of who you are as a person, and should fit in well with the lifestyle you desire. After selling my company that I would put in the small business category and moving into the solopreneur category, I realized I missed the energy of working and collaborating with others. I missed working on a team. Now that I have that insight I’m working to build a Startup. Time will tell if my company will be a Startup or a small business, but either is good for me. I know that I want to build a team.
What type of company do you want to build?