There are may advantages to starting out as a small, one person business.
The truth is that you’re worth more than any employer in the world can afford to pay you. The bigger a business is, the less efficient it is. The older a business is, the more employees it has, the more equipment and inventory it has, the less efficient it is.
On the other hand a small one person business can be just the opposite: highly efficient. And that will translate into money in your pocket. Let’s look at some more reasons that a one person business is advantageous…
Low start up capital
You are primarily selling your labor and knowledge as a one person business. Therefore it’s easier to find a business opportunity that need very little equipment and overhead.
As you make money you can buy the tools and equipment you need to improve your efficiency. But in the beginning it’s your motivation and efforts and not capital that determine if your business start up is successful.
Dual purpose items
You can keep your overhead lower than big businesses can, which will keep a larger percentage of your profits in your pocket. There are many dual purpose items that you already own which can be used in your business. Like your home, your car, your computer and your cell phone. These are personal items that are already bought and paid for.
You can use these items in your new business with little or no additional cost. This can represent a big savings over large companies with their high office or shop rents and specialized vehicle fleets.
Employees are less motivated and less efficient
Self employed people don’t get paid by the hour therefore they are motivated to work harder, faster and more efficient to make the same dollar in the same or less time. You have the motivation to get the job done better because you get paid the same regardless of how long the job takes. Do the job in less time and you still make the same money.
Employees don’t think this way. Their “job” is to maximize their paycheck and not the work at hand. This is something you’ll experience first hand if and when you start hiring employees.
In my shed building business I found it took 2 people to replace me. And it still took them 1 1/2 to 2 times as long to complete any given task as it took me. So they were almost 4 times less efficient than I was working alone.
More control
When you become self employed your whole attitude changes because you are in control. For better or for worse.
When you see something that needs to be done you can make a change. You don’t need to ask your boss, you just do it. This will lead to all sorts of inefficiencies.
Personal and economic efficiency
Here are 2 areas where a small business, particularly a one person business, will beat a larger business. Economic efficiency and time/motion efficiency.
As a one person business you’ll have lower overhead in general and you’ll have more control over your costs. There’s instant feedback and decision making. You don’t have to make a suggestion and wait for someone else to approve your decision.
You can make any necessary change instantly. Where in a larger organization their is a chain of command and the higher ups usually don’t have the actual field knowledge to make accurate decisions.
When you are doing 100 percent of a job you see all parts and can integrate them better to save time and money. This is where specialization comes in. You can focus on a narrow field so that your product is standardized and uses the same information or components so that you can develop an efficient supply chain and perhaps buy in bulk for discounts.
Repetition at the same task will make you an expert so you’ll do the same job faster each time. Eventually you’ll reach the point where every motion is second nature and you don’t have to think between steps.
When you do the same task many times you’ll get better and develop specialized tools and systems to make it go even faster. A casual person doing this work can’t justify these specialized tools or will not develop the systems to save time and money.
It might represent a large initial investment but it will pay off many times over because it’s something you use on every job and saves time and money every day. It will pay for its self and start making profit in short order.
If you specialize enough then you are doing the same thing all the time, or very similar things and you get the job done quickly, efficiently and move on to the next one. Or you go home early for the day with money in your pocket.
In a larger business employees tend to be segregated and only do parts of the task and can’t modify the work flow to create the inefficiencies you can as a one person business.