It’s a long road from employee to entrepreneur, but there is a well-established path to get there. This guide will help you start your trip fully prepared.
If you want to become an entrepreneur, you’re in good company. According to one estimate, there are 582 million in the world.
But as you can imagine with that staggering number, most didn’t make it to the top. And you’ve no doubt heard horror stories of companies going bankrupt. Yet, there’s this idea that’s stuck in your head that you can’t get rid of. You’re sure that’s the next big thing.
But where to start ? How do you go from being an employee working 40 hours a week to being an entrepreneur running your own business?
It’s not something that’s going to happen overnight, but there is a clear path you can follow that will maximize your chances of success. Whether you’re selling business-to-business or opting for a direct-to-consumer model, the steps to entrepreneurship are largely the same. Here’s how to start.
Come up with an idea
First, you must have an idea. That’s probably why you’re here, so this should be the easiest step. However, not all ideas are created equal, so be careful which idea you choose. This should be a problem that a) you are currently suffering from and b) would cost money to fix.
It sounds obvious, but a lot of would-be entrepreneurs come up with what they think is a great idea without considering whether it’s really a problem people want to spend money solving. For example, opening packages is a bit of a pain for me, but would I spend $25 on a special package opener? Probably not.
Quick advice: Instead of building a product for a theoretical customer, develop it for yourself. Make it perfect and start using it. This will help you narrow down and describe its benefits to a potential customer. Letting them know how you made it a part of your life will help them imagine that it will become a part of theirs.
Develop a business plan
It sounds intimidating, but it’s not. In fact, I would advise against making a 30-page proposal that no one will read and that will be thrown out the window in a few weeks. You’re going to have to figure this out as you go, so extended forward-looking business plans are usually a waste of time.
But it’s a good idea to do a market analysis and put down on paper exactly how you’re going to build that product, how you’re going to market it, and how you’re going to find your first customers. This allows you to check if you are onto something or not.
Your business plan should outline the following:
- Your idea (a detailed description of what your product is and how the customer would use it)
- Your target market (a breakdown of the type of customers who would use your product and the size of the market)
- Your price (justify it with similar products if possible)
- Your marketing plan (how would you introduce this product to customers and how much would it cost?)
- Your sales goals (it’s impossible to predict with precision, but see if you can come up with a conservative plan that’s credible – provide just enough detail to make your idea pass the smell test)
Quick advice: Forget an exit strategy. Investors love it, but it’s pointless this early in the game. In fact, avoid investors altogether. They will take over your business, and that’s probably not why you got into entrepreneurship. Unless you’re building a factory, you probably don’t need investors anyway.
Try to prove it’s a bad idea
My big mistake with my first business idea was trying to prove it was brilliant. Bad idea. It’s like asking leading questions of nice people who will say, “Yeah, I’d like something like that” when in reality they would never pay a dime for it. It’s not because they’re lying to you – they probably really believe it. But when there’s no money involved, people feel compelled to be “nice” to you about your product.
If you’re trying to prove that your idea is terrible and will most likely fail, you’re much more likely to spot fatal flaws in the plan, giving you the option to scrap it before it’s too late or bring the necessary changes to make sure it succeeds. Remember that you don’t market your product, you create it.
Quick advice: Some brutally honest questions you might ask potential clients include:
- Why would your organization ever need something like this?
- Is your current method of solving this problem not working very well?
- What are the biggest flaws of this product?
Find a way to keep your day job
If you’re like me and have gobbled up all the successful entrepreneur books after getting the itch, you’ve probably been bombarded with advice to buck the caution and go all out. Do not fall into the trap.
The road to entrepreneurship is littered with the financial wreckage of those who made the mistake of believing they could build a successful business in just a few months. For most entrepreneurs, it takes years to get established, so you should stick to your day job and focus on growing your business during the nights and weekends.
Quick advice: You don’t need a lot of time to start working on the business. Just find a time each day, maybe first thing in the morning or after work is done, to start fleshing out your idea and developing your product. After a few months, those hours add up. Slowly but surely, we are succeeding.
Over-planning is a crippling disease that strikes just about every entrepreneur. We want to plot our steps before taking them, but that’s just impossible to do. Action is the only thing that matters when you’re an entrepreneur.
Before you act, you are in a place of ignorance. You have no idea what kind of externalities or obstacles you will encounter when taking action, so plans made at this stage tend to be pointless. After taking action, you have a ton of information and can plot your next step.
Quick advice: Identify an important milestone to achieve this week. You will be tempted to look at all of your actions and try to do too much, leaving yourself overwhelmed by the process. Instead, identify a milestone that would bring you closer to your goal and focus only on that this week. Then repeat the process next week. When you take a big step, the next logical step becomes obvious.
Adjust, adjust, modify
Starting an online business is a constant journey of adjustment. As you get new information, you will need to modify your plan. Where you will find yourself in six months will be nothing like where you expected. And that’s OK.
Be flexible and ready to change your plans each week. Think of your business as a ship sailing to a distant point on the horizon. From time to time, you can deviate from your trajectory. But as long as you regularly correct your direction, you will arrive at your destination. It’s so much better than sitting on the shore for months trying to come up with the perfect plan.
Quick advice: Get a mentor to help you along the way. If you’re having trouble, you’ll be grateful to have an experienced contractor who’s been down this road before and can help you identify the next action to take. This can be someone you know or you can contact your local small business development center to find one.
As long as you’re careful, it’s a worthwhile trip
Despite its reputation, entrepreneurship is not the place of recklessness. However, just because there are risks and you won’t become a billionaire overnight doesn’t mean it’s not a way to go. Developing a new product is exciting and fun, and it gives you something to look forward to.
As long as you temper your expectations and make smart decisions, entrepreneurship is a fulfilling business. After all, even if it takes you years, wouldn’t you agree that a successful business is worth it?