Is There a Solopreneur Business Model?
When you set up your own business, a common question you get from friends, family, peers, vendors and clients is, “What’s your business model?”
Your business model has nothing to do with your legal business structure, funding or the product/service you provide. Your business model has nothing to do with your title or industry.
Rather as a solopreneur, your business structure depends on a variety of other factors. Some people fall into a business model by accident. Some people set up their business following a model they already know or are familiar with. Everyone should consider what would be the best structure for what you want to offer, your strengths and your priorities. There are many options and approaches. What’s great is that you can define a business model that is uniquely yours.
By definition, a business model describes the rationale of how you create, deliver, and capture value – from customers and in the market. A business model can be an informal or formal description of the core aspects of your business, including your purpose, offerings, strategies, infrastructure, organizational structure, trading practices, operational processes, and policies.
In developing a business model for a new product/service/business, it is easy to overlook the impact of two other factors or dimensions: time and money. E.g., how long will it take to develop/build a sale-able product/program/service offering customers can buy? How much effort, time and money (aka investment) is required to convert leads into prospects into buying customers? And how much risk is involved to achieve a positive cashflow? The answers to these questions will vary depending on the business model you’re considering.
If you develop your business around a business model that optimizes at least one of the following elements, you’ll have a higher probability of success, meaning you’ll beat the odds of surviving three years as a startup business. Look to optimize at least one of these:
- Reduce/constrain/minimize any required upfront investment – the most current research confirms that businesses started during a recession/with tighter financial constraints are more likely to thrive than businesses started with more money
- Accelerate revenues/receivables in your offer/price structure – regardless of the business model you choose, the pricing strategy must fit your offer, your market and your ideal client’s wants and needs
- Develop superb customer support systems to obtain clear reliable customer feedback early and often – even as a solo business owner, it is imperative to have responsive systems in place to serve clients from the outset.
- Reduce your investment risk in every area (burn rate, cashflow, credit, staffing, inventory, etc) – take off the rose-tinted glasses and look at your business as a business.
Establishing your business model is part of developing your business strategy. When you are clear about what business model you are operating under, it becomes much easier to set up structures and systems to run the business. With a business model and systems and structures established, it’s much easier to see the business logic of your company at a strategic level. Decisions become obvious and easier to make.
For each business model you want to consider, start by asking yourself three questions:
- What are your objectives for selecting that business model?
- What are the pros and cons for you personally and professionally using that business model?
- What would have to happen? What results would have to be achieved for you to be able to say your business was as successful as you want it to be in three years?
Don’t assume you should follow the model of all your peers in your field. Do the work to consider and evaluate what will be an ideal model for the business and the life you want to have.
