Being successful as an entrepreneur is tough. You need to prepare for long nights and hardly any time off. Even with all that hard work and risk, aspiring entrepreneurs face a host of challenges that threaten their success. Today I’ll share some tips for aspiring entrepreneurs that increase the chances of success.
The ecosystem of aspiring entrepreneurs
Starting your own business may seem like the thing to do, especially when faced with the challenges wrought by the pandemic. You may face the prospect of a protracted job search in an industry that isn’t bouncing back very quickly as all the Covid restrictions recede, for instance. Or, you might see an opportunity to fill the gap left by businesses that didn’t survive the lockdowns. You might even decide you liked the improved work/ life balance enjoyed when you worked virtually and no longer wish to return to an office, which motivates you to become an aspiring entrepreneur. Whatever your reason for pursuing your dream of owning your own business, you may discover that now is the right time. Owning your own business offers the potential for a high return for your efforts; much greater than what you would expect to earn from working for someone else. Just ask industry titans like Stever Jobs (although he’s dead now), Bill Gates, Mark Zuckerberg, and Jeff Bezos how their entrepreneurial venture worked to make them billionaires.
Of course, aspiring entrepreneurs also face serious risks associated with starting a business of their own, For instance, the financial risk comes from the loss of income (and entrepreneurs are no longer eligible for social safety programs such as unemployment insurance), financial inputs required for startup and operation until the business attains a revenue-positive situation, and risk from potential legal issues emanating from your business operation, such as lawsuits for defective products. In addition to risk, aspiring entrepreneurs face many years with little sleep, incredible amounts of stress, and overly busy days before they experience the rewards possible from owning their own business ventures.
What is an entrepreneur?
Definitions vary so it makes sense to determine what we mean when we say someone is an entrepreneur. You’ll find broad definitions of an entrepreneur in most dictionaries. These definitions include anyone who starts a business and faces higher than average risk from that venture. Included in this definition are all the “lifestyle” businesses that seek to replace income the owners might earn if employed. That definition includes all the handymen, landscapers, small shop owners, and one-person consulting shops. These ventures offer great potential for the owners, with above-average incomes, but offer little to society as a whole. We call these lifestyle businesses as opposed to entrepreneurial ventures.
However, when you consider the role of entrepreneurs as the drivers of growth, which many academics and practitioners like Forbes view as true entrepreneurs (as opposed to lifestyle business owners), you find that entrepreneurial businesses form with the notion of growth at their core. Instead of simply replacing the owner’s income, entrepreneurial businesses “define, invest, build, and repeat” according to Forbes. These businesses are the true drivers of our economy and represent the future of a country by increasing employment, enhancing a country’s balance of trade, improving the lives of individuals (think about how we could survive in a world without smartphones, for instance), and create wealth for owners, shareholders, employees, and, through taxes, the country as a whole.
We NEED entrepreneurs for a prosperous and improved future. Below, I share tips to aid aspiring entrepreneurs as they plan their journey toward success.
Tips for aspiring entrepreneurs
Once you weigh the risks and potential rewards offered to entrepreneurs, if you still think this might work for you, consider these 5 tips to help make your new venture a success.
1. Ensure the market potential
You might think you have a great idea for a new product, process, or means to deliver value. However, recognize that people (and businesses) don’t buy products, they buy solutions. Successful entrepreneurs don’t create products, they create unique solutions to untractable problems where no satisfactory solution exists. Consider some of the great innovations of the 21st century to see how entrepreneurs solve customer problems. For instance, the sharing economy consisting of ventures like Airbnb, Grubhub, and Uber introduced a new process involving using idle capacity owned by individual users to create a thriving market that benefits users and micro-entrepreneurs (although these options are not without their critics).
Before embarking on a costly venture, consider whether there is a sufficient market for the new venture. Ask yourself the following questions:
- Is my venture sufficiently unique and does it possess a sustainable competitive advantage over existing offerings?
- Does my venture solve a problem better than existing offerings?
- Do a sufficient number of people have the problem I solve?
- Are people who face this problem are sufficiently motivated to overcome the problem?
- Do these people possess the money, authority, and need for my solution?
2. Plan, plan, plan
We’ve all heard about businesses started with no more planning than a few sketches on the back of a cocktail napkin. Those are the exceptions that prove the rule. The last startup I worked for had a 200+ page business plan and still struggled to survive. You might not need something so large but your chances of success go up dramatically if you took the time to build a detailed business plan that included action plans.
Image courtesy of The Balance
3. Seize the moment
There is rarely a perfect time to start a business and no one is ever in the perfect position to jump into a new business. You need financial backing (read more about this below), knowledge, and the willingness to give your new venture your all. That’s why it’s great to start out slowly on your venture as a side business before leaving your current job or to obtain a position working for a successful business in your chosen industry before jumping into a venture with both feet.
The good news is that the economy is on the rise and most experts expect this upswing to continue for an extended recovery. Plus, we are living in an era of disruption where new business models and opportunities might thrive. There are now so many ways to succeed and so many digital channels that help you find new customers and promote your great idea.
Really, if not now, when? Don’t rush in blindly, but if you have already planned the foundation for a good business, this really is the ideal time to start making your dream a reality.
4. Be realistic about finances
A critical element of your business plan involves forecasting sales and expenses. Then plan for extra funds to cover contingencies and unexpected expenses or higher than anticipated financial needs. Sure, Silicon Valley startups with tens of millions of dollars in funding may play loose and fast early on then let the dust settle later.
That isn’t realistic for most aspiring entrepreneurs — and especially not for “solopreneurs” going it alone. You need to map out where the money comes in, what benchmarks you must hit, anticipate overhead expenses, how much runway you have to reach revenue-positive, and know that there is a path to profitability. Remember, more businesses fail due to poor cash flow than from any other reason.
When people say they want to live their dream, that doesn’t mean diving into a fantasy world. Especially if your new venture comes with a large upfront investment and monthly expenditures, make sure you anticipate and track all your financial needs and don’t need a miracle to keep the lights on.
5. Put your customers first
Customers are what allows your business to sink or swim. You need to attract, retain, and grow your relationship with the people who are your loyal, consistent buyers and attract new ones.
Modern customers require modern customer-facing solutions. These days, that means investing in a CRM solution. While some smaller businesses try to get by without one, a customer relationship management solution is an essential and very powerful tool that helps you find, land, and keep your customers for the long term. Done right, CRM ensures you track and optimize everything from marketing and engagement to sales and customer service.
Given how important these relationships are to your business, you really cannot leave them to chance. You must build, nurture, and manage relationships in a way that is data-oriented and repeatable throughout the entire customer lifecycle.
Living your dream as an entrepreneur
How can you guarantee success as an aspiring entrepreneur? You can’t, but there are ways to increase your odds. You’ve got to ensure there’s a market for your idea, build detailed business plans, seize the moment, be realistic about finances, and manage customer relationships. Beyond all that, though, the best advice probably comes directly from the motto of one of the best startup success stories in history: Just Do It!