March 13 , 2013
Why would anyone want to be an entrepreneur? Top reasons cited by CEOs of Inc's 500 companies are the desire to control their destiny, job security now that large companies regularly downsize employees, making more money and doing things differently. Other motivations include personal satisfaction for the work done and having a preferred lifestyle.
If you got the entrepreneurial bug in you consider the following conditions carefully to know if you really are cut out for it.
Willingness and ability to bear financial risks
One must be realistic about the financial risks that come with owning a business. Consider how much you'll have to hoard up and how losing it would affect your other financial goals, such as having a sound retirement or paying your kids' education. Weigh the importance of starting a business against the sacrifices you might face. Entrepreneurs must be sure that if they lost capital it won't ruin their financial situation and that they can accept bankruptcy.
Sacrificing your lifestyle
If you're used to steady paychecks, four weeks' paid vacation and employer-sponsored health benefits, you should be prepared for change.
Creating a successful start-up often entails putting in workweeks of 60 hours or more and funneling any revenue you can spare back into the business. Entrepreneurs frequently won't pay themselves a livable salary in the early years and will forgo real vacations until their business is financially sound.
Liking everything about a business
In the early stages of a business, founders are often expected to handle everything from billing customers to hiring employees to writing marketing materials. Some new entrepreneurs become annoyed that they're spending the majority of their time on administration when they'd rather be focused on the part of the job they enjoy.
Making decisions sans a rule book
With a new business there are a lot of decisions to be made without any guidance. You might not be used to that if you've spent some years working in a corporate. Most successful entrepreneurs like decision making in uncertain environments.
Are you good at creating ideas and implementing them? You might have a wonderful concept, but that doesn't mean you possess that special mix of drive, persuasiveness, leadership skills and keen intuition to actually turn the idea into a lucrative business. So, examine your past objectively to see whether you have assumed leadership roles or initiated solo projects -- anything that might suggest you're good at executing ideas.
5 Lessons for aspiring entrepreneurs
Steve Jobs, one of the most successful entrepreneurs of the day on being a successful entrepreneur
1. Connect the dots
Jobs dropped out of college the first months, but, as he explains, this might have been one of the best decisions he ever made in his life. He had time to take a class which has helped him to create the first version of Macintosh, back in 1984. When Jobs was 30, he got fired from Apple Inc. He couldn't believe what happened, but because of this he created NeXT and Pixar Studios.
2. Don't settle
If you have not yet found that one thing you love, keep looking, don't settle. Steve has a great passion for computers and constructing new things, and this has lead to the great success he experiences today. When things were not going well, Jobs never gave up because of his passion for the computer industry.
3. Seize the day
Don't let time just pass by, use it! Jobs believes more in this statement since 2004 than ever, because that year he got the diagnosis of cancer. It was a rare form, which only could be cured by an operation. Today, Steve Jobs is healthy. But every time he has a speech towards young people, he reminds them of how fragile life is and how you should follow your own path.
4. Stay ahead of the pack
Be the first one to innovate. Take risks. Go in directions other people have not even discovered yet. Steve says innovation has little to do with how much money you dispose of to finance research and development, it's about the people you work with and their creativity.
5. Think in broad terms
Jobs is not only innovative, he is also creative and strategic. Jobs is a born leader, with a vision he can easily transfer to others. He saw computers not just as machines he saw that computers could be personal for people. He saw computers not only as practical machine but also as a source of enjoyment, entertainment and creativity.
Steps to become an entrepreneur
You always wanted to be an entrepreneur. You've dreamed of it and now you're ready to live it. Here are some things to give you a sense of direction on how to start it all.
1. What products/services to offer
As a working professional you may or may not have clues about what might be a good business proposition for you to begin with. The first thing you need to set out on your entrepreneurial journey is to have a good business plan. You need to be so exuberant about how you'll be spending your time -- or the business concept itself – that every morning you want to jump out of bed eager to get to work.
You can look around yourself, in the industry you work in to spot unattended needs. Can you come up with ideas to cater to these needs? If the industry is so mature that it is hard to locate needs of consumers/clients not being served, can you think of doing things in a new, improved way? A true entrepreneur must innovate. Innovation can be brought about either in the product/service or in the process by which a product/service is created and delivered.
If you are passionate about something you can become an entrepreneur focusing on your passion. Music, sports, web designing, creative writing, cooking (or even eating!), apparel, etc are examples of passions that young people have been able to capitalize on. Your passion may have nothing to do with your current employment but if you have an idea that will sell you needn't worry of lack of expertise.
2. Know your market and competition
You must possess some knowledge about your prospective customer/client base in order to innovate effectively. If your product offering is one that already has a market, determine how big the market is. Craft a plan regarding what segment and size of the market you'd like to target initially. Figure out their preferences as known from buying patterns. These things will help you gauge how your product should be developed and positioned.
Next get familiarized with your would-be competitors. If the product offered exists in the market you would have devise strategies to tackle rival products or at least cope up with them. If it is an altogether new product you'd have to consider competition from substitute products.
3. Determine start-up costs
You have a great business plan and have even figured out how to deal with competition in the market. Next thing to do is to get a hang of how much money you'll need to pump in to get your business running. You will need to make arrangements for capital through personal funding, commercial loans or from angel investors. More and more private equity firms are willing to fund young entrepreneurs.
4. Consider your break-even costs, cash flows and funding
When you how much money will be driven into the business you want to how long it will be before the business will generate enough profits to return your initial investment. This is an important consideration because this calculation will tell you what should the ideal level of sales output and how products should be priced.
You also need to have an idea of what the monthly or yearly cash flows will be like, to service various expenses.
Finally you also need a funding source that will provide you money when you need it. This could be a bank or other financial institutions. You also need to have a backup of resources from family, friends and relatives, just in case the bank/financial institution is not convinced of your plan.
5. Make sure you can handle the tasks
Chalk out the various tasks you will handle as routine. You might have to negotiate basic contracts such as employment agreements, leases, licenses, terms & conditions, sales and distribution agreements. Before you set out verify if you have the qualities of leadership which will be tested in the course of your voyage. You have to face the challenge of managing people day-to-day.
6. Gauge your family support
Being an entrepreneur is not easy job. Entrepreneurs face lots of discouragement. Potential buyers may not return calls, business may sour or you may face repeated rejection. It takes willpower and an almost unwavering optimism to overcome these constant obstacles. Entrepreneurs devote much time and money to the business so it will be great to have a supportive family that will stand by your side when the going gets tough. They need to understand how the business will affect home life, including the time commitment, changes in daily schedules and chores, financial risks and sacrifices.
If your family is not enthusiastic about what you're doing, try to find support among friends who will understand you for moral support. Join forums of entrepreneurs who will share experiences with you.