Steve Jobs dropped out of college and co-founded Apple out of his garage. His entrepreneurial journey is a real-life inspiration to all of us; we see that even the biggest successes can come from humble beginnings.
Are you ready to start your own entrepreneurial journey? In this article, we will explore what it takes to become successful and how to become an entrepreneur.
What it Takes
Before you start pursuing your entrepreneurial dreams, it is helpful to first ask yourself if you are cut out for it. This career path is probably not the right one for those who are addicted to comfort, have no goals, and don’t do well with stress.
Looking back on some of the greatest entrepreneurs in history, we start to recognize patterns that lead to success. It takes a certain set of characteristics and skills to be successful in such a challenging field. Let’s go over some of them.
- Motivation: When you throw yourself headfirst into entrepreneurship, you don’t know whether it will take months or even years to reap the benefits of hard work (if at all!). You have to be 100% committed to the long haul by constantly being motivated by your goal that will be accomplished in the end. The goal could either be material wealth or making a difference in the world (or both).
- Passion: Having a strong belief in what you’re doing can mean all the difference between success and failure. Where most people would become discouraged and give up at the first sign of trouble, passionate entrepreneurs are driven to keep going.
- Vision: You must know what you want to achieve, how to accomplish it, and who you will elect to help you get there. If you don’t have a vision of your goals in your mind’s eye, you will not have a sense of direction to lead the project.
- Confidence: It is impossible to succeed without confidence in yourself and your product/service. Having confidence turns fear into focus and obstacles into opportunities.
- Decisive: When it comes to a new business venture, you will notice that you will need to make objective decisions that will largely impact its future. You must be able to quickly consider the facts so you will not miss any opportunities and avoid any pitfalls that may occur. Ensure that your decisions are mostly driven by data, not emotions.
- Communication: You must be able to effectively communicate with vendors, employees, investors, and customers to accurately express your business goals. This produces a well-oiled machine.
- Selling: You must be able to transmit your passion to your customers, as well as anyone who will be working with you. Not only are you selling them on your product/service, but you are also selling yourself as a confident, knowledgeable businessperson that they can trust.
- Accounting basics: Having a strong grasp of your business finances will enable you to make the right decisions to keep it afloat.
- Networking: Being surrounded by a strong team will ensure a strong business. Pick those players carefully by attending networking events and getting to know others in your industry.
- Leadership: Use your vision as a way to guide your movements as a leader. It is also important to know when to delegate and empower employees, and when to lead by example.
You may think these characteristics and skills are something that you either have or don’t. However, it is certainly possible to develop them over time.
You will need a knowledgeable support network of mentors to bounce ideas off of and get critiqued. Reach out to mentors at networking events or on social media platforms like LinkedIn. Possible mentors can be successful small business owners with years of experience you can learn from.
It is also wise to obtain certifications that will help you learn any skills and develop any characteristics you are lacking. But if there are some entrepreneurial qualities you still feel you just don’t have, consider finding a co-founder who exemplifies the traits you lack.
Come Up With Your Business Idea
Even if you have the right mindset to start your own business, you won’t get anywhere at all if you don’t have a good business idea! To be successful, make sure your idea does one of the following.
Provides a solution to a problem
Companies that do well help solve a problem for people, which makes our lives a little easier. Think about what frustrates you most. What product/service could you develop to solve that problem?
Solves a future problem
With our quickly changing world, there is loads of opportunity in future trends. Predicting the trends and offering the needed product/service at the right time could turn into a successful business. But making the wrong choice could also lead to catastrophic failure.
To help forecast trends and to start thinking about ways to satisfy them, check out trend predictors like TrendHunter. Look for a niche that appeals to you, assess what is already available on the market, and find ways to add your twist.
Fills a market gap
It is possible to find previously missed opportunities in some markets. Do some market research. Is there a high consumer need that is not getting filled? An easy way to do this is to check out bad reviews of competitive products and fulfill the need consumers are looking for.
Improves what’s already out there
To make something already existing more useful or more enjoyable could make you a lot of money. If it is something that is already in demand, people will go crazy for the better version.
Makes something more affordable
If you can make something cheaper, go for it. Use different materials, find cheaper vendors, and provide the product for less money. You are effectively offering the product to an underserved community who could not previously afford it, a whole new segment of the population.
But wait! Before you start getting excited about your new business venture idea, research patent applications to make sure you aren’t replicating something that is already in existence. You will also get an idea of what competition is out there, and what the future market will look like.
If you are still struggling to figure out your business idea, check out what other startups are doing to get some inspiration. There is TechCrunch, which focuses on startup tech companies, then there is Kickstarter, which focuses on new physical products on the market.
Product/Service Research and Business Plan
Now that you’ve got your idea in mind, you’ll want to verify it is a viable one. When you figure out what sort of person will be buying from you, interview people who fit this typical buyer persona.
- What do they think of your prototype?
- What do they like?
- What can be improved?
- Is it worth the price?
Take the feedback and improve your business offering. Once you’ve come up with the finalized product/service, it is time to come up with the business plan for potential investors.
A business plan is a formal document that includes the goals of the business and the steps to achieve them. Ideally, the document will be between 15 to 25 pages depending on your business model, but can also include appendices with other important elements like patent applications.
Include the following elements in your business plan:
- Executive summary: Include the mission statement and information outlining leadership and employee structure, typical operations, and location/s of the business.
- Business offer: Describe the product and/or services offered by the company. Including information like pricing, processes, patents, and research and development.
- Market analysis: Who is your target market? How will your business fit into the market? What competition will it have? Is there a demand for your product/service? Include this information, along with strengths and weaknesses your business may have in the market.
- Marketing strategy: Outline how your company will advertise and market itself to gain new customers. Include any campaigns that will be carried out and on what channels that will be used.
- Financial plan and budget: How much will salaries, development, manufacturing, and marketing cost? Add any targets for future earnings, including any estimates in expenses and projected sales.
Having skills and a business plan won’t get you anywhere if your bank account is empty. You will need money to buy materials and equipment to develop your product or service, to pay employees, and much more. Luckily, there are many possible ways you can find the amount of money needed to fund your project.
Of course, if you’ve got the cash you can completely self-fund your venture. This is the most ideal as it will give you complete control over what you produce and you will not need to report to any investors. On the other hand, if your project fails, you take on all the risk, and solely bear the losses.
There is also the option to self-fund the initial expenses, and then rely on revenues once you become profitable. This is called boot-strapping. Although it still allows you a lot of control, it may take longer to grow the business since you will be waiting for larger streams of revenue. In this case, you must keep the budget tight to ensure a steady cash flow, especially in the first few years.
To get the business going in your first year, you can always ask your close family and friends to put in money for your initial startup costs. This is called a seed round.
Offer your loved ones a stake in the company in exchange for their funding. Or you can accept the money in the form of a loan, or even better, the kindness of a donation.
Since bank loans for high-risk startups are out of the question, try a small business loan. The Small Business Administration offers microloans typically around $13,000 and up to $50,000! You can apply for a microloan through an SBA-approved intermediary near you.
The maximum time for repayment is six years, with interest rates varying depending on the intermediary. Typically SBA microloans have between 8%-13% interest rates.
Raising capital from outside investors allows you to spread the risk of potential failure. But you are unable to maintain complete control of your project. But even though you may have higher stakes when accepting investor money, you also have access to their network, knowledge, and experience.
Angel investors look for aspiring entrepreneurs that have great potential for success. They are hoping for a hefty and quick return on their investment. They normally invest approximately $25,000 to $50,000. Since they have an interest in your success, they will need to know the fine details of your business plan, and any early foreshadowings of success.
Also interested in high-return investments you can provide are venture capitalists. They like to see a triple to 10x their investment.
Although most businesses don’t qualify, your company may be able to get a federal, state, or local grant. Check out Grants.gov to see if you’re one of the lucky ones. Typically, it is mostly nonprofit organizations who secure these grants, but you never know until you try!
You’ve probably heard of crowdfunding platforms like GoFundMe or Kickstarter that raise funds for needy causes. However, did you know you could also use such a platform to raise money for your new business?
If you need some short-term funds, the last option is your credit card. Even though this easy access to money can be helpful, just realize this is a risk as credit card interest is high. This kind of debt will weigh down the company’s financials in the long term if it isn’t paid off quickly.
Gain the Rewards of Entrepreneurship
Are you pumped to quit your day job and be your own boss? Entrepreneurship, though it is a lot of hard work and stress, can be one of the most rewarding undertakings of your lifetime.
In this article, you’ve learned that it takes a certain skill set and character, a good business idea and plan, and plenty of funding. With the right mix of these elements, you will be on your way to entrepreneurial success.