Starting Your Entrepreneurial Journey Off Right
Starting a business is both exciting and daunting. It is the beginning of a legacy, and it requires you to harden yourself against inevitable rejection and 80 hour work weeks. It is crucial that we start a business with a proper foundation; else, we risk complete and utter failure. Consider the following three questions prior to embarking on your entrepreneurial journey:
1. How are you creating value?
The goal of any business is to provide value. You must identify an area that is suboptimal and construct your business around it via products and/or services. The more value you can provide your target audience, the higher probability your business will succeed. Entrepreneurs tend to be well equipped at identifying taxing issues and providing solutions; however, before starting a business, we need to step back and truly understand how our business creates value. Do you provide a product or service that is higher quality? Do you provide top of the line customer service? Is your product built to outlast your competitors? Let’s consider this example:
Problem: I need to stay dry when it rains
As an entrepreneur, I decide to start an umbrella business to help keep people dry when it rains. The value that I am creating is clear: I am helping people stay dry in the rain. How is my business any different than any other umbrella manufacturer? How can I distinguish myself? Maybe my umbrella is made of higher quality material so it doesn’t collapse in high winds. Maybe my umbrella is shaped so that it works when rain is blowing horizontally. Value creation can be simple (as in the situation where you are disrupting an older market) or complex (as in the situation where you are entering a saturated market). However, a business’s success depends on its value so spend your time answering this question to the fullest extent possible.
2. What is your motivation?
Your motivation for starting a business is important to understand. Many entrepreneurs start a business for supplemental income, which is a completely valid motivation. However, it cannot be your sole motivation. Building a business is grueling. It requires hard work, dedication, and drive. You will work longer hours than you would in a traditional 9–5. The product feedback loop will cause you to constantly iterate on an idea you thought was perfect from the start. Patience is required to find a market and an audience. If money is the only motivation you have, you will likely end your entrepreneurial pursuit long before it becomes profitable. Let’s revisit my fictional umbrella business.
Motivation 1: I want to make $10,000,000 annually. Umbrella manufacturing is popular these days so I am going to build a business centered around umbrellas.
Motivation 2: I have a passion for building umbrellas and improving their design. Sideways rain has plagued my community for decades and the market does not have a sufficient solution for myself and neighbors. I want to build a new and improved umbrella to help address this issue; any profit made from this endeavor is a bonus.
Which motivation is likely to propel you forward when only 10 people buy your product in as many months? Or when your supplier is out of stock? The motivation behind your business is crucial to the success of your business.
So what is your motivation? Are you motivated by the shear enjoyment of creating the product or service? Are you trying to help those less fortunate? Are you happy with the grind regardless of whether your business makes $5 or $1,000,000? Find your motivation and make sure it aligns with realities of starting a business.
3. Is your business overly complex?
So your business can create value and you have a proper motivation behind it, now what? The most obvious answer is to start, right? Well, we have one more question to answer and it is focused on the business itself. Entrepreneurs tend to be great problem solvers; yet, too much problem solving at the very early stages can lead to disaster.
Initially, businesses should be simple. In fact, complex businesses that start simple are much more likely to succeed than complex systems designed from the very beginning. Entrepreneurs, especially those new to failure, like to prepare for the worst. It can lead to “analysis paralysis” or implementing overly complex systems and processes that hinder that growth of your business. Once again, let’s revisit my fictional umbrella business.
Business #1: My umbrellas are going to create an invisible barrier above the user, keeping everything underneath dry.
Business #2: My umbrellas will be a modification on the existing shape of umbrellas to keep the user dry.
While both businesses solve the problem, business #1 is overly complex. It requires massive amounts of research and the alignment of several disjointed pieces to function correctly. It is a valid business idea, but it is so complex that it would take years before it produced anything of value, if at all. Business #2 is improving upon a product that the market has already deemed valuable. It creates value in the most simplest possible way.
A great way to answer this question is through a “Minimum Viable Product,” or MVP. Can your existing business product or service be iterated upon starting with an MVP? Can we build a prototype or testing surface to prove our idea has value prior to full investment?
Start with an MVP and iterate until we reach a complex system. In doing so, we ensure that our business is not overly complex at the beginning and we allow growth and iteration.
Every entrepreneur hopes their entrepreneurial journey ends with a successful business. However, you need to be deliberate at the very beginning in order to give yourself the greatest probability of success. It is crucial that you answer the above three questions so that you enter your journey with the right mindset. If you do so, you grow your businesses in the right environment, which, hopefully, ends in prosperity.