Last Updated on December 11, 2019
Solopreneurship is a relatively new phrase that has come to the fore only recently. But, what does Solopreneurship means?
Looking closely, we will see that the word Solopreneurship is a blend of two different words: Solo and Entrepreneur.
Thus, the word would obviously mean an entrepreneur who works solo or alone.
The Solopreneur Institute has a specific definition for solopreneur which is:
“An entrepreneur who prefers the freedom to run a business without any w-2 employees.”
This means that a solopreneur works with people but he does not hire them. Rather, he hires their services for a specific job or a contract, and pays them accordingly.
A Rising Phenomenon
Solopreneurship is a rising phenomenon.
A few websites have sprouted around this idea sharing specific content pertaining to Solopreneurship.
If we seek to define the phrase in simple words it will come down to the following:
A solopreneur is a person who develops and operates a business without any employees in order to generate passive income.
In order to discuss the difference between a solopreneur ship and proprietorship, we would fist need to define both terms and then, find out the difference between them.
We have already discussed what a Solopreneurship is. Let is discuss what a sole proprietorship means.
A sole proprietorship would simply mean a person who starts and operates a business also assuming all the risks associated with it.
In other words, a sole proprietorship involves starting a business alone. The sole proprietor serves as the manager and the chief executive of their own business.
In some cases, sole proprietors hires other people to work for them to operate the business. However, their involvement in the business, and its day to day operations, is direct and pronounced.
Difference Between Solopreneurship and Sole Proprietorship
Since solopreneurship itself is a novel phenomenon, you will see different sources sharing their specific opinion regarding the difference between these two phenomenas.
The article below will discuss these the two terms and find out the difference between the two.
Sole proprietors can hire full time employees to work for them
Unlike solopreneurs, sole proprietors can hire full time employees.
The drawback of hiring a person, from the point of view of the business, is that it is required by law to file payroll taxes of every employee. W-2 forms for every employee also need to be provided after the completion of each income year.
The documents proving the same need to be submitted to the Internal Revenue Services (IRS) every year.
With the growth in business, the sole proprietor realizes the need for hiring more employees. Sole proprietors also find it feasible to outsource their entire portfolio and tax-filing operations to third parties. These third parties are usually trained accountants who know their jobs well. However, they would charge a hefty sum in order to carry out all these activities.
Hiring employees is a genuine business requirement. They can boost growth and streamline the day to day operations. However, keeping up with the documentary and filing requirements may become time consuming for the sole proprietor which, at a time, steers the focus away from the core business activities.
A solopreneur can keep clear of all these problems simply by not hiring any employees. Consequently, one does not need to worry about the documentation and / or filing.
There are several advantages of sole proprietorship. It is one of the most favored ways of doing business.
But, it also contains one financial fault:
Take for example a sole proprietorship that has 10 people on its payroll. Each of these people is paid a 1,000 Dollars every month.
Now assume that, for some reason, the business is not working, or simply fails to make profits.
What will happen then?
The business will have an outstanding liability of 10,000/- Dollars at the end of the month in terms of unpaid salaries. But there will be no profit to pay it from.
If the business does not make profit for a quarter, the financial liability will be 30,000 Dollars.
The business will have to cope with two problems: the issue because of which the nosiness has stopped making profits, and the rising liability of employee payroll.
A solopreneur does not have to deal with this issue because they usually refrains from hiring full time employee to work with their businesses.
The Stress of day to day Operations
Sole proprietors are engaged in the day to day operations of their businesses. They are at the forefront of every activity.
If there are employees doing their work for them, they have to look after their quality of work, time spent with the business, etc.
Moreover, they also need to meet clients, and respond to their queries and questions.
All these activities take a toll on the sole proprietor increasing their level of stress.
For a solopreneur, the stress is there but the level is rather low because they seek to outsource most of the daily work to outside contractors, and do not get involved in each and every aspect of the work.
Working with like-minded individuals
Sole proprietors usually lead their businesses. They are supposed to chart the course of the business, and inform the rest of the people – managers, supervisors and working – how they want the business to be done.
Solopreneurs work in a very different way. They tend to form partnerships with like-minded individuals who have a certain skill set, and share their enthusiasm for a particular project.
More often, these individuals possess different skill sets which they bring to the table in order to complete a particular task.
A solopreneur offers services in tandem with these individuals in order to make it beneficial for everyone.
The customer remains satisfied since he can have all the required services under a single roof.
The Ease and Freedom
Sole proprietorships also offer a certain level of ease of doing business.
A sole proprietor is not answerable to anyone but himself. He can carry out his business activities as he deems fit.
He is not supposed to defend his bottom-line, or give reasons thereof.
However, sole proprietorship is not entirely free. A sole proprietor is still responsible for the well-being of his employees.
They need to look after, and satisfy, their monetary demands. They are also required to maintain documentary evidences for everything, and every aspect of the business in order to submit them later to the government authorities.
A solopreneur is free of all this hassle. They have the time and the ease to focus completely on their business.
They have an option to hire professionals for tasks which they may not be good at. They can hire people to work remotely from their homes if the job doesn’t require to sit in an office.
The Final Word
Obviously, no one would have given a thought regarding the difference between solopreneurship and sole proprietorship.
The reason is that one of them – solopreneurship – is a new idea, and most people may have not discussed it.
Sole proprietorship is a very beneficial prospect for aspiring businessmen. However, anyone seeking to start a new business should do a little research, and based on their own skillset and temperament, choose one of them that suits them best.
With the passage of time, you will understand which one was better for you all along.