Entrepreneurship is, of course, quite different from a nine-to-five. No one’s paying your benefits, but no one expects you to clock in at a certain time either. Here’s a roadmap many successful entrepreneurs have followed.
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- Step 1: Your initial idea
- Step 2: Test your idea
- Step 3: Plan your business and strategy
- Step 4: Secure funding
- Step 5: Grow and scale
Research from start-up funding organisation Guidant Financial shows that more than half of Americans are dissatisfied with corporate life and ready to be their own bosses.
101: ‘Entrepreneur’ vs ‘Solopreneur’ vs ‘Freelancer’
There’s a lot of corporate jargon floating around. Here are the primary differences among the most common terms:
- Solopreneurs: Everything is on you. Unless you hire help, you’ll deal with all the annoying administrative tasks. Without staff, you’ll arguably have a larger profit margin, but you may well incur more risk.
- Entrepreneurs: You’re likely managing and delegating a lot more than a solopreneur. You’ll likely have fewer boring tasks, but potentially more pressure, and you’ll definitely have more people depending on you. Entrepreneurship is a lot more face to face than freelancing or solopreneurship!
- Freelancers: A mixed bag of sorts, many freelancers work solo, but they also often work with entrepreneurs or companies. They often charge hourly, day or project rates – a benefit that entrepreneurs, for example, don’t typically enjoy.
What are the essential steps to becoming an entrepreneur?
Entrepreneurship can seem like a pie-in-the-sky idea, but if the description above appealed to you, you may have what it takes. Newbies beware: each step below requires hard work, intense networking and plenty of grit.
You need a starter idea – the seed to nurture and develop. Don’t be afraid to start small: Uber was born when entrepreneurs Travis Kalanick and Garrett Camp were stuck outside on a cold winter night in Paris, unable to get a cab. Under Armour sprang into life in 1996, when former college American football player Kevin Plank became tired of sweating through his shirts during training.
Is there something you can do better than others? If you complain about a service, think how you could blow those guys out of the water! Think of Ray Kroc seeing a really efficient burger place and franchising it. (Ever been to a McDonald’s?)
In the idea stage, consider the following:
- Competitors: Too many and it might be difficult to make a difference in the market; too few and perhaps your idea is less viable than you think. Here’s some grist for the mill when it comes to business ideas.
- Urgency: Does your idea serve an urgent need, and can you execute it in time to deliver? (If your head is jam-packed with entrepreneurial ideas, great – but prioritise them by urgency.)
It’s possible your idea for a robotic shaving machine will result in a bloody mess. That’s why testing every idea, product, service and anything else you might offer is crucial. It’s also a critical part of straightforward business methodologies such as DMAIC and PDCA. Testing allows you to evolve and refine your idea, which helps avoid execution issues down the line.
Remember the following:
- The goal: Get prospective customers to validate the idea, which will help iron out any kinks, provide valuable data and help you start building demand.
- The reward: Testing saves you money in the long term as you have time to implement improvements before the idea scales up – problems after launch require much more capital to fix.
This phase is a gift: You can make changes or tweaks to your idea in a relatively risk-free environment – and gather crucial data.
Now that you have a reliably performing product that people love, plan your business model and company structure. It’s not as intimidating as it might sound; planning is just about figuring out what your company will do and what it will look like.
Consider the following:
- What’s the market demand? Investors won’t want to look at your idea if there’s not a keen pool of demand. (Aim to make those early test customers product evangelists!)
- Hire a financial expert: A business plan is merely a growth strategy; get expert assurance on how the numbers look, and develop a solid understanding of them before you pitch.
This stage should get you amped and clear on your next mission: pitching to investors.
With an idea and strategy in place, start looking for some capital to help you really get going – and scale.
If you’ve been flying solo until now, a partner can be an excellent idea. A co-founder can avail you of their funding resources. Often, investors prefer ventures with multiple stakeholders.
No matter how you do it, you’ll need cash. Entrepreneurs tend to get funding from three primary sources of private equity:
- Angel investors: People with money – and, often, experience in a particular industry – who like to fund early-stage start-ups.
- Venture capitalists: Private investors, or investment firms, that provide capital in exchange for businesses in categories with strong growth potential – they’re investing in the ‘next big thing’.
- Individual investors: Friends, family and anyone else who might invest in your venture, in the hopes of seeing a return – plus interest – once your business is successful.
There’s also peer-to-peer lending, crowdfunding and dozens of local and national grants – so be sure to do some research in your region.
After you connect with investors, you’ll need to deliver a proper pitch. See ‘How to pitch to investors when fundraising (and close the deal)’ to learn about this key stage of becoming an entrepreneur. You’re going to want Dropbox DocSend for that pitch. Its analytics let you see when prospective investors have viewed your file, which will be crucial in soothing your nerves.
You made it! But a spark is not a fire: Keep momentum going. Growth and scale are all about repeating successes, which can come from areas you may not expect. (Netflix’s DVD delivery service may be what got it started, but look at it now.)
Remember the following:
- Keep learning: Focus on continuing to learn from your data and your team. Use your funding to hire people with experience and eclectic skill sets.
- Be patient: To the extent that it’s pragmatic, be patient. It can be a long road to growth, so hang in there (and perhaps have a side hustle).
The word entrepreneur even comes from the French word ‘entreprendre’, or ‘undertake’. Even with a complete understanding of how to become an entrepreneur, it can still seem like a big undertaking. And it is! But with the right tools and a can-do attitude, you can do it.