Should You Go It Alone with a Single-person Startup? – Info Entrepreneurship
How to Maximize Your Chances of Success Going It Alone
There are countless playbooks for startup success out there, which will apply to both teams and solo founders. But the following are themes that I have encountered through my work that are most applicable to those going alone.
1. ABL: Always Be Learning
In a team-based startup, if you’re the CFO, then with a degree of comfort, you can safely leave any tech-related aspects to the CTO. As a solo founder, the emphasis on you learning and being involved in all directions of your business will be paramount. A rudimentary knowledge of everything will have both its timing and intellectual constraints but is also fascinating for those who like to learn.
This is important for growing your business because you will be the only one making the decisions. But it’s equally as important when projecting your business to the outside world, be it clients, investors, or new staff members.
Fortunately, the internet is a treasure trove of free resources for self-learning and development. Everything from MOOCs to YouTube has knowledge of subjects ranging from the broad to niche. When I need to learn a new topic, I start at the very top, getting a brief but broad overview of the entire sector before diving down into specialized topics. I set aside part of one day each week to try and learn something new related to do the work I do.
2. You Have to Delegate to Accumulate
A core disadvantage of running a single-person company is being able to maintain bandwidth to undertake the jobs to be done. The lack of differing opinion and pushback from others can also result in some work being a quixotic waste of time.
Yet, this can be mitigated. Delegation is critical and, in this era of distributed teams and everything-as-a-service, it is possible to outsource activities to both people and machines. SaaS and freelance services push CAPEX into OPEX and make growth manageable, both financially and in terms of founder bandwidth.
Being a solo founder doesn’t mean that you will be working alone forever, you will need to hire staff and such staff, if correctly incentivized, can act as proxy co-founders. The wide swath of work available due to your lack of co-founders, when combined with fair stock option grants, should be an appropriate carrot on a stick for ambitious talent.
In terms of how to delegate, it’s best to follow the laws of comparative advantage. What are you best at? Divide your time appropriately between the skills that you are good at and leading the higher direction of the business. A failure to do so will result in suboptimal work and poor strategic decision-making. In terms of what skills should be prioritized, solo founders may even be at a slight advantage, wherein the most common skills that they need to focus on are actually not required if they are venturing solo.
We also tend to think that we are being productive when we are doing menial administrative tasks. Focus on tasks that produce proactive value (i.e., business development), not reactive response (i.e., invoicing). Virtual assistants can be a useful tool for the solo founder for delegating out menial tasks.
3. Use Your Environment as Inspiration
Working on a single-person business in your basement will not be an effective environment. It’s a lonely existence and aside from the lack of contrarian pushback from co-founders, you will reduce your exposure to stimulating factors by a large degree.
Embrace an open-minded culture, get yourself out of the house and into a coworking space, or at a minimum, a coffee shop. If your business is sufficiently virtual, then use travel as a chance to change your perspective. This will also have knock-on effects for business development, marketing, and HR efforts as, the wider net that you cast, the deeper the nodes that will run within your personal network.
Enrolling yourself into an accelerator may act as a sufficient enough shot of adrenaline or a point in which to find a co-founder, if necessary. Governments are also increasingly supporting entrepreneurship through grants and programs that both provide funding and interactive environments. I have worked with a couple of businesses that entered the Startup Chile program, and aside from the funding, the social learning element of it was critical.
Rely also on your family and close network. They may have the tendency to be overly biased in their support, but this can be far exceeded by their empathy and understanding. This advice from Gabriel Weinberg, who solo-founded DuckDuckGo, resonates in this regard:
“Maybe because most advice that would apply to solo founders also applies to multiple. Hmm… I think as a solo founder you need to find a sounding board and a stabilizing force that would traditionally be your cofounders. For me that was meetups and my wife.”
4. Don’t Follow the Usual Fundraising Path
Returning to the genesis of the article: the stigma attached to single-founders is that it is difficult to fundraise. But say, you have begun a business as a single founder and it’s getting to the point where you need capital to expand, how can you achieve this?
Have a Track Record and Exploit It
Entrepreneurs with a track record have a better chance of raising money as a single-person startup. If someone is covered in stardust, investors will know that they can execute and form a team around them. Whether they are doing this alone or with others becomes superfluous.
If you are not a celebrity founder, don’t fear. Instead, lean on your own career track record. If you are starting a one-person business that is related to your past career inside a corporate, then exploit this tangent and emphasize it considerably.
Present your venture as a confluence of events that have built up from skills garnered throughout your career, not as an opportunistic output of a quarter-life crisis.
Let the Investors Come to You
Assuming that you start your venture with your own capital and start getting a degree of traction, with some careful preparation, you will eventually solicit inbound interest. The negotiation dynamic completely switches when you receive inbound interest, and dropping in that you are solo founder then becomes an issue for the investor, not for you.
Aside from executing a great business and generating some traction, make sure to leave your businesses footprint all over the web. Manage your SEO, engage in social media, and provide as much data as possible to self-certification sites. Private startup data is notoriously difficult to scrape, so many sites allow you to self-submit data. Assuming that you have nothing to hide, embrace this and eventually, a machine, or an analyst at a firm, will stumble upon you.
Use Alternative Sources of Capital
By “alternative” here, I am basically referring to investors that would not class themselves as venture capitalists. You do not have to go down the route that you see every day in the tech media. Raising money is not like applying to college — there is no set path.
Years of quantitative easing have inflated capital pools and deflated yields, there are opportunistic investors out there looking for a return and willing to be contrarian:
- Bootstrap. An obvious point, but a luxury that not all will have.
- Accelerators and grants. As mentioned earlier, these can be as valuable for their intangible benefits as their tangible ones.
- Working capital management and trade financing. Assuming that you’re growing a small business prudently, it’s most likely that you will be making accounting profits in the near future. An impediment to growth though will be your cash conversion cycle and the ability to fund growth with cash flow. Aside from managing this carefully, trade invoice services may provide you with the cash flow that you require during times of need, over pure equity financing.
- Debt. Lenders like to see a track record, stability, and assets on a balance sheet. That’s why most early-stage startups do not get the luxury of borrowing. If you generate a combination of these three factors, then there could be a chance of getting a loan or, alternatively, peer to peer or short-term facilities may be appropriate.
- Equity crowdfunding.Raising equity from retail investors is not “easier” and does not have more relaxed terms. Retail investors, though, invest with a different mentality. They like being evangelists for a product/service and empathizing with founder backstories.
Article Prepared by Ollala Corp