Starting Your Own Business. The Ultimate Guide To Entrepreneurship.
Learn everything you need to be your own boss, build a business, and reach your career goals.
Entrepreneurship is the process of starting (or improving upon) a business with the ultimate goal of making a profit. It often involves great risk and uncertainty, but it’s also an opportunity to overcome those challenges and to manage multiple aspects of a business operation. From marketing to accounting to logistics and beyond, entrepreneurs get to oversee the many facets of running a business.
But isn’t easy. In fact, data shows that 90% of startups fail. Despite this, entrepreneurship remains an extremely attractive path. Like many high-risk activities, it often draws people who see the risks as an exciting challenge — and not a disclaimer.
And while the risk might be great, so are the rewards. Entrepreneurship is easily one of the most creative forms of business — and it can be immensely satisfying on a personal level.
Entrepreneurship Trends & Stats
At a high level, one fact is clear about the entrepreneurship trend: It’s on an upward trajectory. After taking a steep decline during the U.S. recession between 2008 and 2011, it has rebounded and is now back to pre-recession growth rates.
Source: Kauffman Foundation
A few other interesting stats and trends on entrepreneurship:
- Skills and expertise matter. Incompetence is the #1 reason small businesses fail, followed by inexperience. (source: FitSmallBusiness)
- 82% of entrepreneurs work 40+ hours per week. 19% work 60+. (source: TAB)
- In 2018, 75% of CFOs of mid-sized organizations reported that their job was becoming more strategic. (source: Forbes)
- 64% of entrepreneurs surveyed said they believe it is their duty to have a positive social and economic impact. (source: HSBC)
- 4% of all job seekers started their own business in 2016. (source: Fortune)
- Women were starting 40% of all new businesses, and persons of color made up 40% of entrepreneurs in 2016. (source: Inc)
- The United States is still considered the world’s most small-business-friendly country. (source: FitSmallBusiness)
How to Start a Business
When you’re ready to start a business, there are a few initial steps to complete. Let’s walk through each of them.
1. Determine the legal structure of your business
First, you’ll need to figure out the kind of business yours will be from a legal point of view. This may change as you grow, and state laws vary. You might consider popular options like:
- Sole proprietorship:In a sole proprietorship, you are the business as far as laws and taxes are concerned. While this is a straightforward way to organize, it can present difficulty when the time comes time to raise funds because you’d be asking backers to invest in a person rather than a business. Additionally, the sole proprietor is personally liable for debts and losses.
- LLC (limited liability company): An LLC is more costly and complex to set up, but it comes with a number of tax advantages and protects its owner(s) from personal liability (hence its name).
2. Choose and register your business name
Next, it’s time to select and register your business name. This might sound like a fun brainstorming activity, but it’s actually a paperwork-heavy legal process with far-reaching implications for your business down the road.
If you’re starting an LLC, your name will be registered automatically when you register your business with the state. Otherwise, you’ll need to go through a separate registration process. Start with a trademark search, then see if the domain name you want is available. You can trademark your name and logo for around $300.
3. Secure licenses, permits, etc.
From here, make sure you have all the right permits and licenses to do business legally. If you sell “tangible property” (i.e., physical items) you’re going to need a seller’s permit. This allows you to collect sales tax from customers. Some states require it for certain service-oriented businesses as well.
4. Build your mission and vision statements
What does your business do? What do you stand for? What problem do you solve? How do you plan to make the world better? These are questions your mission and vision statements will answer.
This step is a key component of your marketing strategy. Brands with a strong identity and mission statement have an easier time producing authentic and meaningful content that effectively communicates their core values. For inspiration, take a look at the websites of your favorite startups. What is each one’s mission? How do they communicate their vision
5. Write your marketing plan
Once you have your license and your name, it’s time to start building an online presence and telling your story. To start, think about your target customer. Ask questions like:
- Who wants what I’m selling?
- Who would find it useful?
- Who would become promoters of it?
From there, dig in to who those people are and what kind of messaging would resonate with them. Think about their backgrounds, interests, goals, and challenges, in addition to their age, what they do, which social platforms they use, and so on.
Use these answers and build out buyer personas with the help of free templates. These are in-depth, semi-fictional profiles designed to help you better understand the needs of your target customers. You should consider your buyer personas when making any business decisions.
The Keys to Becoming a Successful Entrepreneur
There is no one-size-fits-all recipe for success because so much of entrepreneurship is about blazing your own trail and doing what hasn’t been done. That said, there are some key traits and best practices that most successful entrepreneurs tend to share:
Get into it for the right reasons
Don’t start by wanting to be an entrepreneur. Start by identifying a need or a problem and looking for a way to solve it. Focus on the process, not the potential outcome.
Prioritize learning over earning (at least in the beginning)
Prior experience — whether from your day job or past startup ventures — is often critical. 98% of founders surveyed said their prior work experience was “extremely important” to their success (according to the Kauffman Foundation’s Making a Successful Entrepreneur). According to one UK Study, at least 50% of all startup ideas come from experience gained in previous employment.
Set yourself up for luck
Luck is a huge factor and one that nobody can fully predict. Luckily, there are all sorts of things you can do invite luck:
- Lucky people network
- Lucky people pitch often
- Lucky people make plans (and execute those plans)
Understand that execution is everything
Guy Kawasaki said it well: “Ideas are easy. Implementation is hard.”
By executing and being first to the market, you can seize the “first mover advantage.” Simply put: if you’re the first to market with a good idea, your competition will have to play catch-up. Factors like brand recognition and switching costs will work in your favor and make it harder for others to replicate your success.
The classic example is Amazon. By the time their success prompted competitors to start their own online bookstores, Amazon had already taken a big enough market share to make competition nearly impossible. Their execution — not their bright idea — is what changed the way the world shops.
Execution is a habit, it’s something you can hard wire into the DNA of your business. Make it a priority to develop a culture of action and execution.
Embrace uncertainty and risk
Starting your own business is, by definition, a journey into the unknown. If you can’t handle uncertainty, you probably don’t have what it takes to be an entrepreneur. Risk is not only an essential element of entrepreneurship, it tends to be directly related to success: The bigger the risks, the bigger the potential payoff.
Don’t fear failure, learn from it
Studies have shown that one of the clearest indicators of future success for an entrepreneur is past failure. This may sound counter-intuitive, but not when you think of failure as a teaching tool. Today’s tech startups live by the mantra: “Fail forward.” Many businesses that are now household names — like Airbnb and Uber — took multiple launches to succeed.
In the long run, it’s better to focus on developing a minimum viable product, launching, and optimizing based on feedback, rather than trying to get it right the first time with an untested idea of a “perfect” product.
How much risk you can take depends on your business and circumstances. Buying a domain name isn’t the same level of commitment as building a prototype, for example. What matters is that you grow from setbacks and maintain a willingness try things that might not work out.
How to Find Funding
Anyone who’s built a business or multiple businesses will tell you there is no scarcity of money available for entrepreneurial ventures. If you have valuable ideas, strong execution, and a clear communication of your vision, you should have no trouble raising funds. That said, if you lack those foundational qualities–no amount of funding can save you.
Stop worrying about how to get funding and instead focus on determining which funding strategy best suits your needs. Think about how you can offer value to potential backers. Here’s a quick look at the most common options.
Bootstrapping has many advantages over other forms of funding: It doesn’t incur interest, and it allows you to maintain control over your business and its equity, to name a few.
So what is it? Bootstrapping means self-funding. That means no taking on outside funds to grow the business. Instead, profits are reinvested. Bootstrapped businesses keep costs low and scale at a sustainable pace. We all know the stories of multi-billion dollar companies like Apple that started in a garage or a basement. According to SBE Council, 51.6% of new businesses do likewise.
The internet is your friend: Domain names are cheap. Social media offers free marketing. Online retail has a fraction of the overhead of a brick-and-mortar location. When it comes to generating cash early in the game, look at your business model. Consider pricing in a way that generates revenue in a recurring fashion (i.e., subscriptions over one-off sales).
Small business loans/venture capital
Traditional small business loans and venture capital funding offer big money … but often with big strings attached.
Small business loans provide an established source of financing that favors more traditional business models. If you go this route, expect to present a meticulous and clear business plan and to account for every penny.
Venture capital is on the opposite end of the spectrum. VC backers look to put serious cash behind ideas that promise quick and massive growth. Very few have what they’re looking for. The ones that do can expect to trade some of their control of the business and a share of its profits in exchange for VC backing.
A check for a few million dollars sounds exciting until you realize you’re now working for your backer. You have to ask: Is the value they bring to the table work 25-75% of my business? It’s essential to find a backer who shares your vision and offers more than just money.
That said, there are some less obvious benefits of equity financing. The process of honing your pitch will reveal areas for improvement in your business model that you might not have been otherwise discovered. Funding is also validating. It means someone was willing to put a dollar amount on how much they believe in what you’re doing. And an influx of cash when you’re starting out make all the difference when you need to quickly solidify your first-mover advantage.
Another option is to work with a silent partner. Like a VC backer, this is someone who puts significant funds into your project and expects significant returns. But unlike a VC, a silent partner doesn’t want any part in your business decisions. Because silent partners don’t have a say in your business, they’re considered investors by the SEC.
Crowdfunding sites, like Kickstarter and Indiegogo, are a new source of funding that have many upsides for entrepreneurs. Crowdfunding provides money without taking equity or autonomy. These platforms allow you to go straight to your fans and potential users. This promotes future growth and raises capital at the same time.
Crowdfunding sites also serve as marketing platforms. Your content, branding, and mission statement will attract people to your campaign and hopefully motivate them to back it.
Since you’re not giving crowdfunding backers an equity stake or seats on the board, you’ve got to give them something. Campaigns on these platforms tend to offer backers prizes in exchange for their contribution: this can be early access to your product, tickets to a live event, etc. Here you have another learning opportunity. Designing a crowdfunding campaign forces you to consider the value you’re offering your customer.
They say that the best marketing technique is to design an outstanding product. If what your offering is really of value, your backers will let you know by paying you for it.
Friends and family
Mom and dad might not have as much money as a venture capital firm or a big bank, but they tend to have much better terms. Family and friends can be a great source of seed money, particularly when you’re young and inexperienced. They’re more likely to invest in your potential and your work ethic than a backer who might want to see proof of concept that you have yet to produce.
There are entire industries out there — from co-working spaces to CRM software to government grants — dedicated to helping entrepreneurs succeed.
The recent boom in entrepreneurship has sparked competition between governments at local, state, and national levels to attract and foster business development. Business incubators provide essential infrastructure and tools that might otherwise be out of reach for small businesses.
Seed accelerators are highly competitive programs that put startups in head-to-head competition for seed funding. Winners often receive mentorship and educational resources along with financing. Here’s a ranking of seed accelerators.
The Best Books on Entrepreneurship to Read
Looking for books to inspire and guide your entrepreneurial efforts? Look no further.
- “Tools of Titans”by Tim Ferris
From the #1 business podcast on iTunes: learn the tools, tactics, and morning routines of 200 of the world’s top performers in areas ranging from tech to powerlifting to special operations and the music industry.
- “Influence”by Robert Cialdini
Based on 35 years of research, “Influence” breaks down the psychology of persuasion into six key principles. This is a must read for anyone interested in hearing the word “yes” more often.
- “The Lean Startup”by Eric Ries
A blueprint for the modern startup and a survival manual for a business environment where failure is the rule and not the exception. Learn how to innovate rapidly, put ideas to the test, and operate in the “extreme uncertainty” that is the startup ecosystem.
- “Idea to Execution”by Ari Meisel and Nick Sonnenberg
“How to optimize, automate, outsource everything in your business… .” The authors used the process outlined in this book to take a business from an idea on a cocktail napkin to a launch in 24 hours.
- “Pivot”by Jenny Blake
“Pivoting” is the act of taking your existing strengths in a new direction. It’s about maximizing the opportunity presented by the question, “What’s next?” Blake explores the value of pivoting in business and in one’s own career.
Case studies of business that have have stood the test of time. “Built to Last” breaks down the structural secrets to organizational longevity. This is inspiration for anyone hoping to leave a legacy in business.
7. “Smarter, Faster, Cheaper” by David Siteman Garland
A guide to marketing for entrepreneurs in the digital age. Garland includes practical advice to make the most of online marketing tools and platforms.
12 Famous Quotes on Entrepreneurship to Inspire Your Next Venture
- Karen Lamb: “A year from now you will wish you had started today.”
- Albert Schweitzer: “Success is not the key to happiness. Happiness is the key to success. If you love what you are doing, you will be successful.”
- Simon Sinek: “Dream big. Start small. But most of all, start.”
- Stephen Covey: “Be patient with yourself. Self-growth is tender, it’s holy ground. There’s no greater investment.”
- Ajaero Tony Martins: “My best advice to entrepreneurs is this: Forget about making mistakes, just do it.”
- Maxi Foreman: “Ambition is the steam that drives men forward on the road to success. Only the engine under full steam can make the grade.”
- Steve Jobs: “The only way to do great work is to love what you do.”
- Peter Drucker: “The best way to predict the future is to create it.”
- Jeff Bezos: “One of the huge mistakes people make is that they try to force an interest on themselves. You don’t choose your passions; your passions choose you.”
- Maxi Foreman: “Ambition is the steam that drives men forward on the road to success. Only the engine under full steam can make the grade.”
- Seth Godin: “Waiting for perfect is never as smart as making progress.”
- Derek Hutson: “Entrepreneurship is at the core of the American dream. It’s about blazing new trails, about believing in yourself, your mission and inspiring others to join you in the journey. What sets [entrepreneurs] apart is the will, courage and sometimes recklessness to actually do it.”
Entrepreneurship is a learning process and a journey of discovery. You don’t need to know everything to take the first small step, and when starting your own business, oftentimes, the best way to learn is by doing. Now, you have the tools and information you need to start — all that’s left to do is to get to work.
Written By Jami Oetting via Hubspot