Many people dream of becoming an entrepreneur. The title is immediately associated with success. Although it sounds out of reach, any person who starts a business and assumes some or all of the risk of that business is an entrepreneur. Unfortunately, not everyone is successful. While entrepreneurship requires an above-average drive for success, plenty of people out there have tried and failed to start a business.
No formula for success exists; every situation is different and requires a unique approach. You cannot jump into entrepreneurship and naively expect to rake in loads of cash. This is not to say that you have no chance of success. If you want to start a business, the following tips could be of great help to you.
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An entrepreneur is a person who has possession of a new enterprise, venture or idea and is accountable for the inherent risks and the outcome. The term was originally a loanword from French and was first defined by the Irish-French economist Richard Cantillon. Entrepreneur in English is a term applied to a person who is willing to launch a new venture or enterprise and accept full responsibility for the outcome. Jean-Baptiste Say, a French economist, is believed to have coined the word “entrepreneur” in the 19th century – he defined an entrepreneur as “one who undertakes an enterprise, especially a contractor, acting as intermediatory between capital and labour”.
Entrepreneur characteristically innovates, introduces new technologies, increases efficiency, productivity, or generates new products or services. An entrepreneur acts as a catalyst for economic change and research indicates that entrepreneurs are highly creative individuals who imagine new solutions by generating opportunities for profit or reward.
Many types of entrepreneurs exist and they can all benefit from several tips to make themselves and their business more successful.
Let’s focus on few tips that could be of great help to you, in your quest to be a successful entrepreneur.
In your quest for successful entrepreneurship, think and dream big. Practically, though, start small and minimize the risks.
Starting small enables you to experiment, work out the bugs in your system and prove your idea. A tight budget also disciplines small companies to do what customers expect of them. Companies that start with too many resources often scale too quickly, waste money and enjoy the luxury of not having to listen to customers.
In my experience, a start-up company’s expenses are usually 30% more than initially planned, and revenues are at least 30% less than expected.
Being conservative in your estimates doesn’t mean you have to be content with those numbers—you are just arming yourself with information. Gauge the amount of effort and the kinds of activities that are required for sales and marketing.
Too often people start a business around a product or service that they think will be successful, rather than a product or business that has a proven market.
What does this mean? Instead of creating and selling a trendy sports shoe featuring the latest style and materials, you’d be better off focusing on shoes in general, because people buy ordinary shoes every day. Eventually you could focus on selling high-performance sports shoes to retail outlets, but having a small slice of a big market is better than having the whole pie of no market at all.
One entrepreneur I know asked his boss at a very prestigious professional services firm for a leave of absence. This gave him time to verify the merit of his business idea. He knew that if he failed he could return to the relative safety of a traditional career. His friends and acquaintances thought he was gutsy, but he knew he had a safety net.
In the end he was able to prove his idea and confidently leave his job. He was shrewd, not brave.
Cash flow is the lifeblood of business, and it is absolutely essential that it be up and running. You need to find ways to initiate cash flow immediately. How do you do this? In a professional services business, you could ask for deposits on work up front, with balances due upon delivery.
You could do the same in retail, especially on high-ticket or specialty item products. Frame your policy as a way to ensure the satisfaction of clients, guaranteeing them a delivery date. You can also add value to generic items by creating exclusive labels.
Develop continuity programs to facilitate the up-front payment of monthly fees on items that customers will buy regularly, thus ensuring the delivery or availability of these items. Minimize as much as possible the gap between the time you pay for labor and inventory and the time you actually get paid. Ideally, you’ll find ways to get money up front, and the cash gap will never be an issue.
According to Woolsey, an entrepreneur needs an idea, product or service that generates a positive cash flow with minimum risk involved.
Cash flow does not mean that the cash flows out, never to be heard from again. You must bring in more cash than you pay out. To do this, you need to keep costs and expenses low. Never pay retail price on business items; look for gently used items to furnish your office or retail space.
Paying vendors up front gives you leverage to negotiate better prices. In this economic environment, credit is at a premium and vendors are more willing than ever to find creative ways to finance transactions. This trend will likely continue over time.
Research how owners and vendors are coming up with ways to work out deals. You just might hit on a whole new way of doing business.
In business, nothing happens until a sale is made. You’ll need to find a good way to generate leads, convert those leads into sales and secure repeat sales from customers.
Find or create a marketing and sales funnel system that you can implement, test and measure. Make it a system that anyone in your company can use.
Too many entrepreneurs focus on perfecting their brand before generating leads. This is the wrong approach. Leads are always more important than branding, so don’t waste money on the latter when you could be buying new customers.
You can build a brand from the ground up, rather than spending years and hundreds of thousands of dollars building it from the top down. Don’t presume you’ll even survive that long, because without leads you won’t!
You can’t tell whether a program or strategy is working if you are not faithfully testing, measuring and tracking results. You can’t change what you don’t measure.
Think of a doctor. Most doctors like to get the baseline stats of your heart rate, blood pressure and breathing before identifying serious symptoms and recommending corrective measures. Keeping track of statistics helps you determine whether gentle or severe action is needed to maintain the health of your business. It also helps you determine what kind of action is required.
Why continue to throw money away on an ad campaign that is costing thousands of dollars but doesn’t bring people through the door?
If you’ve never run a million-dollar business, then you don’t know how to run one. It’s as simple as that.
But you can learn from the ground up.
You need to accept that learning always comes before earning (except in the dictionary). Commit to learning as much as you can about sales, marketing and operations if you want to run a truly successful business.
Once you do this, then the sky is the limit. Knowing and applying fundamentals in a highly leveraged way is one of the reasons many top executives and entrepreneurs earn so much.
Master these fundamentals, or hire an expert to learn from.
Discounts take money directly from your pocket, decreasing your bottom line. Don’t offer discounts. Instead, create value-added propositions all the way up and down your product line.
Whatever industry you’re in, hold your price points. Increase your margins with low-cost or no-cost extras and possibly freemium offerings.
These little things won’t cost much in the end, but the goodwill will gain you loyal customers who will promote your business through word of mouth.
Get someone with an outside, objective viewpoint to give you nitty-gritty business advice on planning and operations. This person can hold you accountable for results.
Too often we think we have all the answers and are the only person who can really get things done. Another set of eyes could work wonders for how you operate the business. An outsider also makes sure you are hitting the numbers you need to survive on the top and bottom lines.
Becoming a successful entrepreneur is all about taking the right steps. While setbacks and mistakes are inevitable, minimizing error is what separates successful from unsuccessful entrepreneurs. Consider all aspects of every decision that needs to be made. Attention to detail is crucial to avoiding costly missteps that could ultimately lead to the demise of your venture.
Someone could already be advertising a business that is very similar to the one you are building. Branding ensures that people perceive you as being different from the rest, whether on quality, style, price, customer service or some other variable. The best way to market your business is to advertise honest and voluntary testimonials from satisfied customers. The message they spread to friends, families and colleagues says more than you could ever say.
Find ways to distinguish your brand. Many online start-ups copy other people’s ideas. This might work for a while, but without a constant infusion of creativity, your brand will eventually grow stale. Think outside the box: find out what you can do that competitors are not doing, and then set out to do it with excellence.
Working with businesses that complement your products or services is one way to succeed in your venture. You could work with business owners and managers to gain insight into how they run their companies. When your business is just taking off, you will need all the help you can get.
Business conditions evolve almost as rapidly as technology, so stay informed on both. Entrepreneurs cannot afford to lag behind trends or miss out on breakthrough products and techniques. Use Twitter to follow prominent leaders in your field and stay abreast of the latest developments.
There is no mystery in business or in life—only information that you don’t know yet. Prepare as well as you can, knowing you will need to correct course occasionally. Armed with the right strategies up front, you will cut the time required to arrive at your destination, whatever that may be for you and your business.
While writing this article, it’s always a possibility that we missed some other great tips. Feel free to share it with us.