Emerging Business vs. Small Business vs. Self-Employed

Over the course of more than 20 years developing businesses, I have learned a thing or two about business growth cycles. I know from experience that most would-be entrepreneurs have no idea what it takes to run a business. Further, they don’t know when they can legitimately refer to themselves as an entrepreneur, so they wing it.

I have heard people refer to themselves as entrepreneurs but they work at someone else’s company. Others call themselves business owners but their operation (if you can call it that) has no infrastructure, no formalization. Some think they are self-employed, but they’ve never actually sold a product or service, so there’s no actual money to employ themselves. 

Do any of these scenarios sound familiar to you? Do you fall into either of these categories? 

I am going to simplify this process for you. And for many of you, give you an out. I know the mantra right now is “hustle” and entrepreneurship is romanticized. I have developed a rubric that I use to identify and categorize my clients and prospects so I can truly distinguish whether I am dealing with someone who is self-employed, an entrepreneur, or someone who wishes he or she was either of those two designations. 

Emerging Business

This first term is important, because many people fall under the category of Emerging Business. You are an emerging business if the following are true:

  • You have a great idea, but you have not yet learned to present it.
  • The potential business has one owner
  • Your endeavor has not yet generated any revenues 
  • There has been no formal corporate development, which includes steps like incorporating your business or entering into business agreements
  • You still have your day job and you’re positioning your idea to be your side hustle until it can replace your main income source

If this is you, let me give you the next steps. The first thing you want to do is assess the feasibility of your idea. The easiest way to do that is to run it by your most honest and objective family members and friends. 

You may worry about someone stealing your idea. Let me tell you: Ideas are a dime a dozen. Execution is what takes talent and effort. Most people will not execute. So don’t worry about confidentiality agreements and keeping your idea close to your vest. At this point, you just want to make sure the idea is something the market wants.

The second thing I will advise you to do is establish of list of things you need to do to take your emerging business from being an idea to at least being formalized. Put the tasks on a timeline and start doing.

Resist the urge to jump in with both feet until you’ve done some of the basic work of starting a business. Don’t quit your job and DO NOT behave unethically: Don’t use your employer’s time to work on your own business. And never try to steal clients from your employer.

Self-Employed

The second category in my list is self-employed. Freelancers are self-employed. Being self-employed takes a certain mindset and a set of proficiencies. In some ways, being self-employed is very much like being employed by someone else. The primary difference is you are your own employer and your service offerings are usually limited to those things you can do yourself. You may be self-employed if the following are true: 

  • You are 100% billable in your business
  • A sales meeting cannot take place without you
  • YOU are the board of directors
  • You save money by doing support services yourself (proposals, accounting, legal)
  • If you take a day off, the business closes that day

If this model sounds like what you do, you are self-employed. There are great advantages to being self-employed. If you can create consistent income streams, you can enjoy total time freedom, meaning you can work when you want and need to work. 

Of course, the drawback is many freelancers have to deal with the uncertainty of inconsistent income, late payments from clients, and being overworked and underpaid. 

Small Business

Running a small business is hard work. There’s no way around that. And most small business owners will tell you that the work doesn’t stop, particularly during the early years of the business. Here’s how to tell if you have a small business:

  • Fifty percent of your time is billable to the business and the rest of your business is done by staff members who can operate your business in your absence
  • You only have to show up to “close” the deal
  • You have at least 3 board members

Like being self-employed, owning a small business can be your start or your finish line. That part is up to you. The best piece of advice I can give any small business, particularly one that sells products and not services is to make sure you remain relevant by continuing to invest resources into marketing.

We are about to become more connected than most of us can even dream. The Internet isn’t going anywhere. In fact, it’s going to continue to evolve and as the months (I don’t think we can count technological advances in years anymore) march on and your pantry and fridge collaborate online to re-order your groceries whenever you run out of something, you will learn how essential it is that you and your business are also part of the Internet of Things

Entrepreneur

Twenty years ago, being an entrepreneur wasn’t popular. Today, it’s everything. Everyone things they’re an entrepreneur. Everyone is trying to position their side business selling vintage clothes on Amazon as entrepreneurship. I have a distinctly different definition of entrepreneurship. You are an entrepreneur if:

  • You generate multiple streams of revenue from a variety of resources
  • You don’t work in your business, you work on your business
  • Your endeavors don’t require anything more of you than your oversight and leadership
  • You create other entrepreneurs

Entrepreneur. Business owner.  Self-employed. Each has its own distinct set of characteristics and behaviors needed to have success in each. 

These are not amorphous terms that you assign yourself based on how you feel, or what you wish you were. Each term is real, quantifiable, and determined by actual outcomes.  Which are you?

Can the SBA Really Help You Grow Your Small Business

If you ever thought about owning your own business, I hope you also considered the work that goes into launching and maintaining an enterprise.  Often, nine-to-fivers will leave their jobs in corporate America to run their own business in hopes of uncapping their earning potential and taking advantage of the flexibility that entrepreneurship offers. 

The truth is before you ever open the door of your business, you will spend months – and maybe even years – planning your business. 

You need time to assess the market and find out where the voids are. You’ll need to know if you can fill the void at a reasonable cost to you and still make money. It is also notable to mention that you need to have a specific product idea in mind and a pretty broad understanding of both your product and your target market – essential factors in establishing your niche in the business industry.  

After doing the preliminary work, most entrepreneurs spend years and years working long days and clearing a living wage (the average entrepreneur earns right around $70,000 a year, according to Fox News). 

The U.S. Small Business Administration (SBA) can be a valuable resource to help you start and grow your small business. There are four basic types of resources available through the U.S. Small Business Administration that can really help you small business.  

#1 Resources to Help You Organize Your Small Business

Starting and planning your own business can be time-intensive, but it can also be a fluid and seamless task when you have access to the right information and people. 

Get the SBA’s guide for new entrepreneurs to get insights into steps to take to prepare for, plan and launch your business. SBA Direct is a service provided by the U.S. Small Business Administration that provides business owners the information they need to build strong businesses. 

#2 Resources to Help You Manage Your Small Business 

Business doesn’t start and end with you taking your products and services to market. Developing and implementing a good management strategy is essential to your business success. Business management includes guiding and motivating your team, managing the finances to keep the business profitable, scaling the business for growth, and anticipating changes in your market. 

At the heart of good business management are the leadership skills of the management team. Your business will grow and evolve as long as you do.

The SBA provides free and low-cost resources to help your leadership team propel the business forward. Available resources focus on skill-building, strategic thinking, and developing a leadership mindset. Entrepreneurs can also get technical assistance and participate in mentoring programs. 

#3 Resources to Help You Fund Your Small Business 

A business that’s under-capitalized can die before it ever gets going. Contrary to popular belief, the federal government doesn’t provide seed money to help entrepreneurs start businesses. So, how do you get the money to start a business? 

In the current market, it seems like any kid in a hoodie can pitch an angel investor and walk away with hundreds of thousands of dollars to start a business. But most seasoned entrepreneurs will advise novices to keep overhead low, stay lean, and skip raising hundreds of thousands of dollars (which is essentially selling off bits and pieces of your business) in investment money. 

Come up with a plan, execute on the plan, and see how well your business idea does in the market. That’s the key to funding your business – actually selling. 

There are several questions to ask yourself while still in the planning phase of your project: 

  • How will I fund the business before it’s monetized? 
  • How will I monetize my business?
  • How much is it going to cost to operate this business for the first six months? The first year? Two years? Five years? 
  • Do I have enough operating capital on-hand to sustain my business through the slow seasons?
  • Is there another way I can gather resources to sustain my business in lieu of money? (bartering, technical assistance for example)
  • What are the advantages and disadvantages of securing a small business loan?
  • Can I qualify for a conventional small business loan or will I have to seek outside funding through crowd sourcing or angel investors?

If you can answer these questions before you launch, it can make the difference between you being able to help your small business grow slowly over time, and your business stalling out from a lack of resources. 

#4 Resources to Help Your Small Business Get Federal Contracting Opportunities
Winning the right government contract at the right time can help you grow your business. But it’s important that you are able to recognize if it really is the right time for your company to pursue a government contracting opportunity. 

Can your company handle the responsibilities associated with winning a government contract?

Audit your daily operations and capabilities to help you objectively determine if you have what it takes to deliver on a government contract. 

Opportunity awaits.