Elaine Pofeldt knows a thing or two about independent work. She left her corporate job in 2007, and has worked as a freelance writer since then. Her husband has also spent most of his career working for himself, and together they’ve navigated the challenges of raising a family with two freelancing parents.
She writes for Forbes about independent work, and recently published a book full of stories about hyper-successful solopreneurs, “The Million-Dollar, One-Person Business: Make Great Money. Work the Way You Like. Have the Life You Want.
There’s been an uptick in one-person businesses (also called “non-employer businesses” by the U.S. Census Bureau) with more than $1 million in annual revenue. As part of her research, Pofeldt talked to founders doing a wide variety of work — the owner of a spy-camera store, a personal trainer who has licensed his brand, and the founder of a babysitting network with more than 2,500 babysitters, to name a few. In all of her interviews, she was looking for a common thread. “What are they doing right in terms of addressing common pain points for small businesses — generating revenue, closing sales, and building recurring revenue?”
Here are four lessons Pofeldt learned about running a successful solo business.
They Bring in Help
First, she found that the most successful entrepreneurs don’t try to do everything themselves. Instead, they tap into the growing freelance economy to outsource tasks like web design, invoicing, fulfillment, paperwork, and other back-office functions.
Pofeldt thinks it’s important to note that they’re not totally going it alone. “They're ‘non-employer’ businesses by the government's definition, but there are other people involved in the business,” she says. “They're not just working 24/7 to accelerate revenue. I think that's a trap where many freelancers get stuck — they get on that hamster wheel and feel like they have to do more and more and more. They do grow their revenue that way, but they can burn themselves out.”
The powerful lesson she learned is that no business is an island. “We're all part of a community. You cannot do everything alone,” she says. “As independents, sometimes we all tend to be do-it-yourselfers and feel like we've got to do everything. But sometimes it's better not to, and just to spend the money and get some help.”
Next, the entrepreneurs she talked to all find ways to step away from the business and recharge. Pofeldt knows that freelancers can be afraid to ever distance themselves from their work, since time is money. “They’re afraid to go to a yoga class in the middle of the day when they could be doing one more project. But in my research, I learned a powerful lesson that stepping away from your work can make you a better business owner. Taking time away from your laptop, whether it is to meditate, volunteer, work with a business coach, or go to a retreat can give you the mental space you need to assess whether what you’re doing is working and, if not, to quickly course-correct.”
They Use Technology to Their Advantage
Pofeldt thinks that the explosion of helpful technology is partly to thank for the boom in ultrasuccessful solo businesses. In her research, she saw entrepreneurs taking advantage of new technology.
One way they use technology is to automate tasks. “They automate routine tasks so they’re not wasting a lot of time on minutiae, like entering transactions into their accounting software,” she says. “They tend to embrace apps and tools that take the inefficient tasks off their plate.”
Plus, she says, there are a lot of specialized, industry-specific apps and services. “One person in the book, Allen Walton, runs the spy-camera store Spy Guy. He uses something called ShippingEasy to deal with certain aspects of shipping so he doesn't have to do them manually. That saves him a lot of time.”
Pofeldt also points to tools she personally uses as an independent. She describes a recent experience at a book event: “I was moderating a panel at the Brooklyn Public Library and someone in the audience was using my phone to broadcast it on Facebook Live, from my Facebook page. As soon as the panel was over, they set me up at a table to sign and sell books, where I used the same phone to process credit card transactions with Square. Meanwhile, throughout the day, I’m communicating with a variety of people involved with the event and my business on my phone. I’m keeping in touch with the panelists. I’m checking in with other clients. I used an app to easily track the mileage from driving to the event, which I download once a month in a spreadsheet I can easily transfer to my accounting software. That day, as I looked at my iPhone, I thought, ‘This is incredibly powerful. This is life-changing.’ We didn’t have these phones 15 years ago and now my phone is one of my biggest business assets. People who were born in the smartphone era may not feel it as much, but it has completely liberated the small-business owner.”
They Focus on Revenue
Pofeldt is the first to admit that independent work isn’t all sunshine and roses. There are a lot of challenges, too. “That’s part of why I wrote the book,” she says. “It wasn’t just to say, ‘Oh, wow, all these people are making $1 million.’ The reason I focused on achieving a substantial revenue goal is that freelancers really have to build up a lot of savings — more than they may think. When you’re bringing in $1 million in revenue, you’re really taking home between $200,000 and $400,000 when taxes and expenses are paid.”
That’s a lot more than the median U.S. income, she points out, but if you live in one of the big markets for freelancers — expensive cities like San Francisco or New York City — that revenue doesn’t go as far, especially if you are raising a family. A high-quality health insurance plan may cost as much as a mortgage, and freelancers often face late payments from clients that affect their personal cash flow. In other words, bringing in enough revenue to build up substantial savings is crucial, she says: “You need to think about high revenues in order to insulate yourself, so you can continue to enjoy the freedoms that come with being self-employed.”
When it comes to working as an independent, Pofeldt has learned that you have to go in with your eyes wide open. “No matter how passionate you are about writing, or graphic design, or accounting, or whatever it is you actually sell as a service, you still have to think about business,” she says.
“You cannot flake out about the financial side or you'll wind up in debt. You have to be smart about saving money and protecting your credit. Your credit is your No. 1 asset as an individual who is a freelancer.”
While the number of million-dollar one-person businesses continues to rise (with a 35.2% uptick from 2011 to 2016, according to U.S. Census Bureau data), building a hyper-successful small business still takes a lot of hard work. To hear more stories from other hustlers who've been there, and learn their secrets to success, check out Elaine Pofeldt's book.