The solopreneur’s dilemma: Big revenue or big profits?

Business A generates $1 million in sales. Business B makes $150,000. Both net $100,000. Which business would you rather have?

Snuggle in with your cup of coffee, tea, or cocoa, and let me tell you a story.

It’s a tale of two businesses, and their lessons hold powerful meaning for solopreneurs.

First, meet Business A. It generates a million dollars each year. It has 6 full-time employees, 3 part-timers, and a handful of freelance workers. It buys the latest office furnishings, tech, and travel.

Now, here’s Business B. It makes $150,000 a year, primarily from coaching and consulting. It also offers digital products to its clients, including ebooks and workbooks. The solopreneur owner works alongside two contractors, hired on a project basis when needed.

The difference between these two businesses is stark.

But here’s the similarity: they both net $100,000 in profits.

Now, that translates into a 10% profit for the large company and more than 65% profit for the smaller company. Quite a contrast.

This tale of two businesses illustrates every solopreneur's decision between chasing revenue growth and prioritizing profitability. It looks at how making strategic decisions that are in line with one’s personal and professional goals can measure success better than just size.

Ready to dig a little deeper?

The allure of scale

The allure of expanding your business is undeniable. Scroll social media, and you’ll find countless posts boasting ever-increasing numbers.

“Here’s how I make 7 figures annually. Next year will be even more.”

“Read on for the pathway to instant $25,000 months.”

“Psyched to report our $100,000 launch in a weekend.”

These figures are often seen as markers of success. Yet, this narrative overlooks the complexities and challenges of scaling up.

Take, for instance, Business A from our tale: a million-dollar venture that, at first glance, embodies success. But beneath the surface, the financial and managerial demands of a large team and other overhead costs mean that its net profit is no different from that of Business B, which operates on a much smaller — and simpler — scale.

For solopreneurs, the question isn’t about how big you can grow, but whether that growth aligns with your personal goals and lifestyle.

The intentionality of size

Now, choosing the size of your business isn’t easy. And it’s not a decision to be made lightly or left to chance.

It’s about being intentional.

How to choose? Consider what you want your day-to-day life to look like and how you want to interact with your clients or customers.

For some, the dream is a close-knit operation that allows for deep, meaningful work without the stress of managing a large team. Others might aim for something larger, but need to understand the increased demands that come with that choice.

The key is to make these decisions consciously, understanding the trade-offs involved.

Small to big to small again

As your interests and experience develop as a solopreneur, your business will evolve. The size of your company may change as well.

I’ve seen it in my own business, which started out solo and then grew to a full-time team of 5, with offices in two locations thousands of miles apart. Five years later, I streamlined back to a solo operation working with other independents, and I’ve never looked back.

I’ve also coached solopreneurs who chose to stay small right from the start, optimizing their operations for profitability and work-life balance.

Can you start off small and have big dreams?

Absolutely.

And with today’s technology, there are solopreneurs with million-dollar companies.

In fact, earlier this month, Open AI CEO Sam Altman predicted that with AI, there will be a billion-dollar solo enterprise, and he and his friends are making bets on how soon it will arrive.

It comes down to being clear about what you want to achieve and crafting a plan to get there.

Practical Steps for Intentional Growth

Here are some things to keep in mind as you choose your growth path.

1. Define your success.
   Start by defining what success looks like for you, beyond the financials. Is it the freedom to travel, the ability to pick your projects, or the satisfaction of a work-life balance? Your definition of success should guide your growth strategy.

2. Evaluate your business model.
   Look critically at your business model and assess whether scaling up will lead to increased profitability or if it might dilute your efforts and reduce your net income.

3. Consider the trade-offs.
   Understand that growth often comes with trade-offs, such as increased overhead and management responsibilities. Are you ready and willing to handle these changes?

4. Seek advice.
   Turn to mentors or other solopreneurs who have navigated similar decisions for guidance. Their insights can provide valuable perspectives on the implications of growth.

Your choice, your life

Growth for the sake of growth is a common pitfall for many solo business owners. It’s easy to fall into the trap of bigger, bigger, bigger.

The decision to expand should be made with a clear understanding of what you want from your business and life.

Remember, success is not just about the numbers. It’s about building a business that aligns with your values and goals.

Bigger isn’t inherently better.

Better is what brings you fulfillment and aligns with your vision of success.

So what size does success look like for you?

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A reminder about upcoming changes

Last week, I mentioned that in a few weeks I’ll be expanding this newsletter to focus on how solopreneurs can stand out in a crowded field. It will look at visual communications, including design, type, and visual frameworks. I’m excited to share with you my background in art and design and what I continue to learn on this solo business journey.

There’s nothing you need to do right now. Just giving you a heads-up that some exciting changes are coming.

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What have been your experiences with the size of your business? Chime in below in the comments.

Thanks again for being a reader, and welcome to all the new subscribers who joined us this week. See you next week!