How to Become an Entrepreneur
A great idea is the driving force behind every startup. The steps to becoming an entrepreneur are what it takes to make the startup successful. Creativity, leadership, and perseverance are common traits among entrepreneurs.
A startup is the chance to make money for yourself, instead of an employer. Being an entrepreneur is exciting and satisfying. You work long hours and wear multiple hats.
Entrepreneurship is more than self-employment or turning a hobby into a small business. Every entrepreneur looks for a game-changing idea to grow into a million-dollar business.
Companies like Amazon or Microsoft immediately come to mind. Here’s a 2019 list of million dollar startups you might not know. America thrives on entrepreneurship, but the ratio of risk to reward is extreme.
The first thing to consider before you make the leap – are you suited to for the role?
Being your own boss sounds empowering, especially after a bad day at the office. Before you strike out on your own, consider your aptitude for entrepreneurship.
If you’ve always worked a job, structure is provided. The company sets your hours. Employees know the tasks they have to do. You have a network of colleagues and systems. As an entrepreneur, you have to be able to recreate that on your own.
Even the most passionate can find themselves at loose ends. Give some thought about how you’re going to establish your work environment. Workspace, equipment, and partners will need sourcing.
If you’re risk-averse, becoming an entrepreneur will be a challenge. There is nothing safe about a startup. It’s not unusual to put in long hours without a salary. There’s no benefit package, no PTO.
Even seasoned entrepreneurs have their share of failures. Fifty percent of startups close in their first year. Being an entrepreneur is a huge investment of time and money. Ask yourself if you’re prepared to take on the risk. If not now, what resources would you need to feel more secure?
Commitment is an essential trait for an entrepreneur. You need to be passionate about your idea. But passionate doesn’t mean closed-minded. This feels like your baby, but it’s actually your business. Too many leaders fail because they won’t accept feedback.
Leaders who can’t separate their idea from their ego struggle. Entrepreneurs are all about relationships. They need to build teams, engage with early adopters, and develop partnerships. Consider all criticism as constructive. After all, it’s your decision whether to take it.
When you’re confident this is the right career for you, follow these steps to get your startup off the ground.
10 Steps for Becoming an Entrepreneurs
Most startups are founded on a problem. Entrepreneurs see problems as a gap in the marketplace. Successful startups make money by solving the problem and controlling the market share.
Sometimes the problem isn’t visible to end consumers. Instead an entrepreneur disrupts the parameters of an industry. It’s called blue ocean strategy. One example is Cirque de Soleil.
Traditional circuses were struggling under the cost of transporting live animals. Protestors dogged their appearances. The industry was dying when this tiny troupe from Canada took the animal acts out of the equation. Cirque du Soleil plays to millions while traditional circuses have shut down.
Entrepreneurs value creativity, planning, measurement, and vision. Here are some standard tips:
- Expect to scale back the scope of your product/service for the initial rollout.
- Add a 25% contingency to your budget
- Know the gaps in your skillset and supplement them with your team
- Stay positive. Leadership sets the example for the company
- Measure everything
- Get ready for the ride of your life!
Choose Your Insiders
Every business idea needs a group of trusted collaborators. A lone wolf isn’t going to cut it. Choose a small group – two or three people who will kick things around with you. Each situation is different but think carefully before including family members.
Your insiders should see the potential in the idea. They should feel comfortable offering suggestions. The leader is the final decision-maker but should welcome their comments.
Encourage healthy discussion and minimize drama. If there is an expectation of future compensation or ownership, get the terms on paper. If possible, choose people with skills that complementary to your own. It’s important to choose positive people who lift you up and help you recharge.
Confirm the Idea
Entrepreneurs have tons of ideas. It’s time to decide on one.
Make a list of your best options. Write a blurb on why you like each one, only a sentence or two. If nothing comes to you, cross that idea out. Stick the paper out of sight for a week or so. When you pull it out, what jumps out at you? That’s your gut response.
It’s good to listen to your instincts but this is not the time to rely on them alone. Validate your idea by doing research.
Start by checking your competitors. Everyone has a competitor. Google did not invent search engines. Facebook did not invent social media.
If you’re not sure who else has the same idea, do some research. Try services like similarweb.com to help with market research and industry trends. Depending on your business model, use Google maps to search for companies like yours. There are free tools like Ubersuggest to find related keywords.
Even if you’re not online yet, there’s a lot to learn from their websites. Look for ways to differentiate your business. See how they price their products, how they deliver services. Don’t forget to look at their online reviews. They show what customers like and what they don’t.
Set Up Your Business
Decide what type of business best suits your company. A Limited Liability Corporation (LLC) is a common choice. An S Corporation is the second choice. If you intend to look for Venture Capital (VC) funding, neither works for the VCs.
VCs prefer C Corporations. The C Corp doesn’t require shareholders to be American citizens. Stocks are easily transferred. If you see an IPO in your future, this structure is the best. Be aware that a C Corp is complicated to set up. Unlike an S Corp, income from the corporation is taxed.
Consult an attorney or CPA if you have questions. Register your company, get a tax ID, and open a business bank account.
Minimum Viable Product (MVP)
Product or service, most entrepreneurs think big. Often too big. MVP is a process for stripping down a business concept to its minimal form. It’s a way to quick-test your concept and for less money.
The idea is to understand customer preferences, without blowing your budget. It forces the entrepreneur to articulate their idea and accept feedback. These successful companies used an MVP to find out what customers value.
This is a pre-launch party tool to see what the market thinks. When you get a favorable response, move forward with confidence. If you get the thumbs down, it will sting. Dust yourself off, think of the money you saved, and start again.
A quick and cheap business failure is a win. Wasting significant amounts of time and money is a double loss.
People who are willing to try new products or services are worth their weight in gold. They are your customer base. It’s important to keep them engaged. They expressed their interest during the MVP process.
Early adopters have lots of power. They write reviews, they make referrals. Some have a startup of their own. Treat them like VIPs.
The MVP process is also used to develop prototypes. Use a staged rollout to get suggestions on features. Early adopters can help you build a better product or service. They want to be insiders. Nothing wrong with rewarding them for their help.
After you confirm your concept, it’s time to start building relationships. You and your insiders should develop a list of people/companies to approach. Look for companies with similar customers to form a partnership. Reach out to people to introduce the product.
Polish up your presentation tools. Video, documents, or slideshow – this is the first impression. Triple check for spelling and grammar. Keep it short and clear. (No one ever looks at 20 slides.) Keep the key points upfront.
Get your website online. Make sure it’s mobile-friendly with a clickable phone number. Set up a blog and post at least once a week. Include the option to join your mailing list. Engage on social media platforms that are relevant to your business. Set up affiliate marketing programs.
Money is the reason many startups fizzle. Entrepreneurs need a clear focus on their financial priorities. A startup is a challenging environment for expense forecasting, but it’s doable. Be strategic when it comes to purchases and salaries.
Funding is ongoing for any business. Loans or investors are two common sources. Crowdfunding can be an option but do your research. Not all sites serve the same market.
RocketHub.com is for VC funding. They give offer an option to get feedback on your idea. GoGetFunding.com lets you keep anything you raise, whether you hit your goal or not. They offer personal and business funding. Sometimes the site can look a little unprofessional.
This is the time to build your team. Do an org chart for the company as you see it today. Identify the key roles and document their responsibilities. Even if your team consists of insiders, it’s important to get everything on paper. Avoid disagreements and save relationships.
Recruiting for key positions takes time. The talent market is competitive. Check sites like Salary.com or Glassdoor.com to position yourself. Know how high you can go and look at ways to sweeten the deal.
Startups are attractive to people who value making an impact. Often, they have more than one skill and don’t want to be stuck in a cubicle. Don’t hesitate to sell them on the culture of your company.
When cash is short you may offer equity in the company to early employees. This incentivizes them to help your startup grow.
Ready for Launch
Get your launch plan together. For some startups, it’s a big bang. They go at it full throttle. Others prefer a soft opening. They use the quieter launch to test systems and processes.
Either way, you need a plan to announce your opening. Send out a special email blast to your early adopters. Give them a free product or service. Send your email list a special discount code.
Don’t concern yourself with money at this point. You want people to use the product or service. This is all about letting the world know your company is here.
Consider online review management service to encourage customer reviews. Thank customers who take the time to write a good review. Respond to negative comments by taking the conversation offline.
Consumers look for businesses online. Take advantage of tools to improve the customer experience. Let them book services online. Offer free shipping on products. Add chats to your website to answer questions. Pay attention to your analytics.
The launch is your opening day. Take a second to enjoy the moment.
The business is up and running. Now is the time to scale up. Explore new markets, expand the scope of your sales. Investigate the potential for an IPO to take the company public. Invest in R&D to create new products and services. Look for opportunities to acquire other firms that add customer value.
Manage your growth sustainably. Companies like Uber grew so fast they couldn’t maintain quality of service. The customer experience tanked, and the company took a big hit.
If you’re lucky enough to be the next big thing, be aware of the pitfalls. Customers have all the power online. The next big thing can turn into the next big hole. You don’t need to waste time and resource digging yourself out of it.
Being an Entrepreneur
Not all entrepreneurs want to run businesses. When the company is off and running, the entrepreneur starts to get twitchy. They don’t enjoy maintenance. Entrepreneurs create. They love the process of finding problems and creating solutions.
If you find yourself bored and restless despite your business success, don’t be surprised. You’re becoming an entrepreneur.
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