The entrepreneur path is not for the weak of heart. When you start down this road, you will face extreme unknowns and take on major risks. As a business owner, you will need to trust your ability to lead an organization through its growth and an unstable future.
However, the rewards for successful entrepreneurship are great. You are your own boss, and you get to call the shots. You will have the opportunity to watch a startup team develop and take your organization to new heights. Owning a business allows you a wide range of freedom for career direction and growth.
I. Questions to Ask Yourself Before You Begin
Time to sit down and get some answers before moving forward with an entrepreneurial career shift. It may help if you write down the answers to these questions. You may also have a close friend, family member, or association listen to your answers and provide feedback.
Are you a natural leader?
Do you prefer to delegate work or are you more interested in completing tasks that are given to you? Do you enjoy doing very specific types of work, or are you a Jack-of-All-Trades? If you decide to pursue your own venture, you will initially need to rely on yourself to fill multiple roles. Don’t be surprised if you find yourself toiling into the late hours managing payroll, finishing client projects, and cleaning up the office.
Are you ok with taking risks?
Think about your current lifestyle. Would you be able to live with less? It is a distinct possibility as you launch and grow your business. Do you have family members who are dependent on you? If so, what is your contingency plan if things don’t work out right away or at all? The steps you take to prepare may inform your willingness to start a new career path.
Many startups suffer from large setbacks and failure. Examine your history with career obstacles and think about how you might react. Some CEOs will just scrap an idea and move on to their next business venture. Will you be able to bounce back if your startup doesn’t work out the way you’d like?
How imaginative are you?
It is no surprise that creative individuals tend to be the most successful entrepreneurs. Even if a product isn’t particularly innovative, business owners are usually able to envision marketing tactics, operations, and distribution methods that their competitors cannot even imagine. How willing are you to think outside of the box?
Is this idea financially viable right now?
Before leaping into a new business, you will want to seriously consider whether it is the best timing for your financial situation. Some people don’t get to choose – if they’ve been laid off or unemployed, many turn to entrepreneurship out of desperation. But you still need to manage startup costs and living expenses before you get a business off the ground. You will most likely need to be frugal in the early stages of your venture. Being a spendthrift can sink your entrepreneurial efforts into the ground.
II. Know the Habits of Highly Successful Entrepreneurs
Entrepreneurs have certain traits in common. They are often passionate about their own ideas and work and organized with their time and finances. Entrepreneurs cannot be shy when it comes to self-promotion. They understand the value of networking, word-of-mouth, and a solid online portfolio. Business owners will spend so much time thinking and researching their industries, that they will eventually become subject experts.
As an entrepreneur, you must be willing to learn from your setbacks and correct your course. Indigo Johnson, the CEO of employment management firm Careers in Transition, describes her struggle to leave behind her strict leadership behavior, cultivated during her time with the Marines, in favor of a more flexible approach. This shift helped her organization retain their top-notch employees, who have room to grow and learn within the company.
As a business leader, you must become known as an expert within your field. Min Cho, the founder of Nova Datacom, earned nearly two decades of banking industry experience before she launched her small business. Nova Datacom has since grown into a multimillion-dollar organization. Once you launch a company, you must continue to grow and learn, in order to maintain your expert status. Entrepreneur Elon Musk, the brainchild behind SpaceX and Tesla, uses his high-tech engineering lab to keep on the cutting edge of innovation.
III. Solidify and Assess Your Big Idea
Are you brimming with excitement, ready to test out your grand, new business venture? Slow down, before jumping in, you will need to test out the stability of your project and work out the details of market demographics, investors, and operations. You’ll also want to examine case studies of other businesses in your market, so that you can learn from their successes and failures. Once you’ve done that, ask yourself some hard questions about your next steps forward.
- Who will my product and service help?
- What is the market landscape? Is there a need for this product or service in the long run?
- Who are my best resources and will they be able to help me start a business?
- Financially, can I handle not earning money until this business has grown?
- How will I protect my work using copyrights and patents?
- Do I need a mentor?
We’re living in an era of struggle for startup ventures. In post-Recession years, employment rates at startups have been only 45% of the 1999 rates, according to the U.S. Small Business Administration’s Office of Advocacy. How likely is it that your startup will survive past its first four years? In the information industry, only 37% of organizations make it through this period. The industries with the highest four-year survival rates are finance, insurance and real estate, holding strong at 58%. These rates will fluctuate depending on the current state of the economy, but it is a good idea to research your niche industry first.
Before making the leap, plan out a timeframe. Depending on your business plan and capital needed, it can take you a few months to reach “ramen profitability,” a term for having enough funds to run your business and live without outside income. Investor Paul Graham encourages startups to share the load with a founding team, rather than an individual founder. While your equity will be split amongst the other founders, your chances of success will be far greater.
IV. Map Out a Realistic Business Plan
Before you knock the business plan, think about how many doors this brief document can open. A well-crafted business plan can show VCs and angel investors that you have both the vision and the credibility to carry your ideas into fruition. This will help you secure the necessary funding to take your plans to the next level. Enloop is an excellent, free online tool that can help you start a business plan and compare your projected success rates to similar startups. Your business plan should also give you a roadmap to follow for your upcoming years of growth.
Retail Business Plans
Startups account for 52.6% of all retail sales in the United States, according to the U.S. Small Business Administration. You will need to do in-depth research into operations, shipping, sales predictions, wholesalers, market statistics, and marketing as you write out a business plan for retail. Consider how much risk is involved with your particular product, as you consider how to approach investors. A strong marketing strategy will be crucial, since your predicted sales will rely on brand visibility and recognition.
Some of the most popular professional services industries for startups include temporary staffing, healthcare technology, self-improvement consulting, and accounting. The success of a service will hinge on your influence amongst key demographics. In many ways, you will need to concern yourself with similar issues retail businesses face. Place an emphasis on building a team of sales associates who can convey the true value of your services. Exposure will be crucial with a service-based career, where people learn about you through word-of-mouth or your online presence.
The National Restaurant Association predicts that over $660.5 billion will be generated by restaurant sales in 2013. This doesn’t even include the huge amount of revenue generated by bars, bakeries, cafes, and food trucks. As you generate a food-service business plan, you will need to read up on FDA food regulations, to make sure that your proposal is compliant with federal government regulations. Many food businesses rely on additional forms on income, including space and stage rentals, which should be includes within your projected revenue graphs.
There are specific business plan elements that must be addressed, no matter what type of venture you’re exploring. This is a list of the most common components you will need to address during the business plan drafting process.
- Executive Summary: This is the crux of your business plan. Here, you will outline your company mission, objectives, and background.
- Company Summary: Who are the founders and how do they split ownership? Create graphs of your expenses, assets, and investments.
- Products or Services: Go in depth with the project management steps for the development and creation of your products and services.
- Market Analysis: Who is your target demographic? Show market testing and research that supports these audiences. Are there hidden demographics that would benefit from your products and services?
- Implementation and Forecasts: You will want to examine two possible futures with your forecasts: conservative and optimistic.
- Financial Plans: Have you worked with a financial advisor to see if this venture is economically feasible? What are the hidden costs? Create an expense budget, cash flow statement, and a projection for breaking even.
V. Gain Exposure and Funding
Before you start getting your brand name out there, you will need to establish a solid online presence. This includes professional social media profiles, an engaging website, and a blog. Contact industry experts to see if they will contribute content in the form of guest blog posts and partner up with other companies online. These well-known figures and organizations have access to massive social media audiences. Your search engine rankings will climb as authority websites feature your startup. Once you have gained an online audience, it will be time to start the funding search.
Look into investment companies such as Diamond State Ventures, Madrona, and NewSpring Capital, which can match your organization with the best venture capitalists. Make sure that your startup team and your business plan are polished – you will need to be prepared when networking with potential investors. Don’t go into VC meetings empty-handed. Practice pitching your startup and take your best team members with you. Don’t spam VCs with funding requests – the key is to build meaningful relationships with investors who believe in your cause.
Project campaigns on Kickstarter raised $176 million from backers who were excited to see these ideas come to fruition. If you have a clearly defined business plan and a compelling video presentation, your company may be able to earn startup funds through websites like Indiegogo, Kickstarter, and GoFundMe. Crowdsourcing is most effective when it is partnered up with a solid web presence and media production. Consider hiring a web designer, filmmaker, and photographer to create the best content for your funding page.
Some of the most popular small business loans include the 7(a), 504, and the 7(m) microloan program, which are offered by the U.S. Small Business Administration. However, you don’t want to rely on loans for the bulk of your financing, as they have low approval rates in this economy. During the 2013 Fiscal Year, only 27% of startups were approved for the 7(a) Loan and 14% of startups qualified for the 504 Loan. Your startup should partner with a financial advisor to complete the extensive paperwork required to apply for an SBA loan.
It is rare to find grants that can be used for startup purposes, unless you intend to open in developing areas, conduct specific types of scientific research, or develop environmentally friendly products. However, Grants.gov is an excellent starting point to see if your organization will qualify for a grant.
While this funding method can place your personal finances at risk, it is a great way to start moving toward your vision quickly. Your 401(k), life insurance, and a home-equity loan are just some borrowing avenues you can explore.
VI. Get a Legal and Licensed Start
Before you start moving forward with business operations, you will need to acquire the right businesses licenses, file tax paperwork, and adhere to employer laws. The following checklist and resources will walk you through the ins-and-outs of business structures, accounting, taxes, and legal requirements.
- Choose a business structure based on your size and operations. Your categorization as a sole proprietorship, partnership, corporation, S corporation, or LLC will affect your company’s tax responsibilities.
- Obtain an Employer Identification Number.
- Obtain your state and city business licenses.
- Apply for local permits for applicable factors like zoning, building construction, and signage.
- Work with your accountant on your startup’s tax form schedule.
- Prepare for tax filing by collecting records of all sales, expenses, and inventory.
- Review federal and state employment laws.
VII. An Entrepreneur’s Essential Toolkit
Essential Software and Apps
- LinkedIn: This is the industry standard social media platform for entrepreneurs to network and talk shop.
- MailChimp: Manage your email marketing campaigns and connect with vast audiences with easy-to-use templates.
- Crunchbase: This mobile app connects you to a vast database of tech companies, angel investors, and leaders.
- TaskRabbit: Hire a virtual assistant or messenger to get tasks done on the fly.
- Uber: Your own personal transportation service. Hire a driver for custom arrival points and destinations within seconds.
- Khan Academy: This non-profit institution offers free courses across a multitude of educational topics, such as chemistry, physics, finance, and art.
- CreativeLIVE: Creative media and business experts host streaming courses and seminars, which are free if you catch them live.
- Coursera: Over 80 universities around the world host over 450 free courses on this educational platform.
- iTunes University: Get a taste of Ivy League education by downloading free video lectures, textbooks, and assignments from the top universities in the world.
Startup and CEO Publications
- FastCompany: This publication is dedicated to tracking innovative trends in design and tech.
- Inc.: A digital magazine dedicated to startup guides, money news, and industry leaders
- Forbes: A biweekly print magazine that focuses on national finance and marketing. The online version offers a wide selection of columns featuring tech and business trends.
- Harvard Business Review:This print and web publication engages the worlds of academia, management, and enterprise with the most current business news.
- Entrepreneur: This web platform explores startups, technology, franchises, and marketing strategies within the U.S.