Starting your own business is an exciting prospect; you have the chance to bring your ideas to life, be your own boss, and make more money. But what skills do you need to get started and what’s the secret to building a thriving company?
In her webinar, The Million-Dollar, One-Person Business, Elaine Pofeldt outlined pathways to joining the entrepreneurial movement of one-person businesses, synthesizing advice from hundreds of business owners who’ve successfully started their own solo business ventures.
When Pofeldt came across a U.S. Census Bureau statistic that showed more than 35,000 nonemployer firms were bringing in between $1M and $2.49 million in annual revenue in 2015—she set out to learn what these business owners were doing to be so successful.
Pofeldt’s recent book, The Million-Dollar, One-Person Business, explores how these entrepreneurs are hitting 7-figure revenues in businesses where they are the only employees, and how they utilize automation and technology to scale their efforts. We spoke with Pofeldt about what it takes to start a high-revenue business of one.
1. Give yourself time
MBO Partners: When first starting out, what should people keep in mind?
Pofeldt: Be sure to give yourself a runway. That way you don’t have to give up on your idea prematurely. I know some people are all or nothing, but personally, what I’ve seen, is that it’s no fun to start a business and run out of cash. You don’t have to quit your job to start a business (unless that’s part of your contract). A lot of people are able to do a side gig and I highly recommend that.
It takes time to get up and running and bring in revenue, and it’s important to see if the market is actually there—sometimes you find that you actually hate the business idea and want to do something else. So long as you have the energy to work on your business 3-4 hours per week, your efforts can have a high impact if you spend your time well.
MBO Partners: What is the biggest challenge people run into?
Pofeldt: Starting out, the number one challenge is letting people know you’re there. When I first started, no one knew I was a freelancer, so I spent time doing some sort of networking activity each day. No effort is wasted if you’re getting the word out. It can be hard to be visible as a one-person business; you don’t have the same size budget as your bigger competitor, so concentrate on what you can do for free. Use social media, and if you have a little budget, experiment with paid Facebook or LinkedIn ads to market test ideas on different demographic groups to sharpen the picture of who your customer is.
3. Make good use of time
MBO Partners: How do the entrepreneurs you spoke to do it all?
Pofeldt: The entrepreneurs I interviewed were constantly looking for ways to amplify the impact they could have beyond what one person can usually do. They did this through a number of ways, one of which was making good use of their time.
As entrepreneurs, we tend to be do-it-yourselfers, but it is important to bring in help with tasks that aren’t the best use of your time. Still, if you don’t have the cash flow to support that, it can be difficult. These entrepreneurs farm out work to outsourced services once they can afford it to get the tedious work of their business done so they can focus on higher-impact tasks.
There are so many menial tasks in a small business that can take up time. Even if you find a few apps that can automate these tasks, you can easily free up 7 hours per week, which translates into one whole day you can devote to strategy.
4. Avoid common mistakes
MBO Partners: What common mistakes do people make?
Pofeldt: Over-marketing: The people I spoke to would often market their business so well that demand would explode beyond their capacity. There’s a moment for every entrepreneur when their success surprises them. It’s a good problem to have, but it can be stressful too. You might need to course correct, do something different, and focus more on big-picture strategy rather than menial tasks so you can address an explosion in demand.
Underpricing: A lot of times people are so eager to get business that they underprice, but through experimentation, they realize they provide far more value than they thought. Then, they’ll need to price adjust to meet their operations and keep up with costs. Everyone makes mistakes in business; you don’t start a business knowing how to do everything perfectly.
5. Don’t work in isolation
MBO Partners: What is the best practical advice you’ve heard?
Pofeldt: One of the best things I’ve learned is to take time away from your business. It may sound counterintuitive—when you’re starting a business shouldn’t you be working on it nonstop? —but you really need some distance to think clearly. Spend more time with family and friends or doing what you love. That will help you bring new inputs to the business. If you stay locked away with a laptop, you’ll get tunnel vision. Get out of the office; go to meetings and socialize with other entrepreneurs. There are a lot of entrepreneurs with very stable, thriving businesses and the more you’re around them, the more you’re going to pick up on great ideas.
The one-person business is a business structure, but typically there isn’t just one person doing everything alone—there’s a whole web of people for support. All businesses rely on people. If you work in isolation, your business won’t thrive. You can get on a treadmill and never get anywhere, or, take a step back and think strategically—that’s where the good ideas come without doubling your time commitment.
If you’re considering starting a business, learn how to prepare yourself by reading: How to Transition from a Full Time Job to Self-Employment.
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