If you want to run your own business, you’re not alone. Many people dream of becoming their own boss or creating their own products. You can set your own hours and have full control over your business.
But becoming an entrepreneur is a lot of work. Before you even launch your brand, you’ll have to do a lot of research, planning, and prep work. If you’ve never started a company before, it can be pretty intimidating! Here’s a short, seven-step guide that will teach you how to be an entrepreneur and start your own business.
- Create A Business Idea
- Develop A Product
- Write A Business Plan
- Secure Funding
- Start Your Business
- Manage Your Business
- Consider A Business Partner
1. Create A Business Idea
First things first; you need to have a business idea. This can be literally anything, but the best ideas have one thing in common: they solve a problem. Uber is a great example. Nobody liked taking a taxi, and rideshares provided a friendlier, more affordable alternative.
Think of a problem you want to solve. When you find one, you have your business idea.
2. Develop A Product
When you’re deciding what to develop, it should be something you find interesting. Again, this can be literally anything. Your hobbies are a great place to start. Let’s say you like to paint decorative miniatures. Can you imagine any tools that could make the work easier?
At the same time, you want to avoid product categories that are excessively competitive. Anything in the tech gadgetry sector is probably a bad idea, for example. There are just too many Chinese companies flooding the market with things like USB adapters and smartphone cases.
Sometimes, you don’t need to invent anything new. Let’s say there’s a shortage of high-quality circuits for handheld radios. If you have the engineering know-how, you can fill this gap in the market without the need to reinvent something completely new. Or maybe there’s no shortage, but you’ve figured out a way to produce the same circuits at a lower price.
In either case, you haven’t re-invented the wheel. But you’ve still filled a need.
So, how do you come up with a product idea? Here are some ideas:
- Carry a notepad for a week. Every time you use a product, write it down. This can be a pretty long list! When you’re done, go over the list, and see if there’s anything you think you could do better.
- Look through patent applications. In most cases, patent applications are made public 18 months after being filed. Be careful! You can’t just copy someone else’s invention – unless they sell you a license. But patent applications can give you an idea of what’s coming next in a particular tech space. For example, let’s say you know that Samsung patented a smartphone camera that’s about to blow the latest iPhone out of the water. In that case, it would be a great time to develop a photo-editing app that can take advantage of the new camera’s capabilities.
- Brainstorm with your friends. This is more helpful when you’re trying to narrow down your ideas. Invite everyone over for dinner, and ask them to be prepared to talk about a particular type of product or service. For example: “What’s your favorite hair dryer and why?” This can give you a sense for what other people are thinking. Along the same lines, it doesn’t hurt to read Amazon reviews of similar products. That way, you’ll get indirect input from a broader audience.
- Join a networking community. If you want to meet other entrepreneurs, use a service like Eventbrite to find events in your area. These events are a great way to network with others and learn from their insights and experiences.
Once you know what you’re selling, you need to decide how to create it. In the case of a service, this is generally simpler. It can even be as easy as deciding on an office space. But if it’s a product you’re making, you need to decide whether you’re doing it yourself or producing it elsewhere.
Alternatively, you may be building something by combining other people’s parts. A lot of computer manufacturers do this, for example. If you own a Dell PC, the only thing in it that dell actually manufactured is the branded case. All the rest of the parts come from different manufacturers.
Finally, you’ll need to validate your concept. This means producing a few prototypes and testing them with potential customers. If you can do some market research beforehand, even better. This can save you a bundle on prototype production costs.
3. Write A Business Plan
Now that you’ve validated your product, you’ll need to do some work on the business side. This means writing a business plan, which explains everything there is to know about your business. It will include your target customers, business model, pricing, and production methods. It will also include a marketing plan, your intended product lines, and a financial strategy.
Do this before you create any website or social media presence. You only get one chance to make a first impression on the public. Get your business plan lined up first!
4. Secure Funding
Even a small business takes money to get off the ground. This is especially true if you’re manufacturing a new product. You have to spend a lot of cash up front on production and marketing before you start to earn a single penny. Here are some ways to fund your new business:
- Self-funding – If you have cash or significant savings, you can use this money to start your new venture. You can even take out a second mortgage. Make sure to keep enough cash on hand to support yourself in the mean time! It could be a while before you start to earn a profit.
- A business loan – Most banks offer small business loans to entrepreneurs with good credit. They’ll want to see your business plan before they provide any funding. You may also want to look into an SBA loan.
- Reach out to a venture capital firm – If you’re trying to raise larger sums of money, you probably won’t be able to get a big enough bank loan. Venture capital firms specialize in funding startups, but be careful. They’re going to want part ownership, and they’ll probably want some say over how you run your business.
5. Start Your Business
Now that you have funding, it’s time to start your business. Make a checklist of everything you need to do before your official launch, and work through it. Set up your social media accounts and website. If you’re opening a retail location, set up a bunch of signage for opening day. Make it a big deal!
Once your business is open, put all your energy into driving sales. That should be your main focus for at least the first year. And whatever you do, make sure to system in place for customer service and after sales support. Your first customers are your most important ones for generating word of mouth, and you want to make sure they have a good experience.
6. Manage Your Business
Starting a business doesn’t make you an entrepreneur. Starting and running one does. And while there’s a lot of overlap between the two skill sets, they’re not entirely the same.
This is one area where it really helps to look at the example of other business owners. Look at leaders like Steve Jobs, Elon Musk, and Jeff Bezos. Each has (or had) their own unique leadership style. But by studying how they run their companies, you can learn a lot about how to run yours.
Listen to business podcasts. Look at Amazon’s top books in the “business” category, and read a few. Take a business class at community college. Anything you can do to learn more will help.
7. Consider A Business Partner
Founding and running a business is hard. That’s why so many successful companies are founded by two or more people. So, why would you want a co-founder? Here are a few benefits:
- It’s easier to secure funding – You’ll have twice as many resources, and you’ll have more credibility when applying for a business loans. Venture capital firms also look much more favorably on co-founded companies.
- They bring other skills to the table. Maybe you’re a skilled engineer with a ton of ideas, but you don’t know the first thing about business. You could focus on product development, while your partner could focus on sales and marketing. By partnering with someone with complimentary skills, your company will have far stronger leadership.
- You’ll have someone to share the ups and downs with. Some days, running your own company is an exhilarating experience. Other days, it’s stressful beyond belief. Your co-founder will know exactly what you’re going through, which makes the experience far less isolating.
Then again, having a co-founder also has its downsides. These include:
- You have to split your ownership – With a single partner, you’ll only own 50% of your company. With more partners, it will drop even further. So while you’re not doing all the work, your rewards are proportionately reduced.
- You’ll have to split your decision-making. No matter how closely-aligned your views are with those of your co-founder, there are going to be disagreements. This can be healthy in the sense that it brings different ideas to the table. But if there’s constant arguing, it will inevitably impact your team’s morale.
- It can be tough to find the same one. You and your co-founder need to share the same philosophy, and your personalities have to be compatible. They also need to provide a complimentary skill set to your own. And above all, they need to have a strong belief in your product or service.
In other words, having a co-founder is complicated. There are plenty of successful and unsuccessful companies with both solo founders and co-founders.
Do You Have What It Takes To Be An Entrepreneur?
Each month, 0.31% of American adults start their own business. That’s only 310 out of 100,000 people, but it adds up over time! At the time of this writing, 14% of working-age Americans, or around 27 million people, are starting or running their own business.
Surprisingly, the largest increase in entrepreneurs has come from people aged 55 to 64. 63.2% of new entrepreneurs are men, while 36.8% are women. And 79.6% of these people weren’t intending to start a business – they just identified a need in the market.
Entrepreneurship is more popular than ever. 51% of working-age Americans now believe that it’s a good time to start a business. And of those who intend to start a new business in the next three years, 80% are already taking action, such as registering an LLC.
So, do you have what it takes to become an entrepreneur? Grab a pen and paper, and ask yourself the following questions. As you go, keep track of how many times you said “yes.”
- Can you calmly handle unexpected surprises?
- Are you good at adapting to changing circumstances?
- Do you hate doing the same task over and over again?
- Are you comfortable with making a long-term commitment?
- Have you been known to take calculated risks?
- Do you prefer to get creative with an ambiguous assignment over being given specific instructions?
- Are you the type of person who refuses to give up, even when the going gets hard?
- Do you keep track of your finances and spend your money wisely?
- Do you enjoy taking the lead on group projects?
- Can you comfortably oversee a variety of tasks and people?
- Do you enjoy taking initiative?
- Are you known to be a good problem solver?
- Do you know how to be self-motivated?
- Would you consider your organization skills a strength?
- Do others consider you a “people person”?
If you answered “yes” to 12 or more questions, you’re definitely ready to be an entrepreneur! If you answered “yes” to 6 through 11 questions, you’re on your way, but you’re not there yet. Study up on entrepreneurship and work on your skills, and you’ll get there!
If you said “yes” to fewer than 6 questions, you still have a lot of work to do. But that doesn’t mean you can’t be an entrepreneur! You’ll need to change your mindset. Maybe you need to work on your organizational skills or your people skills. Find an entrepreneur you admire and study their career, habits, and strategies. Michael E. Gerber’s book The E Myth Revisited is a great place to start.
Learning how to be an entrepreneur isn’t for everybody. It takes the right mindset and a strong belief in your product or service. But if you want to take your concept to the next level, there’s nothing stopping you.
You can’t just charge forward blindly. You need to have a solid business idea and a reliable product. In order to produce anything at scale, you’ll have to secure funding. It also helps if you have a partner to help you out. After all, starting your business is just the first step. Once it’s off and running, you’ll still have to manage it! Then you won’t just be an entrepreneur. You’ll be a successful entrepreneur.