Have you ever thought of becoming an entrepreneur? Millions and millions of people have set up their own businesses. Some have been wildly successful; some have made a good living and some entrepreneurs have ended with abject failure. Have you considered setting up your own business, but you were daunted by the sheer size of the task.
Let’s unpack what it takes to become an entrepreneur.
An entrepreneur is a person who starts and manages a new business and takes on the financial and personal risk of doing so. Entrepreneurs can be small business owners, content creators, start-up founders, or anyone who has the ambition to build a business and work for themselves.
Some people start a small business and are quite happy to stay small and make a comfortable living. Some entrepreneurs start small and then scale up as the business grows and develops. Some are hustlers, buying and selling whatever than can turn into a profit, be it property or motorcars. Some folks come up with amazing inventions, patent the intellectual property and start mega businesses, or sell out to larger organisations
Getting into business for yourself can be fun and exciting. It can also be terrifying. Starting a business is not a get-rich-quick scheme. It’s a long-term investment of money, time, and effort. New businesses have a high failure rate. Hopeful entrepreneurs must abandon the safety of a monthly salary and risk their savings and carry the burden of a bank loan. But for those who last the course, the rewards can be beyond your wildest dreams.
There is a time-honoured way to become an entrepreneur
Find a business idea
The product or service you choose is at the core of your business. It will be the most important decision you’ll make. Look at it from the customers’ point of view. What problem will your product or service solve? Solving a problem shared by many people will make your marketing easier, as they will be looking for you, and you won’t have to create the market.
While you are deciding what to devote your efforts to, consider whether you are offering a trend, a fad, or a growing product category?
- A fad is popular for a short time but fades quickly. Examples of fads include the Hula-hoop®, the Pet Rock®, and Pokémon®
- A trend lasts longer than a fad and does not decline as quickly. Online purchasing and wearable technology are an example of trends.
- A stable market is neither growing nor declining but maintains itself over a long period. Domestic cooking utensils are a good example of a stable market.
- A growing market shows consistent growth and signs of a permanent change in the marketplace. Renewable energy and telehealth are examples of growing markets.
Keep this in mind when you do your competitive landscape research. Being first to market is risky because the market may need to be developed over time. Entering a saturated market will mean you will face competition for many established competitors. You will have to differentiate your product or service from them.
Develop your product or service
Once you have decided on the product or service you will offer you will have to undertake a thorough business analysis:
- Define your business idea – What exactly is your product or service? Defining your product in these early stages will help to keep you on track.
- Identify your market – How will your product or service be different from your competition? What are the benefits of your proposed new product? Who will be your customers?
Test your product
Once you are clear about what you are offering it’s time to validate your idea. Do market research. Make a few units to sell in the market to test the response. Offer your service and see what the uptake is. Once you make a few sales, you’ll be better able to understand the demand for what you’re selling. You can then adjust your approach accordingly.
Write the business plan
Now that you have confirmed the need for your product or service, it’s time to write a business plan. A business plan is a document that outlines essentially everything about your business. Your business plan will describe your business purpose [the need you are addressing], your product-market focus [which products you will be selling into what markets], and your basis of competition [ will you be the cheapest or will you have a premium offering with substantial value additions]? A business plan ensures that you’ll stay on track and that you have a solid, well-thought-out strategy
Obtain the funding
A business costs money to get going. Here are the most common ways of securing new business funding
- Self-funding. Here you use your accumulated savings [or the proceeds from a sale of assets] to fund your business.
- Ask family or friends to invest in the business. This is risky, especially if your venture fails and you must deal with angry relatives.
- Obtain a bank loan. If your proposed offering has merit, a bank will provide some or most of the funding required. Remember you will have to pay back the loan with interest.
- Approach venture capitalists. Venture capitalists are always on the lookout for unusual and profitable business ventures that are starting. In return for their investment, they receive equity ownership or debt, which can be converted into equity in the future, depending on the success of the business.
Launch the business
Being an entrepreneur requires action and hard work. Launch your business, and get it known in the public domain. Friends, social media, and conventual advertising all have a role to play, depending on your type of business. A successful launch can build anticipation and create momentum for your business.
Manage the business
If you have got this far, the hard work comes now.
Here are some guidelines to make running your new business easier.
- Be organised – plan every day so you get the most out of it. Make sure your team have a detailed and comprehensive understanding of what’s required of them
- Keep detailed records. Keep track of every expense and invoice. Much of this can be done online, but sometimes old-fashioned paper must be used. Remember you will also need your records for your annual return to the tax authority.
- Keep an eye on your competition. The opposition won’t be sleeping and will be responding to the threat your business poses to them. Be informed and respond quickly.
- Manage costs. Make sure that every expense is essential. Don’t indulge in vanity purchases when a large payment is received. Positive cash flow is everything.
- Be creative. You will face many challenges, some of which you have no previous experience to draw on. Be creative and trust yourself.
- Make sacrifices. To run a successful business demands great sacrifice. Your family friends and your hobbies and interests may have to take a back seat, while you devote yourself to your business.
- Provide great service. It sounds so simple, but if you provide good service, and great value for money, your customers will return. And what’s more, they will tell their friends.
Most businesses fail in the first year. If you want to be amongst the successful ones, you will constantly have to learn and adapt as your business grows and as you face the many challenges along the way.
But if you are successful, you will join an elite group of people who have made a success of starting a business.
Show the world what you are made of.
