Challenges That Impact the Solopreneur Enterprise

There are always challenges associated with operating one’s own business venture. Some challenges are formidable while others are merely annoying.  Many are common and probably inevitable.  Anticipation and preparation are the best defenses and can mostly be addressed in your business plan and its subsequent updates.

TIME CONSTRAINTS

Employees can, on occasion, walk into their office, close the door, and choose to be non-productive for most of the day.  Solopreneurs do not have that luxury.  We must meet or exceed the expectations of clients and prospects every time and hit a home run whenever we walk up to the plate.

Solopreneurs are often faced with a lengthy daily to-do list— client work to perform, a meeting to attend, a workshop to develop, a class to teach, an event with probable networking potential to attend.  Furthermore, there are business operations to maintain, such as financial management, marketing, prospecting and customer service. Every item is mandatory.

Over time, fatigue and a sense of being overwhelmed can develop.  Even depression can manifest. The successful Solopreneur must learn to manage and prioritize routine tasks and in fact consider removing some from the plate through outsourcing.  The judicious use of technological tools that save both time and money is smart management, as they help business processes and customer service operate seamlessly.

Click  here  and  here  to assess no-cost and low-cost apps that not only record the time you spend on project work, but also invoice clients and in some instances, accept accounts receivable payments online.

FOUNDER’S SYNDROME

The reality of a single-person shop is that services that generate billable hours cannot be delivered unless the founder is on the job and able to produce them. That means, if you’d like to attend a multi-day skills training session or take a one or two week vacation, be certain to allow adequate time to make key preparations that will help you to discreetly step away from center stage for a few days.

Tasks that you’ve outsourced, e.g. invoicing or bookkeeping, can continue as pre-arranged, but the production and delivery of the services that are the business must be put on hold until you return.  Learn how to prepare your business for your absence (in this case, a vacation) when you click here.

HOW TO GROW

You work alone and that is why you are called Solopreneur.  To promote the expression of your creativity and ingenuity, it will be wise to remove certain routine tasks from your plate, as noted above.  Grow your organization by giving yourself adequate time to concentrate on the money making functions of a business owner: client acquisition and retention, recognizing potential new revenue streams, including niche markets you might enter, effective and timely business strategies to implement, collaborations, beneficial partnerships and networking.

If you elect to continue to perform all administrative tasks as you work to grow and sustain the business, quality control might become an issue.  Spreading oneself too thin is inadvisable and may result in sub par work, diminished customer service, poor decision-making and fatigue. It is far more preferable to spend the money on outsourced help so that you can maintain or enhance the expectations of your brand.

In closing, I reiterate that when you write a business plan, you will be encouraged to acknowledge and prepare in advance for most of the business challenges mentioned.  The initial marketing plan, financial plan and business model will keep you from falling prey to client list, money management and growth challenges.

Thanks for reading,

Kim

Image: Mosaic depicting the Amazon queen Melanippe, courtesy of the Haleplibahce Museum in Urfa, Turkey.

 

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The Most Profitable Small Businesses

What was your Fiscal Year 2015 net pofit margin? Did you reach your projection? Are you solvent and able to manage your accounts payable, business and household? Were you able to buy useful and comprehensive medical and dental insurance?  Were you able to deposit $10 K  or more into your retirement account? Did you travel to some nice location during the year and reward yourself with a vacation?

If the answer to two or more of those questions is no,  I respectfully suggest that you think about your Freelance consulting venture.  If you were able to put $7500 into your retirement account but you’ve not taken a real vacation in 5 years,  it does not raise a red flag in my estimation.  But if you have trouble paying bills, you have only the cheapest health insurance available and you infrequently or never pay into your retirement fund,  then you need to devise a way to make more money.  One of your options may be not just to tweak your business model and engineer a pivot. You may need to go into another type of venture altogether, one with greater profit-making potential.

Take heed– Sageworks, a financial data service located in Raleigh, NC, analyzed the net profit margins of 16,000 small businesses that earned less than $10 million between September 2014 and August 2015.  The average net profit across all industries in that time period was  7.2%.

Note that this list of top performers consists almost entirely of Freelancer-friendly service industries.  Despite the challenges of selling services, especially intangible services,  to either B2B or B2C clients,  Sagework’s list demonstrates that it is possible  to make money as a self-employed service provider.

Some industries are more soloprenuer-Freelancer friendly than others.  Accountants/bookkeepers, real estate sellers, lawyers,  landlords,  health  practitioners (physical therapists, chiropractors, podiatrists, etc.), graphics/industrial designers and architects/(structural) engineers are all able to operate a one-person shop quite well, perhaps with a single employee to provide administrative help.  Physicians, I’m sorry to say,  can no longer maintain a solo practice in big cities.

Educational requirements and professional credentials pose a formidable barrier to entry for several of these high-yield business opportunities, with medicine, dentistry, law, architecture, engineering, chiropractic and accounting (CPA or certified financial analyst) leading the list.  In contrast, real estate sales requires only the right relationships,  a license to do business and no real selling skills if you are in a hot market.  If someone with a real estate broker’s license brings you into the business,  you can work under the umbrella of that person’s credential.

I confess that I look askance at the stated prospects for attorneys.  There have been many mergers between big law firms and as a result, many lay-offs. I’ve personally known a couple of lawyers who had a hard time finding employment and when it was obtained, the job was an assistant district attorney that pays maybe $50 K a year.

I’ve read about lawyers with degrees from Ivy League schools (UPenn and Columbia) saddled with six figure debt and no job.  I recently read about a young lady who sued her (accredited but undistinguished) law school,  claiming that the advertised post-grad job statistics are false and also charging that the career services department was useless. She lost her case,  but I suspect that her argument is valid nevertheless.

From a former employee of a very prestigious law firm who was let go four or five years ago (and started her own profitable boutique firm),  recent law school grads who were hired by prestigious firms over the past couple of years have been subjected to a shocking bait & switch game—from a law firm, no less!  An offer letter is sent, in which the new hire learns that s/he will not start the dream job for two years.  Oh, and the salary will be $20K less than was originally negotiated.

While some attorneys do quite well, like my friend, many  self-employed lawyers in solo or small enterprises struggle as the big firms shed employees. Welcome to the new normal. Below are the small businesses that in the U.S. that on average have the healthiest profit margins.

Thanks for reading,

Kim

Business                                                                                   Net profit margin

Accounting / Bookkeeping                                                             18.4%a

Real estate sales                                                                                15.2%

Lawyer’s office                                                                                   14.5%

Dentist’s office                                                                                  14.4%

Landlords                                                                                             14%

Health practioners (chiropractors, etc)                                      13.3%

Physican’s office                                                                                13%

Business or technical consulting                                                   12%

Graphic and industrial design                                                         11.4%

Administrative services (billing, etc.)                                           11.3%

Architectural / structural engineering services                          11%

Real estate oproperty services (landscaping,cleaning, etc.).  10.1%

 

 

Influence Peddling, the Path to Success

The successful Freelance solopreneur is a highly respected,  usually well-liked,  professional.  He/she is regarded as uniquely qualified and able to consistently deliver results.  For these reasons,  the successful Freelancer is considered the go-to person by clients and colleagues.  The successful Freelancer has Influence  and that influence has been leveraged to build a lucrative client list.  If one aspires to become a successful Freelance solopreneur,  one must acquire Influence  and apply it skillfully.

Robert Cialdini, PhD,   Regents’ Professor Emeritus of Psychology and Marketing at Arizona State University,  president of the consulting firm Influence at Work and author of Influence (2001),  is considered the leading social scientist in the field of influence.   Dr. Cialdini,  who himself possesses significant influence,  has identified six elements of persuasion that help ordinary citizens to become influential:

!.    Liking   If people like you,  either because they sense that you like them or because of things you have in common,  they’re inclined to say yes to you and help you to advance your goals.

II.   Reciprocity   People tend to return favors.  If you help people, they’ll help you  (sometimes!).  If you behave in a cooperative way,  they are likely to respond in kind.

III.   Social Proof    People will do what they see others doing, especially if those people seem similar to them.

IV.   Consistency   People like to be consistent, or appear to be so.

V.     Authority   People defer to experts and those in positions of authority.

VI.    Scarcity   People value what is rare and not perceived as a commodity.

I thought about the elements of persuasion that Dr. Cialdini shared and wondered which are most applicable to the needs of Freelancers? My feeling is that AuthorityConsistencyLiking and Social Proof  are within our control to varying degrees and attainable.

Freelancers are hired guns and we must be perceived as experts.  Blogging,  writing a newsletter,  case studies on our website,  presenting webinars and working with prestige clients are some of the ways we demonstrate our Authority,  our expertise,  to colleagues and prospective clients.  Our reputation,  the brand,  must telegraph that we Consistently  resolve challenges,  overcome obstacles and produce desired outcomes for our clients every time.

People do business with those that they know and Like  and they do more business with those they Like  and trust and the successful Freelancer is well-liked.  Dr. Cialdini noted that we usually like people who we think like us,  people with whom we have something in common and people who help us by doing favors.  While remaining authentic and avoiding manipulative behavior,  the Freelance solopreneur can create conditions that will make people like him/her,  which is the essence of relationship and influence building.

On the most elementary level,  the Freelancer should be pleasant and respectful,  always ready to greet old friends and new with a smile and a handshake.  When in conversation,  listen and be interested in what others have to say,  another way of letting people know you like and value them.

Find commonalities with those whom you expect to meet  (or those whom you’d like to know better)  by turning to social media.  Read Facebook and LinkedIn profiles to find out where people went to school and what their interests are.  Without divulging the source of your information,  look for ways to casually drop these references into the conversation and take steps to strengthen the connection.

Should the opportunity arise,  do favors large and small for colleagues and clients,  always creating a sense that there exists a network of partners who are willing to help one another.  You will increase the likelihood of ROI and set the stage for Reciprocity  by characterizing your assistance as a two-way street.  Those known to be able to dispense valuable favors always attain Influence.

Finally,  clients are risk-averse.  No one wants to make a mistake and allow either superiors or subordinates to see them lose face.  They make decisions that favor the familiar,  the  “known quantity”,  because it is the safe choice.  The goal of Freelancers is to obtain that Social Proof,  the ultimate endorsementbecause it is the recipe for building a robust client list.  To become successful Freelancers,  we must persuade clients and colleagues that we are eligible and deserve the right to become the  “known quantity”  go-to expert because we have attained Influence  and they look smart when they hire or recommend us.

Thanks for reading,

Kim