What’s the difference between a sole trader and a solopreneur?

Robert Kiyosaki explains in his "Rich Dad" series, most people who think they start a business are taking on a job instead. Most people fall into the self-employed, rather than the business owner category.

To be clear, a sole trader and a solopreneur are different kinds of beasts. A sole trader is someone who works for him or herself, by him or herself. A solopreneur, on the other hand, is someone who intends to build something bigger than themselves, even though they work alone.

“How is that possible?” I hear you ask. Good question. In times gone by, a sole trader or someone who works for him or herself, by him or herself could be self-employed but never a business owner. They had the choice to continue working in their business alone or to hire people, therefore becoming a business owner (and building something bigger).

Some authors believe the concept of a solopreneur, or a business owner who works for themselves, is a myth. Patrick Bet-David, who wrote the Wall Street Journal best-seller “Your Next Five Moves” devoted an entire chapter to convince readers it’s a myth. It’s titled “The myth of the solopreneur: how to build your team”. Patrick is a highly respected and accomplished business leader, so is it possible he’s right and there’s no such thing as a solopreneur?

Wait a minute. Before you get out your pitch forks and rolling pins in anger because I’ve made you read this far on something that could be a fallacy, I’d like to introduce you to another author. Meet Elaine Pofeldt. Elaine wrote a book about the select few that make it big, titled, "The Million Dollar, One Person Business". Yep, it’s a thing.

While the book has a few examples of solopreneurs who turn over $1 million per year or more, there are possibly thousands more who easily make a 6-figure income. As a solopreneur, with few business expenses and $100,000 or more in profit, you’re likely to be okay. That’s a comfortable living and perhaps more than a full-time income for most folks.  

According to the site Meet Edgar, “Solopreneurs prioritise business growth by building systems, automating tasks, and finding new revenue streams to continue to grow their income level.” In contrast a sole trader might sell their own time for money or work in their shop selling goods over the counter. When a sole trader stops working for the day, so does their business.

Solopreneurs, on the other hand, are masters of productivity. They understand their core business and their target market in detail. I know at this point, I run the risk of oversimplifying the success of these types of businesses. Still, there are a few points worth diving into, which have helped many make the transition from sole trader to solopreneur.

Resources vs Resourcefulness

In times gone past, you needed to own resources or physical assets to be considered a business owner. Today's solopreneurs may not own physical assets; however, they are resourceful. Today’s business owners simply need access to these assets and there are dozens of new ways to get access.

For example, anyone can turn what they know into a product. Publishing a book, video or online course is - easy. There is no requirement to go through a publisher or organise for your own distribution. Minimum orders are fast becoming a thing of the past. Production of a physical or digital product empowers an entrepreneur to grow beyond trading their time for money.

What Solopreneurs Automate

Automation, previously available only to big business, is now accessible to every business owner with a computer. Successful solopreneurs automate routine processes, so they can focus on what they do best. Everyone has a unique set of knowledge and skills, which combine to become what Greg McKeown refers to their highest point of contribution in his book, Essentialism. Automation is simply another tool to take care of routine tasks, so you can capitalise on your strengths.

When You Can Outsource

What about when something is not routine? What if a solopreneur needs someone with a skill they don't possess or if their time is more valuable in other areas of the business? There are dozens of websites where you can hire freelancers for almost any skill. Hiring, payment and fulfilment are easy and require no special skills or knowledge.

So, if you have a weakness or the opportunity cost of doing something is more than the benefit, you can outsource. For example, if typing your own notes will save you $50 per hour but you could easily make $100  per hour doing something more important, it makes sense to outsource.

Build Something Bigger

Maybe it’s time to ask yourself, what you want from your business. If you want to continue your work as a sole trader, you can make a good living. In case you want to build something bigger than yourself, you can do that too. Do you want to always work in your business, as a sole trader or become a solopreneur and enjoy the fruits of being a business owner?