How to Run a One-Person Business

How to Run a One-Person Business

Establishing a successful one-person business is a classic American dream. The following are some checkpoints to get started on the right foot, how to make the business thrive and common pitfalls to avoid.

The Business Plan

Having a great idea is not necessarily the same as having a viable business model. This is why it is important to think through all parts of the enterprise before sinking time and money into it. The business plan should be 10-20 pages long and cover what equipment and inventory are needed; where the business will operate; what permits and licenses are required; the customer base and how to attract customers; the pricing model to be used; and any other aspects that need to be considered. The plan should also include a realistic estimate of startup costs and projected earnings. The Small Business Administration (SBA) offers free educational videos on how to compose viable business plans.

Financing

Lenders are generally cautious when it comes to small business loans, so preparation is the key to success. The loan officer expects a loan package that includes a solid business plan, a competitive analysis, contingency plans for the unexpected, a breakeven analysis and a personal financial statement. That last component is vital; since the business does not yet have a track record of its own, the lender has to rely heavily on the owner's good character and financial history.

Less capital-intensive businesses may not require loans to get started, but be aware that all business dealings may have repercussions on your personal finances. Sole proprietors, in particular, are vulnerable since they are personally responsible for all debt and the potential aftermath of a failed business. It is wise to review the legal setup and research liability coverage as part of the business planning process.

Structuring Time

Making the business successful takes great time management and discipline, as it is very easy to let administrative paper shuffling, chatty customers and back-end busywork steal much of the productive hours each day. Successful entrepreneurs guard their time jealously and set dedicated time blocks for different tasks every week to ensure nothing falls by the wayside.

For example, Monday and Wednesday mornings until lunch can be dedicated to making sales calls to customers. There is no checking email, dashing out to the post office or calling the accountant during these blocks; they are dedicated to customer calls only. Then there are other blocks for administrative tasks, inventory, networking and so forth.

It is also important to find a healthy work-life balance. Small business owners tend to be passionate about what they do, which makes it very easy to get stuck working long hours on a regular basis. This can be detrimental for both your health and family life, causing long-term burnout and marital tension.

Delegating Tasks

Running a one-person business does not mean doing everything yourself. In fact, successful entrepreneurs make an active effort to delegate away as much of the noncore business tasks as possible. This frees up their schedules for taking on more clients and gaining new customers. For example, an IT consultant charging $150 an hour can hire a "virtual assistant," an independent contractor who remotely handles most of his administrative tasks, for $40 or $50 an hour. The net effect is he can work more billable hours each day, making the arrangement profitable. A retailer can farm out the creation and operation of a Web store to complement its brick-and-mortar store. This is especially beneficial if there is a steep learning curve involved, such as learning Web page design. Other tasks that can be easily delegated to contractors include bookkeeping and customer mailings, and cultivating a social media presence.