Not all businesses are good choices for solo-founders. Some are almost impossible to grow when you’re a business of one. But how can you find a business that you can easily grow as a solo-founder or small team?

Understanding the types of business that are most suited to being a solo-founder can save years of frustration. Understanding the markets that are suited to small self-funded businesses, will shorten your road to success from years to months.

Unfortunately I spent a decade learning this the hard way. Every day I see people making the same mistakes, mainly because we naturally copy what big companies do.

We’re unconsciously influenced by companies that we use ourselves. Think Netflix, Notion, Twitter, Gmail. These companies all have a few things in common:

1. They require scale (lots of customers)

2. They target consumers for a major part of their business

3. They charge a low price (or are free)

4. They exist in large markets

5. They have a lot of money to spend

But don’t worry. As a small business, we can craft an offering that avoids all these points and is much more likely to succeed.

Here’s how to do it, step by step:

As a solo-founder or small bootstrapped business, any type of product/service that requires a massive number of users is best to avoid.

I discovered this the hard way with one of my early startup attempts. The idea was a wedding directory that I was positioning as “TripAdvisor for weddings” (this was in TripAdvisor’s heyday). It was a 2-sided marketplace and targeted the entire UK wedding market. The market I chose was too big. The business required network effects on a massive scale to work, and trying to attract engaged couples and wedding vendors on this scale, with no budget, was basically impossible. As a result, I was forced to keep changing the focus of the business, making it constantly more niche, in an attempt to have a small enough market where the network effects could take over. Ultimately I couldn’t build those effects quick enough, in such a transient market as weddings. I shut it down. It failed. It’s very hard to create network effects when you’re the only one working on it. You don’t have the time or money to make it work.

Have a think about other businesses that require network effects. For example, social networks. All the major social networks were funded early and were typically unprofitable for a long time before they reached scale that allowed them to monetize effectively. As a small-business, you can’t compete against the spending, or sustain losses for a prolonged period.

The other thing to avoid is charging low prices. Why? Because getting customers is hard! Sales and marketing are both major time drains and you can’t spend all your time doing them. Again, if you have low prices, you need to reach hundreds or thousands of customers (that scale problem again).

I see a lot of people starting a subscription business and charging “Netflix style” prices. e.g $10/month. We are so conditioned to these types of pricing, that we naturally want to replicate them. But converting consumers to a $10 month subscription is much more diffic