With more and more young and dynamic individuals choosing to forego the traditional 9-5 jobs to become entrepreneurs. But, with a lot of hype around the globe, Exactly what is entrepreneurship and what does it mean to become an entrepreneur?
Simply put, entrepreneurship is the process of starting a business with the goal of making a profit. However, actually carrying it out is not as easy as it sounds. Being an entrepreneur isn’t just another job, instead, it’s a lifestyle. It often involves undertaking a lot of risks and uncertainty, but at the same time, it comes with great potential and leading a rather remarkable life.
In fact, even though multiple studies show that almost 90% of startups fail, entrepreneurship remains an extremely popular career path. This is because similar to high-risk activities like adventure sports, people feel the adrenaline and take up entrepreneurship as an exciting challenge.
Moreover, there are multiple successful entrepreneurship stories and examples across the world, like Oprah Winfrey, Bill Gates, and Jeff Bezos, or Indian entrepreneur heroes like Azim Premji, Ritesh Agarwal, and even Shravan and Sanjay Kumaran, who prove that entrepreneurship is easily the most creative and rewarding form of business.
So, if you are aspiring to follow the footsteps of these successful people and enter the world of entrepreneurship, we have created an entire guide that you could follow to make your path a little easier.
What Is Entrepreneurship?
There are many debates and various definitions that attempt to answer this question. However, with responsibility as long and complicated as the word itself, very few are able to cover the entire extent of it.
Some of the most popular definitions peg entrepreneurship as the ability and readiness to develop, organize, manage and run an entire business enterprise to ensure to make a profit. The most prominent example of entrepreneurship is starting a new business.
An entrepreneur is defined as the person who has the ability and the desire to establish and administer a startup and is prepared to tackle the challenges and risks that come with it. Entrepreneurs are often the source of new ideas, inventions, or replacing a new and better product with an existing one.
More importantly, an entrepreneur needs to master the ability to multitask as they are required to wear multiple hats, right from the administration, business development, marketing, and even office executives, at least in the early stages. For example, you could be making coffee for your employees, and the next minute getting on a call with a client. In a nutshell, being an entrepreneur equals doing everything, and being everything that is needed to make your startup a success.
Benefits of Entrepreneurship
Now that you know what is entrepreneurship and the risks it comes with, don’t fret. There are multiple benefits as well. If you do your job well, make the right decisions, and a small tilt of luck is on your side, the rewards of entrepreneurship are more than enough to make up for your hard work and countless hours. Mentioned below are some of the benefits of entrepreneurship.
Take Control of Your Destiny
No longer do you have to deal with promotions, salary hikes, or job roles that have been decided by others. You’re in charge of your business, goals, mission, vision, and everything else. Have your ideas often been shot down at your job? Well, when you’re running your business, you decide in which direction your company will head, which ideas will be implemented, and what step to take next.
Additionally, you get to decide who is part of your team, ensuring that you determine what type of people, and what skills you want to bring aboard.
Hence, the success – or failure – of your company is entirely dependent on you and your decisions.
Be Your Own Boss
No matter how high up you climb the corporate ladder, there will always be a boss above you. Not in entrepreneurship. Here, you are your own boss. You manage all the aspects of your business as you deem fit. You determine the work schedule, of not just yourself, but all your employees as well.
This is surely going to motivate you to come to work, put in extra hours whenever required, and even make sacrifices, as all of this will ultimately give you and your company success. Additionally, you get to decide your salary, based on the success of the business.
Make A Difference
Being an entrepreneur gives you a unique opportunity of changing the world for the better. You can partner with NGOs, or employ disable people if your operations permit it. Not only will this give you immense satisfaction, but it’s great for the marketing and promotion of your business as well.
Even if you don’t decide to take any extra effort to make a difference, just your presence will change the lives of many, including your employees, and your customers who benefit from your product or service.
Lead An Exciting Life
Yes, entrepreneurship comes with its own share of challenges, but tackling these challenges ensures that you lead a very exciting life. Each day is filled with opportunities to grow, develop your skills, and there’s always something new to learn.
Steps To Follow To Become An Entrepreneur
Until now, we’ve covered what entrepreneurship is and the benefits of becoming an entrepreneur. However, how can you become an entrepreneur?
It’s time to get the ball rolling and get into the most important part of entrepreneurship – how to start a business. Mentioned below are the first six steps that every aspiring entrepreneur must take, regardless of the business or niche they are in.
Step 1: Find The Gap
The more important, yet highly undervalued step of starting your business is finding the gap in the market. Once you find the gap, you need to come up with a solution to fill that gap, which then turns into an idea. Based on this idea, you can build a service or product.
Many times, young individuals jump at the first product or service they come across, just with an aim to become an entrepreneur. But, that’s the biggest mistake you can make. Additionally, once you have a good idea, always ensure you get feedback from your target market if the product or service you’re offering is actually needed or not.
The Money Gig analyzes multiple markets and niches to find gaps and present ideas that you can use to make a million-dollar business.
Step 2: Define The Legal Structure
Once you have a great idea and have analyzed the market potential, the legalities begin. You must determine the kind of business you want from a legal point of view. While they may vary depending on states, here are the 4 major types of legal structures that you can choose to start a new business.
Under this structure, you are the sole representation of the entire business as far as laws and taxes are concerned. In short, you’re personally responsible for all debts and losses, along with the profits. This structure means that when the time is right, you will ask investors to invest in a person, i.e. you, instead of a company.
Limited Liability Company (LLC)
If you’re worried about financial losses, registering as an LLC is the best way to go. Under this structure, you’re not personally responsible for the financial or legal faults incurred by the company. Albeit, this structure is more complex to set up as compared to the others, it does come with multiple tax benefits and protects you.
As the name suggests, a partnership is a business structure under which at least two people share ownership of the company. Each owner will contribute to all aspects of the business, including the losses and profits.
Registering your company as a corporation is essentially making it a person with responsibilities and rights of its own, separate from its owner. A corporation can enter into contracts, loan and borrow money, sue or be sued, hired employees, own assets, pay taxes, and all the other activities that an individual carried out.
Note – Legal structure on forming a company differs from country to country.
Step 3: Choose & Register Your Business Name
After you’ve decided which legal structure you want to build your company under, its time to choose a name and register it. Many entrepreneurs don’t realize the importance of choosing an appropriate name. In fact, it’s quite contrary to William Shakespear’s popular quote, “what’s in a name.” Ask any consumer, and everything is riding on the company’s name. People resonate with a name that is fun and easy to pronounce, or if you’re in the B2B segment, you want a more professional and meaningful name.
Once you’ve chosen a great name for your business, it’s time to register the name. While choosing a name is actually fun and requires creativity, registering it comes with heavy-paperwork and multiple legal processes. If you’re starting an LLC, your company name will already be registered, however, under every other structure, registering your company’s name is another process entirely.
With an increasing demand for a digital presence, you must also book a domain name for your company.
Step 4: Complete The Legalities
This step involves a lot of legal work as you’ve to make sure you have all the necessary permits and licenses to ensure your business and the product or service you’re selling is 100% legal. Some of the common licenses you require are:
- Business Licenses
- Fire department licenses (for flammable required things)
- Air and Water pollution control permit (for the wastage producing factory)
- Sign permits
- Food Permits
- Sales Tax license
- State licenses
- Country permits
Step 5: Build Your Mission And Vision Statement
This is an extremely crucial step that can make or break your business. Without a strong mission and vision statement, you won’t be able to prove to your customers that you’re different and better than your competition. Plus, this step greatly helps you to understand and define which direction you want your business to head in. Before writing your mission and vision statement, here are a couple of questions you must answer:
- What does your business do?
- What do you stand for?
- What problem do you solve?
- How do you plan on making the lives of your consumers easier?
While most entrepreneurs are aware of this step, they often don’t understand the difference between a mission and a vision statement.
Mission vs. Vision Statement
A mission statement essentially acts as a guide for your company to reach its goal. It explains the purpose of your company and how your company aims to serve its customers. The statement is typically a description of what your organization goes, how it functions, and what its objectives are. Hence, your mission statement should answer the 3 ‘W’ questions; what, who, and why.
On the other hand, a vision statement provides insights into where your company aspires to be upon achieving its mission. Additionally, it also explains how your company will contribute to changing a particular community, or the world, as a result of the products or services offered.
It’s imperative that you learn how to define an inspiring vision and mission statement for your business as it needs to be strong and clear for your customers to resonate with it. Both your statements should clearly define who you are as a business to both internal and external readers, which include but aren’t limited to employees, partners, board members, potential customers, shareholders, etc.
Nowadays, many companies are opting to combine both the vision and mission statements into a comprehensive statement, which your business and brand can share and stand by.
Step 6: Create A Marketing Plan
Once everything is in order, it’s time to reach out to your potential customers and announce your presence. Building a business without marketing is basically opening a restaurant and not telling anyone about it.
Digital marketing and traditional marketing both have their pros and cons, and depending on the industry you’re in, you must invest in both.
Messaging is a very important part of marketing, as customers will only take an interest in your company if they are able to resonate and connect with messaging. So, dig deep into the personas of your customer. Understand their likes and dislikes, goals, challenges, etc., based on which your marketing plan and messaging should be based.
The Task Of Getting Funded
It’s been perceived that one of the most daunting tasks of becoming an entrepreneur is getting funding. However, anyone who has built a successful business can testify that there is no scarcity of money or investors who are willing to fund entrepreneurial ventures.
However, with a plethora of investment options, investors are extremely careful as to where they put their money. So, don’t take a half-baked idea and ask for funds. Instead, do your due diligence, build a strong foundation, prove that there is a need for your product and service, and then ask for an investment. If you have a valuable idea, which is executing strongly, and are able to clearly communicate your vision, you will have no trouble in raising funds.
It is also recommended to bootstrap your business for as long as possible. This essentially means self-funding your company, wherein the profits you make are reinvested to grow the company. In the era we live, doing this is not a very challenging task. Domain names are cheap, social media provides free marketing options, and search engine optimization can help you gain a lot of popularity.
Once you reach a stage where you require funding, you need to first prepare a funding strategy. After all, you all give away part of your hard work and sleepless nights, and you will be accountable for someone else’s money. Given below is a short brief of some of the most popular and common funding strategies.
Friends & Family
This is one of the most common funding methods that almost every entrepreneur uses, often as the first stage of funding. Granted, your parents and close friends aren’t going to have as much money as venture capitals, but the terms are often much better. People who are part of your social circle are a great source for raising seed money, which is more than enough to kickstart your venture. Moreover, they’re more likely to invest in your company due to emotional sentiment as compared to a professional investor who will most likely demand proof-of-concept.
Small Business Loans
This method has been followed for decades now and tends to follow a more traditional business model. So, if you’re going down this route, be prepared with a meticulous and clear business plan, and account for every penny you’re raising.
Another extremely common source of funding, venture capitals are generally on the opposite side of the spectrum from small business loans. VCs look for ideas that require a large sum of money and promise quick and massive growth. Often, VCs demand some type of control of the business and a share of the profits in exchange for the funds they provide.
Very similar to a VC, a silent partner will invest a significant amount of funds in your company and will be a part of the profits your company makes. However, the main difference between a VC and a silent partner is that the latter doesn’t want to be a part of the operations or business decisions.
Crowdfunding is a great way to raise funds, as along with the cash, you also get a better understanding of the market potential. Under this funding option, you don’t need to give up any part of your equity or autonomy, instead, you go directly to your fans or potential users and ask them to fund your company. Essentially, they will give you the money for your product, with that money you will manufacture the end-product and then once it’s ready, you will deliver it to them. Popular crowdfunding sites are Kickstarter and Indiegogo.
The Common Pitfalls & Risks To Be Careful About In The Initial Stages
While every business and entrepreneurs face unique challenges, there are a few common mistakes and risks that almost every new business needs to overcome. We’ve mentioned some of these common pitfalls to ensure you can be aware of them and work to avoid them.
The Risk of Demand
Many entrepreneurs get a bright idea and launch into building a business around it. However, are consumers really interested in the product or service? Regardless of how well-thought-of your business plan is, if there is no demand, your business is doomed to fail.
The Risk of Technology
This risk is extremely common among businesses that are conducting engineering or scientific research and development to create their product or service. The risk of technology failing is always looming and you must prepare for this before you invest in your idea.
The Risk of Execution
More than the product, marketing plan, and even consumers, the success of a business depends on the entrepreneur. You need to be a strong leader, who is able to execute the plan to ensure the success of the business. This includes building a strong team of employees who are able to carry out plans, convincing investors to fund the business, and even urging consumers to purchase your product.
The Risk of Funding
Every entrepreneur will face the risk of a lack of funding and needs to prepare for it accordingly. They must be prepared to initially self-fund their business and start building connections with investors for when the company needs external funding.
Entrepreneurship Books You Must Read
In the world of entrepreneurship, there’s always more to learn. Hence, here are the top five books you can read that will teach you about the ins and outs of becoming a successful entrepreneur.
1. “Tools of Titans” by Tim Ferris
The no. 1 business podcast on iTunes, Tools of Titans gives you important insights in important tools, tactics, and even morning routines that over 200 of the world’s top entrepreneurs follow, right from tech and powerlifting, to special operations and the music industry.
2. “Dream With Your Eyes Open” by Ronnie Screwvala
Dream With Your Eyes Open has been written by the entrepreneur Ronnie Scewvala that aims at offering insights into the entrepreneurial work, wherein he describes his journey of over 2 decades.
3. “Influence” by Robert Cialdini
Based on the research conducted over 35 years, this book reveals the psychology of persuasion, which is broken down into six principles. This is a great read for those who are looking for the best ways to sell their product or service.
4. “Bhaag” by Ganesh V.
A collection of stories of 11 highly motivated student entrepreneurs, Ganesh V’s Bhag gives readers an entrepreneurial perspective from various verticals and backgrounds. Even though each of their stories and challenges are different, readers get an understanding of what the life of an entrepreneur looks like.
5. “The Lean Startup” by Eric Ries
One of the best recommendations and a bible for every entrepreneur, Lean Startup acts as a manual for a modern startup. This book promotes the idea that failure is a rule and not an exception.
6. “Dhirubhai Ambani: Against All Odds” by A G Krishnamurthy
A story that recaps the best rags-to-riches story of Dhirubhai Ambani, A G Krishnamurthy’s book is about a middle-class businessman who rose to become the founder of one of the biggest enterprises in India, which is known as the Reliance Empire.
7. “Idea to Execution” by Ari Meisel and Nick Sonnenberg
In this book, the authors actually carried out the outline they proposed to ensure the success of a business and were able to take a business from an idea on a napkin to a registered business within 24-hours.
8. “Pivot” by Jenny Blake
In this book, the author focuses on taking your existing strengths in a new direction, by compelling the reader to understand the importance of the question, “what’s next?”
Are You Ready To Be An Entrepreneur?
Entrepreneurship isn’t a race with a start and end goal. Instead, it’s an on-going journey of learning and discovery. You don’t need to know everything before you take the first step. In fact, sometimes the best way is by learning while doing.
So, now that you have all the necessary information to take the first step into the world of entrepreneurship, are you ready?
You can learn more about being a successful entrepreneur on The Money Gig.0