So You Want to be an Entrepreneur?

You’ve reached a crossroad in your career. Maybe you want to reap greater rewards for your hard work, or you’re tired of working for someone else, or you want to determine your own destiny. Whatever the reason, you’ve decided to start your own company and be an entrepreneur. How do you get started and what does it take to be successful? The good news is you are not forging new ground. Many people have done it before you and best of all, many of them are willing to help people like you realize your dreams.

The first step is to define a product or service that can generate revenue. This may seem basic, but one of the lessons from the dotcom era is there is unlimited demand for anything free. Next, it’s time to write a business plan. You may be asking yourself why you should bother with a business plan. This exercise will force you to consolidate your thoughts and research your product concept. How long will it take to develop your product, will it require outside funding and how much funding, who do you need on your team, are there competitors, how will you market and sell your product, how big is the market, what type of pricing strategy will you pursue, how do you plan on providing customer support, are there any regulatory hurdles to overcome, and so on. I’ve seen many technical people who have written their business plans later, only to find out after months or even years of effort that there were no viable business models for their products. It’s far more likely that a business fails due to a poor business strategy than the execution of one.

So you’ve spent time developing a business plan, now what? Even if you fund the company yourself, it’s a good idea to present this plan to those who might be able to offer insight. You need to develop your elevator pitch, a short presentation on the product concept and the business strategy. Most advisors and investors will start by listening to the presentation or reading the executive summary. While there are many crucial elements of a business plan, at the early stages of a company, product vision and credibility of the team are of utmost importance. Above all else, the first investors are investing in the people. The business strategy will often get more attention than the product itself.

The question of how to fund a company is on most entrepreneurs’ minds these days. Attend any meeting of the investment community, angels or venture capital, and you’ll hear how entrepreneurs should focus more on bootstrapping their companies and not approach the investment community for funding until they have a proven product concept with customers. While many venture capital firms are heading upstream to the later rounds or becoming asset managers, there are still some venture capitalists committed to providing seed rounds. As a group, angel investors provide more funding to start ups than the venture capital community. While venture capitalists tend to be concentrated in a few areas, almost every region has an angel investment group. Strategic partners provide yet another avenue for funding. Often established companies will invest in start-up companies. They may want to explore new market segments with capital efficiency or they may be looking for innovations to further their existing product lines. There is always the traditional network of friends and families as well. No matter what path you chose, locating capital is like looking for a needle in a haystack.

Persistence matters. Cisco Systems had to meet with 77 venture capital firms to secure its first round of funding from Sequoia and the company already had hundreds of thousands of dollars of revenue per month. The story of Colonel Sanders and Kentucky Fried Chicken is a legendary story of perseverance. Colonel Sanders endured more than a thousand rejections before he obtained his first deal.

One big advantage of a start up is its ability to adapt and change rapidly. No business plan survives confrontation with market, customers, competitors, and investors. Given the length time it takes to develop almost any technical product or service, it’s unlikely your original idea will materialize as it was first envisioned. You need to listen, to keep an open mind, and to be receptive to change. This is difficult for most first time entrepreneurs to do.

Starting a company is like embarking on the adventure of a lifetime. It’s not important to know how to get from A to Z. When starting out, you only need to know how get from A to D. You just have to do it and enjoy the journey along the way to success.