Can't Find A New Job? Create Your Own
There are many people turning to entrepreneurship these days. The unfortunate truth is: With such high unemployment rates, many job seekers have given up looking for a job and have turned to creating their own. Entrepreneurship is not just for the likes of the youthful founders behind Facebook and Google. Not only are there more recent college grads trying their hand at starting new businesses, but mid-career professionals and recent retirees are trying too.
One of the biggest mistakes that early entrepreneurs make is believing that their startup is about the product. It's not. The product is the heart of the new business, but it no more makes a company than the heart makes a whole person. After all, an entrepreneur is starting a new business -- not a new product -- and it's the business that's wrapped around that product that matters most.
So how should a new entrepreneur approach starting a new business? There are some basic elements about a business that an entrepreneur needs to consider.
Basic Elements Of New Business
What problem are you solving for the customer? Is it a problem that customers are actively seeking to solve? Was the solution needed yesterday? And how much is the problem costing the customer today?
While these questions seem elementary, it's amazing how many entrepreneurs create a product simply because it could be built. An entrepreneur needs to address desperate customers and, more often than not, customers buy because the product will make them money, save money or time, or reduce their workload. While you can create a product that doesn't solve a problem -- just think of Facebook -- it is simply easier to gain traction and succeed with one that has a clear value proposition for the customer.
Do you understand the customer and the context that your product has in the market? Many entrepreneurs believe that they need to have their product ready before they can talk to customers. That's not true. Desperate customers are willing to talk to anyone who can solve their problem, even if the solution is available tomorrow. You can only understand your customers and the market by getting out there and engaging with people.
Do you know who your competitors are and how they do business? Just knowing how much market share your competitors' own is a good indication of how much money and time you will need to put into marketing. A fragmented market with no clear dominant player is the easiest for a new business to get into, but markets in which companies already own 25 percent of more of the market share mean that starthave to overcome those entrenched players.
What's your business model? How are you going to make money? The dot-com era taught us that there is unlimited demand for free. When a startup offers its product for free, it's usually a clear sign that they don't know how to monetize the business and are postponing figuring out this piece to the puzzle.
Who do you need to make your vision come true? In order for any business to grow, it needs people. If you plan on being a "solopreneur," then your business is limited by the number of hours you can work. Even if you "productize" the business, you'll still be bound by the amount of time that you can support the customers and the effort you can put into marketing.
The ultimate goal of any business is for the business to take on a life of its own so that you don't need to be there all the time. A team is more than just employees, service providers, and consultants. It also should include mentors and advisers. A team is not your friends or just anyone who will work on your project; team members need to be a piece to the puzzle, and have a specific role and purpose that makes organizational sense.
Conventional wisdom will tell you to start by writing a business plan. I find that most entrepreneurs are impatient and don't do this. Truth be told, business plans are not appropriate for every type of new business and every entrepreneur. If you are planning a business that has been done many times before, then all the factors are known and a business plan works. (A good example is a restaurant.) But if you are venturing to unknown territory, and what you plan on doing hasn't been done before, or you can't get the information needed to complete the plan, then a concept plan is more appropriate.
A sure sign that you need a concept plan is when you feel your business plan is a work of fiction. A concept plan is short and is a precursor to a business plan. It outlines what you think the business is going to be, as well as the assumptions and hypothesis. It describes how you plan on determining what the business needs to be. You can think of it as a plan to conduct a series of business experiments.
Entrepreneurs with a technical skill often focus on skill. Programmers just want to write code and veterinarians just want to treat animals. The problem is that they focus too heavily, and sometimes exclusively, on the product or service, and neglect the business of product or service.
People believe the product comes first, and marketing comes second. Marketing needs to start as soon as possible. Marketing creates the demand for the product, so sales can capture that demand later and turn it into revenue. Marketing builds relationships with customers and partners, and creates awareness for the product. People buy what's most familiar to them and building familiarity takes time.
If you look at publicly traded companies, marketing is always more costly than product development. The first stumbling point for startups is marketing and it shouldn't be an afterthought.
Everyone has heard of the need for startup to be more capital efficient than in the past. Being cost effective does not mean using the D.I.Y. approach. Whether you are a solopreneur or a small business with a handful of people, you need to be highly productive. Eliminate tasks that don't affect the bottom line. Automate wherever possible. Outsource or hire away those mundane and routine tasks.
Entrepreneurs need to think about the D.I.W.O. (do it with others) path. Entrepreneurs without a sales background dread sales. One misstep is to believe that sales is about talking to potential customers and telling them about the product. Sales is a process. Every startup needs to develop a deliberate and well-orchestrated sales process where little is left to chance. It needs to be repeatable and produce predictable results. And above all, it can't hinge upon hiring sales superstars. Like it or not, initially, the entrepreneur must learn sales and embrace it because it will demand their participation.
With almost certainty, an entrepreneur's first notion of the product, service or business model doesn't work. The successful product or business is a variant. It's important for the entrepreneur to realize the need to change as more information is gathered from the customers and market.
An early stage company is searching for the solution to their problem, which is: What product does the customer really want to buy and what business model is needed to make the startup grow and thrive?
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