The entrepreneurship journey can be full of excitement and challenges. No matter what motivated you to consider setting up a business, you are destined for a roller-coaster ride.
You might decide to take the plunge into entrepreneurship because you want to do something different after spending a fair amount of time – several number of years – in a typical business career and in a typical corporation.
Or, you could have been bitten by the entrepreneurship bug. You may have a great startup idea and you may want to build a great business based on that idea.
No matter what your motivation may be, you need to have an overarching strategy and a range of tactics to ensure that your business succeeds.
In this article, we provide the key steps you should take to avoid startup failure which is all too common an occurrence.
Perfecting Your Business Plan
Ideas, as much as nations, can be made ‘more perfect.’ So it is with any business plan. As an entrepreneur in the making, you need to give a fair amount of attention to completing your business plan and having it on paper.
Your business plan can be an outline of your business plans and strategy for the next 3 to 5 years.
Your business plan can explain why the business niche you are entering is ripe for disruption or how your product or service is going to be a ‘winner’ or how you are going to beat existing competition in the business segment you are planning to enter.
And your business plan should explain why there is enormous growth potential for your product or service.
Whatever the potential maybe, it takes effort – mostly marketing effort – to realize that potential. So, your business plan will talk about your marketing plans.
xYour business plan will make revenue projections a few years into the future.
It’s always great when a new business enters profitability – the sooner, the better.
Business plans are hardly set in stone. They should be flexible. You should be willing to adapt depending on market reaction and consumer preferences.
Google Trends shows how people’s interests change over time.
Here’s a snapshot of sourdough vs. cup cakes vs. home exercise vs. peloton.
(Google Trends over one year)
(Google Trends over 5 years)
It’s clear that people’s inclinations and preferences are impacted by current events.
“Pursuit of happiness” is the right approach when it comes to ‘life goals’ for human beings. Pursuit of growth and profits should be in the DNA of any company that wants to succeed. Standing still or resting on laurels is never an option for businesses.
Market Research to Find Your Business Model/Niche
You need to combine your passions with a fair amount of market research to come up with a viable business niche.
Jean Liu, as a young mother of three kids, found it tough to find a cab in Bejing. She thought Didi had a great business case as it was solving problems people like her were having. She decided to buy into the company. (Source: Bloomberg)
If you are into biking and feel there is a niche market for bike accessories and you feel it’s a growing market, then you could launch a Shopify store to sell bike parts and accessories online.
There are great success stories of Shopify based e-commerce stories in many niches – from clothing, accessories, cosmetics, eco-friendly/sustainable living products, organic food products, and even 3D printers. (Source: Shopify. Oberlo.)
Broadly speaking, your business model can be one of these.
Like noted above, it could be bike parts or camping equipment. If there is a niche market for products, you could source the products and sell them from a Shopify store. A Shopify website can be developed for $2,000 to $10,000 depending on the level of complexity.
Ecommerce businesses can vary widely – from sites owned by a single person running his or her business from their drawing room to businesses employing 10s or hundreds of people. But the vast majority of ‘small businesses’ tend to employ five to ten people.
If you have some background in software development, you can start your own software company. With IT/software skills widespread around the world and 4G/fiber broadband also available in many countries around the world, you can hire IT specialists to handle parts of the software development process.
You only need to manage the development and testing process. Your software will likely be offered as a ‘Software as a Service’ (SaaS) product. You’ll need to come up with different pricing tiers to subscribe to your application.
It could be $29 for a single-user license per month, $100 for five users, $200 for ten users and so forth. You will need to be in control of all aspects of the software – great user experience, great help documentation, and so forth.
Ebooks and Course Development
There is a growing demand for online courses and millions of people are paying to learn specific skills. You can research the demand for specific courses and then create your own course. Once your course is ready, you can offer it on platforms such as Udemy, Teachable, and others.
If you have a specific set of skills and just want to utilize your skills to make a living as a freelancer or as an independent professional, going freelance is a great idea.
The skill sets that make for great freelance careers include programming, writing, graphic designing, website design, digital marketing, transcription, Virtual Assistant (VA) and proofreading. There are freelance job sites where you can bid on projects. You can choose exactly the rate or price for your work that you consider to be the right one.
You can choose to take up as much or as little work as you wish. Women with young kids who may not be up for full-time jobs can find this a useful way to earn money.
Coach & Consultant
Life coaches, fitness coaches, personal fitness trainers, make-up coaches, finance consultants, tax consultants and planners, and management consultants are some possibilities if you have the skills to be a coach or a consultant. This is more suited for more experienced professionals whereas freelancing can be adopted at any stage of one’s career.
Amazon affiliate marketing is the most well-known affiliate marketing idea but there are others. You could create a WordPress website where you review the best Amazon products in some given niche – home appliances, electronic products, home appliances, cellphones, audio equipment, DSLR cameras and so forth. Amazon has different commission rates for different segments.
You will get the commission if anyone visits your website and then clicks on the Amazon product link on your website and goes on to purchase that item from Amazon. It’s a great passive income idea.
How to make a career out of the enormous growth in social media? Can you become a YouTube star or an Instagram influencer and can you make money by becoming one? There are of course examples of successes who make millions.
If you have an interesting expertise that is amenable to teaching, learning, and sharing, then creating a YouTube channel can be a good idea. Once you have a large number of followers, and a large audience for your videos, there will be ways to monetize that viewership including via Patreon.
Pilots, travel vloggers, AVgeeks, fitness instructors, cooks/chefs, make-up artists are among YouTubers who have built up a large following.
You need to find a different niche – perhaps you are a beer taster or master sommelier or gumologist or tea taster or dog surfing instructor and you could perhaps talk about what you do and people would be interested.
These are among the ‘most fun’ jobs according to surveys. Other jobs that figure on such lists include professional bridesmaid, zookeeper, fortune cookie writer, LEGO builder, destination wedding photographer, sex toy tester, waterslide tester and Netflix tagger. It’s perhaps more difficult to create a successful YouTube channel based on your expertise in any of the above domains.
Different business models require different levels of market research. If it’s an ecommerce store or creating your own course or affiliate marketing, you should ideally perform the market research to make sure there is sufficient demand for your ecommerce product idea or your course or your affiliate marketing niche.
If it’s about freelancing or being a coach or consultant or building some SaaS software, it’s more related to what your expertise is.
Perfecting Your Funding Plan
From crowdsourcing to VC funding and angel investors, there is a variety of options available to raise the money you want to start your business.
Different businesses require different levels of startup funding. A software company requires way more money than starting a website to earn some passive income via affiliate marketing.
An ecommerce company will require more initial money than starting a VA or proofreading business. The funding required can range from less than $10,000 to millions of dollars.
Hundreds of thousands of companies are started each year by entrepreneurs. Their funding sources are.
- Personal (savings/credit).
- Friends & Family
- Venture Capital (VC).
- Angel Investors
- Crowd Funding (Kickstarter, Go Fund Me, Indiegogo, Patreon).
Once you prepare the financial documents such as balance sheets and cash-flow statements, you will have some idea of how much your startup will cost and how much startup funding you need.
It often happens that setting up a company such as a software or SaaS company or an ecommerce business costs significantly more than you might have anticipated.
You can approach VCs and angel investors for funding. You’ll need the financial projections and a pitch deck to try and convince the funders who get pitched by numerous entrepreneurs.
Convincing the investors will take all your powers of persuasion. Not every entrepreneur will be lucky to be a student at Stanford or Harvard. Not every entrepreneur belongs to California or Washington or Massachusetts.
VC funding and angel investments skew towards certain sectors. Different kinds of startups become ‘hot‘ at different times – think FinTech, EduTech and so forth. Software, healthcare, and biotech sectors also attract a lot of VCs and angel investors.
You may need to modify, revise and iterate several aspects of your ‘pitch’ before you have a successful funding round. But even rejections can be teachable moments.
Once you have the funding you need in hand, you need to put the pedal to the floor and proceed ahead like a maniac, as if there was no tomorrow.
Perfecting Your Marketing Plan
Once you complete all the formalities of incorporating your business as a limited liability company (LLC) or corporation and take care of all the statutory requirements such as getting a tax ID for your company, you’ll need to focus on a long-term marketing plan and strategy and start executing that plan.
It turns out that digital marketing is the most effective way to ‘spread the word’ about your company. It is cost-effective and can be effectively targeted.
So, once your website is ready and you have created the various social media accounts – Facebook, Twitter, Instagram, Snapchat – you’ll need to start launching digital marketing campaigns. These can be small campaigns initially costing only hundreds of dollars.
Since every startup cannot be a Google or a Facebook, marketing is the only way for people to know about your company. Luckily, digital marketing costs are not in the same league as Superbowl halftime advertisement expenses.
Digital marketing comprises different sets of activities some of which are.
- Content marketing.
- Email marketing
- Social media marketing (SMM).
- Search engine optimization (SEO).
- Search engine marketing (SEM).
As the founder of the company, you’ll need to roll your sleeves and learn about these things. But getting to learn new things, facing new challenges is part of the thrill of starting a company.
Ads in the local newspaper or local radio/TV can supplement your digital marketing efforts. You need to keep track of the marketing spends across different marketing channels. If your marketing budget is large enough and the task is complex enough, you can hire a marketing director to handle all this.
Marketing is one of the key focus areas for an early-stage company. Once your business is up and running, you will need to focus on building a customer base. Once you have some customers, you need to think of ways to grow the customer base or you need to think about upselling.
Starting a company is not going to be smooth sailing. Scaling a business has its challenges. Companies can grow too fast and lose focus and direction and can quickly go bust. Be prepared for ups and downs. You’ll make wrong decisions occasionally.
Jeff Bezos talks about how Amazon has made lots of wrong bets but the right bets have been large enough to make up for the wrong bets.
Reed Hastings talks about how he was ‘not honest’ in his first startup. Hastings mentions that he was not straightforward enough with his employees and was too slow to take the ‘harsh’ step of firing employees. But he learned his lessons.
You can learn some lessons from successful entrepreneurs and you will learn some lessons on your own – by tripping and falling and then getting up all over again.
Remember what Mark Twain wrote: Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do.
So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.