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Salt Lake City Bookkeeping Blog

The Dangers Of Running A One-Person Business

Posted by Matt Roberge on Sep 10, 2015 7:30:00 AM

Running_A_Small_Business_By_YourselfWhen most small businesses start, they usually have just one employee: the owner or founder. Some solopreneurs grow to the capacity of what they can handle on their own and are content. However, running a business as a solo operator comes with its share of risk. Here are my thoughts on the danger of running a one person business

Absence = Losses

When you are a one-person business, it is hard to be absent from the business. It's not that you won't be profitable; you just won't be as profitable as you could be. One-person business owners tend to feel guilty about being away from the business. That means no sick days, personal days, or vacation days. Working non-stop can really take a toll on you, not only on your mental status but on your health as well.  

Slow Growth

A one-person business tends to grow slower than businesses that have employees. It's pretty simple: when you are on your own, you simply can't do everything. You can definitely try to do everything, you just can't do it as well as if you had some help. 

As a business owner, it is important to set aside time to work on the business; more specifically, on growing the business. Most business owners get excited about working on growing their business. The problem is that very few have the discipline to actually follow  through with working on the business. When you are trying to do everything in your business, you inevitably get called away from what you were working on. After all, the customer is your main priority, so tasks such as growing your business often end up on the back burner.  

Losing Customers Hurts

No business likes to lose customers, but a one-person business can really feel the pain of losing a customer. If you are good, you may build up your capacity to roughly 90% of operations work and call that full. The rest of your time will most likely be spent on miscellaneous administrative work that any small business has to handle. When a one-person business loses a customer, they now have to find a way to replace that customer and still maintain service to their current customers.

A business with employees should be structured in such a way that it never hits capacity and never stops looking for or acquiring new customers. When a business with employees loses a customer, it may hurt a little, but if it is operating properly, it will not be a "game changer" for the business. Small businesses that are operating optimally bring in many more customers per year than they lose.

No Other Perspective

The one-person business does not have any other internal minds to help them make or question decisions. I feel that many solo business owners choose to operate on their own because they believe that they know how to do everything. This type of mindset is not meant to have employees nor grow a business beyond what one person can handle.

As a small business owner, not only am I open to other internal perspectives, I value them. I always tell our employees to bring me their ideas if they think there is a better way to do something. We may not always implement their thoughts or ideas, but I will always listen. The best ideas often come from the people in the trenches doing the work. Also, if you are doing your job correctly as a business owner, you are always trying to hire people who are better than you are at the job you hired them to do. 

Owner Burn-out

Running a business on your own can often lead to owner burn-out due to all of the these factors. If you can't be absent from your business, it can really take a toll on you. The frustrations of slow growth often lead you to give up and return to working for someone else. The stresses of losing a customer and running a business in general often cause people to give up. Owner burn-out is real and it is tough to avoid when you are working both for yourself and by yourself.

Building a business with employees is not for everyone. Many business owners have hired employees only to return to running their business solo. While a one-person business can be a successful model, I wanted to share the dangers of running a business all by yourself as well.

What are your thoughts on running a one-person business?

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Topics: Small Business Owner, Small Business Growth, Grow Your Business, Scaling A Business