Tell folks you’re an entrepreneur, and they understand the broad definition.
Tell them you’re a solopreneur, and you’re going to get odd looks.
When I started my finance firm, my initial model was as a solopreneur.
In the first two years I operated the company, I expanded the model from solopreneur to entrepreneur.
What’s the difference between the two models, and why should you understand them?
We’ll tackle those two questions in this article.
Before you launch your business, it’s helpful to know the key differences between the solopreneur and entrepreneur models.
Once you understand the pros and cons of each, you can choose the model most appropriate to your risk profile, strategy, and work-life balance.
6 Differences Between a Solopreneur and an Entrepreneur
- Solopreneurs start the business on their own.
- Entrepreneurs often start businesses with a team.
- Solopreneurs bootstrap the company with their own money.
- Entrepreneurs use funding from friends, family, and outside investors.
- Solopreneurs make all the business decisions.
- Entrepreneurs have the option to make the decision or leverage the team.
- Solopreneurs may have a lower risk profile.
- Entrepreneurs embrace risk with an ‘all-in’ strategy for their venture.
- Solopreneurs tackle one problem for a specific customer group.
- Entrepreneurs build businesses to address large-scale challenges and aim to expand the company to a wider customer base.
- Solopreneurs often start their businesses from home. In this article, you can explore how to run a home business.
- Entrepreneurs can work from home, yet many rent space to hold team meetings and interact with their Board of Advisors.
Examples of the Solopreneur & Entrepreneur Models
Jobs and Wozniak started Apple as a two-person entrepreneurial team.
Sara Blakely started Spanx as a solopreneur.
Is one model better than the other? Nope.
Do they offer pros and cons? Absolutely.
When you understand the differences, you can start the business with the right model and a smart strategy.
How Solopreneurs and Entrepreneurs Start
The solopreneur starts a business on their own, and the entrepreneur collaborates with a group.
Solopreneurs pick an industry they know and build a side hustle with a small customer base.
Their initial goal is to confirm product-customer fit and then build out the offer.
Examples of popular solopreneur models include copywriters, social media managers, and graphic designers.
Entrepreneurs can start a business on their own, but a more popular approach is to launch with a team of two to five people.
The team tackles a big problem and looks to scale the business at a rapid pace.
When you start a business, one of your first decisions is how to secure the money you need to get the ball rolling.
A helpful place to start in any solopreneur or entrepreneur business is the Small Business Association.
You can explore SBA resources here.
How a Solopreneur and Entrepreneur Finance the Business
The solopreneur and entrepreneur have different sources of funds when they start a business.
The smart solopreneur chats with a financial advisor and CPA to gain insight on a business budget and steps to coordinate the proper business accounts.
A CPA and financial advisor offer pros and cons of various strategies and help balance risks and rewards.
Once the solopreneur earns sales, they often work with a bookkeeper to keep their finances in order.
Entrepreneurs combine their own money with funding from outside investors.
Investors often provide start-up money to cover payroll and operating expenses.
This early-stage investment can provide investors with an ownership stake in the business.
Today’s solopreneurs and entrepreneurs receive funding from unique sources. They also have a different approach to making daily business decisions.
Who Makes the Business Decisions?
Solopreneurs and entrepreneurs may take a different approach to making key business decisions.
For instance, if the product launch fails or the service offer doesn’t excite customers, the solopreneur has to find a new solution.
If the internet goes down at 2:30 p.m. or the router explodes during a live webinar, the solopreneur has to find answers.
Perhaps if the neighbor’s cat has IT expertise and makes house calls, the solopreneur can get part-time help.
It’s not optimal.
Finance, operations, social media, marketing, and IT decisions occur every day in the solopreneur’s world.
This 24/7 buffet is a common challenge for a home-based solopreneur.
You can read more about the ups and downs of starting a home business.
Entrepreneurs can either make decisions on their own or collaborate with the team.
The entrepreneur can focus on one area (sales or strategy) and delegate other tasks in finance or operations.
Entrepreneurs also have the benefit of working with an advisory board.
Early-stage investors have expertise in many business areas and can advise the entrepreneur on multiple challenges, such as pricing and customer segmentation.
What’s a Typical Work Week for a Solopreneur and Entrepreneur?
Solopreneurs can launch their businesses on a full-time or part-time basis.
The majority start part-time to lower their financial risk and maintain balance with their other employment role(s).
A solopreneur will work evenings and weekends to meet with clients, launch an online course, and complete assignments.
The majority of solopreneurs wait until the business can provide 70% to 80% of their employee income before considering going full-time to focus on the new business.
Entrepreneurs start full-time with their new company.
They are on a fast track to scaling and generating revenue to satisfy their investors.
Since entrepreneurs tackle large-scale business challenges, they work 12–18 hours per day to build their products and go to market.
First-to-market is a key objective for many entrepreneurs and their investors.
The entrepreneur model has to be flexible as they determine how many products to create and where to manufacture them.
How Many Products Do They Produce?
The solopreneur and entrepreneur produce different amounts of products and services.
Solopreneurs often combine a low-priced item with a higher-priced offer. A solo copywriter can offer a digital DIY course and offer 1:1 freelance services.
A solo graphic designer can offer a collection of design templates to serve one tier of customers and work with larger clients on specific projects.
Entrepreneurs offer multiple products under one large theme.
A new SaaS company can offer diverse solutions and subscriptions to different customers within one industry.
Entrepreneurs in consumer retail could create multiple shoes, sandals, and socks to suit a wider customer group at unique price points.
The environment plays a key role for both models, and it’s a big decision when one starts the business.
Where is the “Office” for a Solopreneur and Entrepreneur?
A solopreneur and an entrepreneur take a different approach to the workplace. Solopreneurs usually launch their businesses from home.
Their laptop and WiFi connection are their primary tools.
Key topics include space, equipment, permission, and licenses.
The digital nomad model is a popular choice if you want to ‘change’ your home setting.
Digital nomads travel to various countries for extended periods and operate their businesses from a cafe or coffee shop.
The entrepreneur may work from home or in a traditional office setting.
The popular Silicon Valley model of 5–8 entrepreneurs living in one home and working all day and night on a product still exists.
Today, entrepreneurs can work from home and collaborate with their teams via email, online tools, and teleconference.
Once the entrepreneur receives funding, they might seek office space to accommodate a larger team.
Frequently Asked Questions
Is it more efficient to start as a solopreneur?
Not necessarily. The key inputs to evaluate when you choose a model are the scope of the BIG problem you want to solve and finances.
Solopreneurs start with a problem they can tackle from home, and they often have the personal funds to start. Entrepreneurs tackle a larger industry challenge and may rely on investors to provide a financial cushion to start.
How do you know it’s time to move from one model to the other?
You can evaluate revenue, projected costs, and the next steps to achieve product-customer fit.
If your sales are slow and your expenses are low, you can stay in the solopreneur model.
Once you find success with one product to solve 1 problem, you may opt to expand.
Additional employees come at a cost, yet their ability to help you tackle a larger issue and tap into more revenue makes entrepreneurial revenue attractive.
Choose wisely, and don’t expand too soon.