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A "solopreneur" is a person who starts and runs his or her own business, usually alone, without a partner or employees. The term is made up of the words "solo" (alone) and "entrepreneur" (business owner). Solopreneurs are usually responsible for all aspects of their business, including product development, customer support, accounting, and marketing.
Solopreneurs can work in a variety of industries, from freelance writers and graphic designers to consultants and online marketers. They are often characterized by their independence and self-reliance. Since they usually do not have employees, they have full control over their business decisions and workflow.
It's important to note that the term "solopreneur" does not necessarily mean that the person is running their business solo. They may still use service providers, freelancers or outside resources to complete certain tasks or support projects. The main difference is that the solopreneur usually has primary responsibility for the business and does not have a permanent staff.
Solopreneurs often rely on their skills, expertise, and ability to self-promote to be successful, as they are usually the main driver of their business.
The cost of self-employment can vary widely and depends on a number of factors, including the type of business, the industry, the geographic location, the size of the business, and your personal choices. Here are some of the basic costs that might be involved in self-employment:
Legal and consulting fees:
Lawyers' fees and consulting fees for the legal formation or registration of your business, as well as for advice on tax and business matters.Registration and licensing fees: Costs of registering your business with the appropriate authorities and obtaining necessary licenses and permits.
Operating equipment: purchase of office furniture, computers, software, communication technology and other necessary equipment.
Marketing and advertising: costs of creating a website, designing promotional materials, online marketing, social media advertising, and other promotional activities.
Rental or lease costs: if you need business premises, there will be rental or lease costs. This can vary significantly by location.
Insurances: Costs for various insurances such as liability insurance, professional liability insurance, health insurance for self-employed, etc.
Operating costs: Current expenses such as office supplies, electricity, water, heating, telecommunications and other day-to-day costs.
Eventual start-up losses: especially in the first months or years of self-employment, income might be lower than expenses. These are often what are known as "start-up losses" that need to be accounted for in business planning.
Personnel: If you hire employees, you need to factor in the cost of wages, salaries and possible benefits.
Tax obligations: Income taxes, sales taxes, and other tax obligations need to be considered.
It is critical to conduct thorough business planning to realistically estimate anticipated costs and revenues. A well-thought-out business plan will help you minimize financial risks and ensure that you have sufficient funds to successfully launch and operate your business. It may also be useful to seek advice from experts such as tax advisors or business consultants to ensure that you do not overlook any significant costs.
A look at the financial situation of founders in Germany
The German government has ambitious plans that could shake the foundations of the business landscape in Germany. A centerpiece of this reform is the planned introduction of mandatory old-age provision for founders, who have so far been outside the traditional old-age provision systems for specific occupational groups. The aim is to ensure that the self-employed can also build up a solid old-age provision. This directive could be implemented as soon as profit income exceeds the marginal earnings threshold for dependent employment after a waiting period of two years.
Background: opportunities and challenges for the self-employed
This reform is a response to the growing importance of self-employment and entrepreneurship in today's workforce. The self-employed have often been excluded from traditional social security systems, leading to uncertainty about financial security in retirement. The proposed mandatory retirement plan is intended to close this gap and ensure that the self-employed can also benefit from adequate retirement provisions.
Insights from research: IfM Bonn provides insights
A recent analysis by the Institut für Mittelstandsforschung Bonn (IfM Bonn) sheds light on the potential impact of the planned mandatory retirement provision. The analysis excludes individuals who are already insured elsewhere or who operate low-yield energy production facilities. Instead, the focus is on the income development of young start-up cohorts and established self-employed workers.
Data and methodology: a closer look at the numbers
The analysis draws on the Taxpayer Panel, an income tax data source provided by the Research Data Center of the Federal and State Statistical Offices. This dataset covers the period from 2001 to 2018 and allows for a detailed examination of the income situation of the self-employed.
Income distribution and trends: who are those affected?
The study focuses on the income distribution of founders from different cohorts in 2018. Interestingly, it shows that many self-employed people still report negative or low incomes years after their start-up. This suggests that many self-employed people are running their business part-time or part-time.
Outlook: Challenges and opportunities for the future
While the introduction of a mandatory retirement provision for founders is undoubtedly an important measure to secure the financial future of this group, the analysis of income trends makes it clear that many self-employed people may continue to face financial challenges. The federal government faces the task of taking advantage of these findings and, if necessary, adjusting the draft legislation to better address the needs of the self-employed.
The years 2012 to 2016 mark a crucial phase for the startup scene in Germany:
Founding year 2012:
Over 46,000 people ventured into self-employment.
About 24,700 of them recorded negative profit income in their first year.
About 31,900 people earned incomes between €0 and €5,400.
Founding year 2013:
More than 39,700 people ventured into self-employment in 2013.
Over 23,400 of them struggled with negative profit income in their first year.
About 29,000 earned incomes between €0 and €5,400.
Founding year 2014:
Over 38,000 people bravely founded businesses in 2014.
About 23,500 of them struggled with negative profit income in their first year.
About 25,800 earned incomes between €0 and €5,400.
Founding year 2015:
Over 38,800 people ventured into self-employment in 2015.
More than 32,500 of them recorded negative profit income in their first year.
Approximately 30,900 earned incomes between €0 and €5,400.
Founding year 2016:
Over 40,500 people courageously founded a company in 2016.
About 27,700 of them struggled with negative profit income in their first year.
About 38,700 earned incomes between €0 and €5,400.
On average, self-employed individuals with incomes above €5,730 earned a whopping €64,448.
These figures shed light on the financial reality of young businesses in their early years. Many struggle initially with low incomes below €5,400. Those that record higher profits are instrumental in raising the average. This highlights the many challenges young founders face as they build and develop their businesses.
Freelancing, or working on your own as a freelancer, has both advantages and disadvantages. Here are some of the most important ones:
Advantages:
Flexibility: as a freelancer, you have the freedom to determine your own working hours and location. You can adapt your work to your personal needs and priorities.
Independence: You are your own boss and have full control over your work. You can make your own decisions and don't have to compromise.
Potentially higher income: As a freelancer, you have the opportunity to charge higher hourly rates or project fees than you would in a traditional salaried position.
Varied work: as a freelancer, you have the opportunity to work with a variety of clients and projects, which provides variety and challenge.
Disadvantages:
No guaranteed income: As a freelancer, there are no fixed income guarantees. You may have to go without assignments and income for some time.
Self-employment means working alone: As a freelancer, you often work alone, without colleagues or supervisors, which can affect social interaction and motivation.
Administrative tasks: As a freelancer, you will have to take care of administrative tasks yourself, such as invoicing, accounting, and taxes.
Uncertainty: As a freelancer, there is always the risk that orders and projects will fall away or that demand will change, which can mean uncertainty and financial instability.
So overall, there are many pros and cons to freelancing. It depends on personal preferences, skills and goals whether this type of work is a good choice.