Entrepreneurship is not for the faint of heart. While every entrepreneur starts with a dream of making a dent in the universe, most end up discovering that it is more about survival.
Skepticism looms large and the struggle is often tougher than expected. The challenge is to deal with the ups and downs.
The initial euphoria of a new company subsides and eventually one has to face the real world: a place full of skeptics. An entrepreneur must learn to cope with all these things and still remain focused at work.
The equation is pretty simple: you need money to sustain the company but passion to start it.
They say money is not the goal but a by product of an excellent product or service. Most entrepreneurs quit when it gets tough, but those who are passionate about their work, seem to hang in longer and triumph against all odds.
It is rare to find a successful entrepreneur who does not love his work. It is the joy of work that keeps one going in the turbulent times. It is about defying logic, building dreams, and achieving the impossible.
Entrepreneurship is a risky business. But risks can be eliminated with proper planning and by employing a well measured approach.
Here are a few things that every entrepreneur must know before taking the plunge.
1. A great team
A great team is a must for any company to start and sustain itself. The team should have like-minded people with complimentary skill sets.
The bottom line is to cover as many areas as possible. A great team also comprises people with deep knowledge and expertise in their domains.
One must clearly assess himself as to what he brings to the table. A team of passionate individuals with the commitment to work is what you should be looking for. It is important to have a cohesive team, especially when things are not going good.
Passion for work is infectious, a lousy person will never move people.
2. Know your business
Great entrepreneurs figure out the most important things that drive their business. They are as follows:
- Core values of the start-up
- The purpose of the company
- Envisioned future
- A detailed description of the work involved
- Team and their roles
3. Assess your start-up
Ideas rule the world, but only when they are executed properly.
The product or service you are dealing with must have sustainability, and not a me-too approach. Work out the details of executing the plan.
A start-up must find out its niche before venturing into the hostile world of fierce competition. Every start-up needs to answer these questions:
- What is your product or service? What will differentiate your product and services?
- Who are your customers? What they want?
- What is the size of the market for its product/service? Is it global or local?
- Is the start-up scalable?
- What is the investment involved in launching the product or the providing the services?
4. Assess the competition
It is all too easy to say that our product is unique with so many features and a great technical team, etc. The acid test lies in careful analysis of the competition.
Analyze the competition, before you begin execution of the idea. What differentiates your product/service?
Is it feasible to compete with the existing players?
Everybody has something to promote. It is how creatively one can put his idea in the market that decides how much success it eventually gets. Be creative and promote your products/services to get maximum traction.
5. Swallow your ego
An entrepreneurs needs to ask for help, he needs to promote himself, he has to often do what is in the best interest of the company.
The best entrepreneurs are driven by the best ideas, not necessarily their own. Egoistic people are repulsive in nature, whereas entrepreneurs need to be magnetic.
Entrepreneurship and ego do not go together. It does not matter who gets the credit, what matters is what is established.
Integrity is the foundation on which a company is built. If the foundation is weak, the company cannot sustain.
Integrity is the consistency of actions and words, it is how a brand is built. The most influential brands are built with integrity in their actions and that is how the customers develop respect for the companies.
7. Workforce diversity
It is good to have a diversified group of people as opposed to having people of the same culture or background.
People from different backgrounds, culture, and nationalities add to a rich team. Each individual with different background brings something different to the team and adds value.
8. Quality of the board members
Board members can directly influence the results of a company. They are important because of their inherent networks, experience, skills, and mentorship they offer.
Great companies are built around great mentors. This includes directors, advisors, and people with technical ability to drive things.
For a start-up, it is a must to have a great board member team.
9. Test your idea
It requires more than a business plan to validate your idea. Designing and developing the product is easier, selling is the tough one.
Most entrepreneurs with a technology background often forget to ask the most important question: Who cares?
Is there someone who is interested in your idea? Is there a market for it? How are you going to sell it?
Talk to people before you develop anything. Figure out how many people are interested in your idea. It is important to evaluate the feasibility of an idea before taking it up.
Analyze the idea, the basic requirements for it and the factors needed to sustain the idea.
10. Check the source of funding
No matter how much petrol is there in the tank, the refueling will be needed at some point. Every entrepreneur must assess the funds at his disposal and figure out how much capital would be needed and when it would be needed.
When a company scales, it needs funds. Choosing the best funding option is important to the growth of a company.
It is important to know and be aware of the various ways for raising funds like friends and family, self funding, VCs, banks, angel investors, incubators, and IPOs going public.
11. Create or cater a need
When dealing with products and services, there is no place for mediocrity. Excellence is the need of the hour. It is hard to sustain something that is not world class in the long run.
Entrepreneurship needs conviction to try something new, something that does not exist. There are two ways to sustain a business — either you cater to the needs of the client or you create the need yourself.
The iPod is a classic example of a product that created its need in the market, whereas e-commerce is an example of finding a new solution to an old problem.
12. Recruit the right people
A start-up is built around the initial people it recruits. Recruit people who are self-driven and are willing to go the extra mile.
Hire the best talent to do the best jobs. Never compromise on the quality of people.
Find experts and let them take control. Let them have the centre stage and make decisions. Let the best people handle the jobs and drive things.
Build a team — people tend to bring out their best when they are collaborating rather than competing with each other.
13. Work on the exit plan
Most entrepreneurs neglect the exit option. They find it difficult to comprehend selling their business or other exit options.
It is important to consider your exit strategy when starting-up. The most common selling option is to be acquired by another business, a private investor or management.
Some businesses also go for mergers and IPO as an exit option.
14. Working capital and finances
How much working capital is required? How are the finances going to be managed?
It is very important to streamline the accounts and finances from the beginning. Most entrepreneurs, especially those with a technical background do not understand finances.
However, businesses cannot be run without the understanding of money.
15. Equity of company
Decide beforehand the stakes involved in the business.
The start-up is a very early stage, but one needs to have a fair idea of how the equity will be distributed.
Many of the start-ups fail when there is contention in distribution of the equity.
The founders and the board must chalk out everything clearly before the team. A rough guideline that most successful start-ups follow for equity is as follows:
Venture fund: 33%
The route of a start-up is unpredictable, to say the least.
The people on board should be prepared mentally to go through this tough journey and deal with any sort of challenges.
Whether it is a complete change in technology, financial crunch, product failure, internal conflicts, damage by nature, or dealing with people loss, one cannot afford to let the situation dictate terms.
17. Encourage failures/success alike
Everyone is bound to fail, mistakes are part and parcel of the job.
Never discourage a person for failing. Risks, experimentation, and repeated efforts pave the way for success of a company.
18. Sense of urgency
The clock is ticking every second. For an entrepreneur, it gets tougher to sustain with passing time. One can never take anything for granted.
Each moment lost in a useless activity is a moment taken away from building the company. Everything adds up and matters in the long run.
19. Understand the legal ramifications
Sort out the legal issues in the planning phase itself. Know what is needed and when it is needed.
20. It takes time
Even the genius of Edison took more than 25 years to make an electric bulb. It took 20 years to develop the Xerox machine.
The greatest of ideas are not always magic. It takes time to build great stuff. It needs a real big effort to build something that can create an impact.
Give sufficient time to try out things. However, sustaining a start-up becomes tougher with time. Ultimately, one must find the time to try new things.
21. Creating a brand
Even start-ups need to create brands. There are four stages included in the process namely brand awareness, which means people begin to recognise your existence.
Brand quality is when they trust the quality. Brand association is the attitude or feeling towards a brand, call it affinity. Brand loyalty is when they begin to recommend your brand to family and friends.
22. Power distance
Communication is the greatest asset of a start-up. When teams communicate and collaborate, great things are possible, but when there is a communication gap, things are messed up.
How accessible is the senior management? If the distance is large, it means that there are lot of people involved in the process and at times, this may take longer time for decision making.
The need is to enable communication between groups and allow the best ideas to find their way through the ranks into the products and services.
23. Know when to step back
One needs a good structure to be in place to make people replaceable.
It is important to have a system wherein others can take charge when the founder members step aside. A company is never scalable when it is heavily dependent on people.
24. The right pricing strategy
Deciding the cost for a product/service can be a tricky job. A lot of start-ups fail because they either put too much or too little cost for their products and services.
A careful study of the resources spent for the job, market analysis and time spent on service needs to done before the correct price can be decided.
An effective pricing strategy is paramount to the success of the product/service.
25. Be flexible
The life of an entrepreneur is about living on the edge. It is a very tough job.
Most of them work hard, yet majority of the start-ups fail. All is not rosy. Be honest and assess hard before jumping into entrepreneurship. One needs to have the commitment level to work tirelessly, even without results.
Research shows that most business ideas fail. Most companies start with one idea but succeed with some other idea.
They gradually find their way to a better idea or sometimes even refine the initial idea. They take a proactive approach, expect problems and find solutions in advance.
Be open, be adaptive and don’t hang on for too long with the same approach when things are not working.
“When you try long and hard for anything, eventually, a moment comes, when it happens. The important thing is to keep trying until that moment comes.”