Have you been bitten by the entrepreneurial bug? Ready to bet it all and become the boss of your own business?
Not so fast.
Though the barriers to launching your own venture have never been lower, remember that about 20% of small businesses fail in their first year and 50% of small businesses fail in their fifth year.
But you can increase your chances of beating the odds. Before you go all-in on your company concept, take the following three steps to set yourself up for success.
1) Validate your market and concept
Nobody starts a business assuming they’ll fail. Yet, a surprising number launch without any real confirmation that there’s a market for the product or service they intend to sell.
It’s far less expensive to shut down a business at the idea stage than it is after you’ve invested thousands of dollars into bringing your idea to life.
Albert Oaten, VP of SecureDocs, in a presentation at a recent Seedcamp Academy Day, described it this way: “Don’t spend a year building your ark and then hope the animals jump aboard. Instead, make sure the rain is falling hard and the animals want to buy tickets to your ark before you build it.”
Start with any of the strategies below:
2) Evaluate your strengths and weaknesses
Validating your product and market are important but they aren’t the only factors that’ll determine your success as an entrepreneur.
Another very big consideration should be your personal strengths and weaknesses.
Are you analytical or empathetic by nature? Are you a strong writer, a better designer or a data-crunching whiz? A leader or a follower?
As you grow your company, an honest assessment of your strengths and weaknesses will help you build a team by hiring and partnering with those whose characteristics complement your own.
There aren’t any wrong answers here. Don’t be embarrassed by your responses. Being honest gives you the information you need to build a successful future.
3) Choose your growth structure
Finally, one question that goes unanswered too often by entrepreneurs is: “What kind of business do I want to build?”
Consider the difference between a tech app developer who’s seeking millions in seed capital in advance of a future acquisition and a “mom and pop” entrepreneur who’s looking to make some extra cash in their spare time. A good example of this difference is in an online business venture, such as dropshipping (which is one of the simpler businesses to get off the ground).
Money isn’t the only potential outcome of growing a business. Lifestyle considerations—such as greater flexibility, more family time or the ability to travel regularly—may be just as important to you.
Don’t wait until you’re months or even years down the road to realize you’ve built the wrong business. Take the time early on to validate your business model, understand what you bring to the table and choose the right growth structure.
Entrepreneurs, we want to hear from you. What other questions did you ask yourself early in your entrepreneurial journey? Tell us in the comments.
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