When you begin, you find yourself in a small ship with cruddy equipment and two races battling it out for the sector. They're both rather weak, but you're always best off not warring against a side (unless it's the Drakk). The game makes the weakest ship from any side strong enough to annihilate you early, and even late-game. As a result, you'll find yourself hunting down all the neutral mobs in an area and grinding better loot. This isn't that hard initially, but as more sides come into view and the grand wars begin, you'll be hard-put to find a safe haven. You may find your strongest ally is but a tiny speck in the universe and your best bet is to ally with your greatest enemy. It doesn't matter which side you pick, so long as that side is the last remaining race in the galaxy at game's end.
Multiplayer makes it a bit more fair, however. With enough allied ships, the operatives can become significant enough to destroy planet colonies with ease and rain destruction on your chosen foe at the time. You'll still want to keep far away and rely on missiles and other long-range weapons, of course, but it's much easier to raid the opposing sides without being utterly annihilated. If you die, the penalty is at least rather minimal. You may lose money, experience, maybe a crewmember will die, but you won't lose your ship or any of your accumulated uber gear. As a result, you just fly around killing neutrals to replenish your reserves and head right back to the front line, allies in tow. It's much more relaxed that way.