solopreneur

Who Is A Solopreneur? Mastering The Ultra-Lean Business Model

A solopreneur is usually (not always) a digital entrepreneur who leverages automation, work flexibility, and creativity to develop ultra-lean business models. Those can scale over the one-million-dollar revenue mark with a minimum business overhead, no venture capital funds, and mostly bootstrapped. Those solopreneurs start by mastering profitable microniches.

Clarifying the meaning of solopreneurship

In the business world the solopreneur is seen as the small business owner that does, from A to Z, all the functions and tasks the business requires to survive.

Yet a solopreneur doesn’t necessarily do everything on her own but instead focuses on devoting the whole focus on the most critical part of the business while contracting (if necessary) the remaining portion of the company.

Where the classic start-up entrepreneur (the Silicon Valley archetype) is about building a company with the grandiose vision of an exit. Either through venture capital acquisition or an IPO.

In many cases, the solo businesses will transition toward becoming a small company (like DuckDuckGo solo-business that turned out in a profitable and successful venture-backed business).

In other cases, the solopreneur might limit the growth of the company as a choice of freedom. In short, for the solo business isn’t just about money but also about the kind of business you might want to build.

Solopreneur vs. startupper

The solopreneur approach might well be the opposite approach compared to the Silicon Valley-type serial entrepreneur, which primary aim is to build businesses that scale but that also requires a lot of maintenance and large employees’ base.

The solopreneur makes the opposite choice. Thus, let me recap in the following points how solopreneurs might differ from startuppers:

  • Bootstrapping vs. funding: bootstrapping is the primary mode of growth of the solopreneur
  • Passion vs. business planning: the solopreneur is often fueled and build on top of passion and choice rather than opportunity alone
  • Non-linear income vs. financed and artificial growth: the solopreneur puts work in building scalable assets, due to the limitation in resources for the business, that is a key element for the success of the business
  • More key customers vs. more customers: due to constraints in terms of structure, finances and time, the solopreneur has to make hard choices very early on. Thus, giving up that part of the business or those customers which are not key to its strategic long-term success

Related: Successful Types of Business Models You Need to Know

Step one: Start from a business model rather than a business plan

business-model
A business model is a framework for finding a systematic way to unlock long-term value for an organization while delivering value to customers and capturing value through monetization strategies. A business model is a holistic framework to understand, design, and test your business assumptions in the marketplace.

Rather than drafting a business plan, which is suited for those entrepreneurs looking for outside financial resources. The solopreneur has to look for simple tools to start and grow its potential business.

For the sake of it, using a business model, as a thinking tool, it can be way more effective, as in a page and in a few hours maximum, you can clear your mind.

Step two: It’s all about your Blue Sea and the Smallest Viable Audience

blue-sea-strategy

minimum-viable-audience
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.

Once found the gap in the market, it is then crucial to niche down. In other words, you have to drill into that specific segment of the market until you find a potential target audience (from a few hundred up to several thousand people), which will be your manna.

Related: Microniche: The New Standard In The Era Of Dominating Digital Tech Giants

Related: The Blue Sea Strategy

Step three: Target  Ramen Profitability

ramen-profitability

Serial entrepreneur and venture capitalist Paul Graham popularized the term “Ramen Profitability.” As he pointed out “Ramen profitable means a startup makes just enough to pay the founders’ living expenses.”

According to Tim Ferris, another way to look at it is to find a Muse by setting up in detail the TMI or target monthly income. Tim Ferris suggests thinking in detail about your monthly cash-flows.

In short, all the expenses that you are going to incur. Imagine, for instance, that you always dreamed of traveling the world. What does that mean? How many countries are you going to travel while setting-up your Muse? For how long will you stay in each country? How much would you pay off rent, travel, and living expenses?

It might sound complicated at first, but once you set this up, your goals will be much clearer. In fact, Tim Ferris makes your life easier by making a great tool available: The Monthy Expense Calculator.

In short, this tool tells you line by line what expenses to take into account. After you have to divide by 30 (to get the daily budget) and add a 30% buffer (you must be ready for any emergency).

Step four: Bootstrap your way through

bootstrapping-business
The general concept of Bootstrapping connects to “a self-starting process that is supposed to proceed without external input.” In business, Bootstrapping means financing the growth of the company from the available cash flows produced by a viable business model.

Related: What Is Bootstrapping? Why A Bootstrapping Business Is The Way To Go

Step five: create options to scale

The most important concept to understand is that of creating options to scale.

As you build a successful solo business you also create options to expand from a microniche to an adjacent space. You also have the option to look for a niche, before going fora whole industry.

Another option as the solo business grows the cash the business unlocks can be used to build or grow other businesses.

Bringing it all together

  • Identify a microniche
  • Draft a business model
  • Bootstrap your way through organic growth
  • Create options to scale

Read next: The Digital Entrepreneur’s Guide On How To Start A Business

The resources you need to get started with your business model

Popular case studies from the blog:

Read Next: Business Model Innovation, Business Models.

Related Innovation Frameworks

Business Engineering

business-engineering-manifesto

Business Model Innovation

business-model-innovation
Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.

Innovation Theory

innovation-theory
The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.

Types of Innovation

types-of-innovation
According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).

Continuous Innovation

continuous-innovation
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.

Disruptive Innovation

disruptive-innovation
Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.

Business Competition

business-competition
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.

Technological Modeling

technological-modeling
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.

Diffusion of Innovation

diffusion-of-innovation
Sociologist E.M Rogers developed the Diffusion of Innovation Theory in 1962 with the premise that with enough time, tech products are adopted by wider society as a whole. People adopting those technologies are divided according to their psychologic profiles in five groups: innovators, early adopters, early majority, late majority, and laggards.

Frugal Innovation

frugal-innovation
In the TED talk entitled “creative problem-solving in the face of extreme limits” Navi Radjou defined frugal innovation as “the ability to create more economic and social value using fewer resources. Frugal innovation is not about making do; it’s about making things better.” Indian people call it Jugaad, a Hindi word that means finding inexpensive solutions based on existing scarce resources to solve problems smartly.

Constructive Disruption

constructive-disruption
A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.

Growth Matrix

growth-strategies
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Innovation Funnel

innovation-funnel
An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.

Idea Generation

idea-generation

Design Thinking

design-thinking
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.

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