How to Become an Entrepreneur or Small Business Owner

How to Become an Entrepreneur or Small Business Owner

Becoming an Entrepreneur

Many people with dreams of becoming an entrepreneur end up not pursuing those dreams because they think they’re not smart enough, don’t have enough money, or aren’t creative enough. None of that is true.

There are no standards or requirements for becoming an entrepreneur.

Entrepreneurs offer products and services that generate steady revenue. That’s it.

You don’t need to invent a new product, sink your entire life savings into your venture, or come up with a completely original idea to start and run a successful business. You don’t have to have a college degree and there are no age restrictions whatsoever.

But how do you get there? How do you go from dreaming of starting a business to being a successful business owner?

Step one is to let go of the many commonly held limiting beliefs and misconceptions about entrepreneurship. These myths hold you back and stop you from pursuing your entrepreneurial dreams.

Myths about Entrepreneurship and Starting a Business

It’s pretty easy to talk yourself out of starting a business. Most of the negative self talk and limiting beliefs about entrepreneurship that people cling to are myths. Don’t let the following myths stop you from following your dreams.

I Need a College Degree

You don’t need a degree of any kind to start a business. Not a high school diploma, college degree, or an MBA. That’s not to say that these things have no merit.

You can take business courses and even get a degree in entrepreneurship at many colleges. You can learn helpful skills, gain invaluable knowledge, and form lasting relationships on campus. These things might serve you well in your career, but none of them guarantee success and none of them are required.

Richard Branson, founder of Virgin Group, has dyslexia and was by all accounts a poor student. Bill Gates and Mark Zuckerberg both dropped out of Harvard and started companies worth billions. Pete Cashmore of Mashable fame graduated high school two years late. David Karp, the founder of Tumblr, never even finished high school.

Choosing business over education isn’t just for tech prodigies. Whole Foods Founder John Mackey doesn’t have a college degree. JetBlue founder David Neeleman dropped out of college. Ralph Lauren never went to fashion school or finished college. Al Copeland, founder of the Popeyes restaurant chain, didn’t finish high school.

Peter Thiel, co-founder of PayPal, launched a fellowship which grants young entrepreneurs $100,000 to drop out of college and work on their projects. Thiel, though highly educated himself, believes that college can limit opportunities after graduation by weighing students down with student loan debt.

The annals of entrepreneurship are filled with stories of successful dropouts, quitters, and people with no use for formal education. Don’t let the lack of an education hold you back.

But don’t think that you don’t have to make a constant effort to learn as much about business and your industry as possible. There’s always more to learn. There’s also more than one way to learn it.

I Need Lots of Money to Start a Business

Does it take money to make money? It certainly can, but a lack of startup funds, investors, or partners with deep pockets shouldn’t stop you from starting a business.

For example, a web-based service business can be started with about $25. That’s roughly the cost of a domain name and the first month’s payment on an entry level web hosting account.

Michael Dell started with $1,000. Spanx, Inc was started with $5,000. Apple, Amazon, and Harley Davidson were started in garages. Michael Kittredge, founder of Yankee Candle, made his first scented candle out of melted crayons.

You don’t need $1,000 office chairs, two dozen boxes of fancy letterhead, or a state of the art facility to get started. What you need is something to sell and someone to buy it.

You can become an entrepreneur with no money, but you’ll have to figure out how to use your existing resources or get what you need for free. Spend whatever seed money you can scrape together on things that attract customers. Having a lot of money won’t hurt, but starting small and expanding later works too.

I Wasn’t Born with Entrepreneurship in My Blood

Some people will tell you that entrepreneurs are born, not made. Those people are wrong.

Here’s what the bio of one of the most successful entrepreneurs in the world today looks like:

  • Went to college and got a degree in Communications
  • Bombed the LSAT not once but twice
  • Took a job at Disney World
  • Quit Disney and found a job with an office supply company
  • Sold fax machines door to door
  • Tried stand up comedy
  • Worked as a sales trainer
  • Started spending nights and weekends noodling around with an idea for a product while working full time
  • Quit the job 2 years later to focus on the business

Does that strike you as someone with entrepreneurship in their DNA? That work history belongs to Sara Blakely, founder of undergarments manufacturer Spanx, Inc and self-made billionaire.

The entrepreneurial gene did not compel Blakely to create Spanx. She wanted to be a lawyer. Or maybe a comedian.

She encountered a frustrating problem in her daily life. She tried every existing solution she could find, but found them all lacking. She got the idea for a product and kept her day job until a couple of years later when her billion dollar company was born.

I Don’t Have an Invention or an Original Idea

Some entrepreneurs are visionaries or inventors. But you don’t have to be Alexander Graham Bell or Steve Jobs to start a business. You don’t even need an original idea.

Original ideas are overrated. Your ability to execute your idea is much more important than the originality of the idea itself. People pay you because you offer something they want at a price they’re willing to pay. It doesn’t matter if that something is something they’ve never seen before or something they see every day.

Conrad Hilton was not the world’s first innkeeper, but the hotel chain that still bears his name generates billions in revenue every year.

Sam Walton didn’t invent the department store or the concept of high volume, low margin retailing. He did manage to turn Wal-Mart into one of the most successful retail operations on the planet, however.

My Product Isn’t Perfect

There’s nothing wrong with pursuing perfection. As long as it doesn’t prevent you from ever getting anything done. Perfectionism is sometimes just another form of procrastination.

Does McDonald’s make the best hamburgers in the world? Not a lot of people over the age of 9 or so would say yes. In fact, a 2014 survey of Consumer Reports subscribers had McDonald’s ranked dead last for taste among fast food burger chains.

So while they might not have the most delicious burgers or offer the perfect dining experience, what McDonald’s does have is a wildly successful business. That business is driven by systems and processes which can be repeated, transported anywhere, and implemented in any language. Those systems can be understood and executed by a mostly low wage workforce with high turnover.

Their processes, while not perfect, result in consistent products, consistent customer experiences, and consistent profits. They’ve withstood increased competition, economic downturns, high profile lawsuits, negative publicity, and ever changing consumer tastes. McDonald’s has created a highly scalable cash machine that isn’t dependent on having a perfect, unique, or best in class product.

So if you’re waiting to perfect your product before you seize the opportunity, you’ll be waiting a long time. You’ll be making adjustments while your competitors make sales.

Your product doesn’t have to start making the world a better place or winning design awards on day one. It does have to be available, however. You can go to market with the minimum viable product then make adjustments based on feedback and data.

I Can’t Find a Business With No Competition

You don’t need a market with no competitors. Competition is generally a good thing. It proves your idea has some merit. There is such a thing as too much competition, but you’ll know if you have an opportunity in the course of preparing your business plan or doing a feasibility study.

When there’s competition, you need an angle or unique selling proposition to take on the established businesses in your industry.

You can compete on features or customer service. You could also compete on price, but that’s a slippery slop. You can find ways to capitalize on trends or gaps that a larger, less nimble competitor might overlook. You can come up with a disruptive innovation that turns a traditional business model on its ear.

You might be able to stand out with a unique angle and great execution even in competitive industries. You might even become the market leader.

I’m Too Old To Start a Business

You rarely hear anyone say they’re too young to start a business. Everyone knows the story of Mark Zuckerberg and how he created Facebook at 19. We’re awed by young entrepreneurs like Nick D’Aloisio, who got VC funding at age 15 and sold his company to Yahoo for $30 million a couple years later.

Such fascinating success stories might lead you to believe that entrepreneurship is only for the young. It’s simply not true. Starting a business, even one that becomes a household name or the subject of a Hollywood film, is not something that only young people can do.

A 2009 survey of 652 American tech company CEOs and product development heads conducted by the Kauffman Foundation yielded some interesting results regarding age and entrepreneurship. The number of tech company founders over 50 was twice the number of founders under 25. The average age of all founders surveyed was 39.

Reid Hoffman was 36 when he started LinkedIn. When Donald Fisher founded the Gap with his wife, he was 41. Bernard Marcus, one of the founders of Home Depot, was 48 when the company opened its doors. Charles Flint created the company that later became known as IBM at age 61. Benjamin Franklin was 61 when he invented bifocals.

It’s not too late. You’re not crazy for wanting to start a business later in life. You’re not too old to be an entrepreneur.

Traits of Successful Entrepreneurs

If you’re wondering if you have what it takes to be an entrepreneur, it would be nice if there was a checklist you could use to predict your success. It doesn’t work that way, unfortunately, but successful businesspeople do share many common traits. Keep these in mind while you’re planning your business.

Entrepreneurs Have the Right Mindset

Entrepreneurship starts in your head. That’s also where the biggest challenges often lie. You’ve got to push past the fears, eliminate the doubts, and let go of the stress.

You also have to remember that being a business owner is not the same as being an employee. Owning a business requires a different mentality.

When I was an employee, my mindset was all about completing assigned tasks on time as instructed. I just wanted to do my job well enough to avoid getting hassled, collect my paycheck, then go home and watch TV.

I saw no reason to concern myself with the health or direction of the company. As long as my paycheck didn’t bounce, everything was fine as far as I was concerned. I didn’t come in early, stay late, or end the year with any unused vacation or sick time. I couldn’t tell you what the company’s mission statement was, but I probably would’ve made fun of it if I read it.

Maybe I was the worst employee ever. Or maybe that approach is common. Either way, you can’t run a business if you ignore the big picture the way an employee might.

You’re building something bigger than a job so you have to think big. The entrepreneurial mindset means focusing on the long term, not just the tasks in front of you. Make every decision and every choice with your goals in mind.

Entrepreneurs are Comfortable with Some Risk

There is some risk involved with starting a business. But being an entrepreneur is not just for people with a high tolerance for risk.

Entrepreneurs are actually not risk takers by nature. A study published by the Halle Institute for Economic Research showed that people starting businesses are not more risk tolerant than others. The study also found that business owners do get more comfortable with risk over time.

To become an entrepreneur, you must understand that risk is one small part of building something rewarding. You don’t seek it, but you don’t avoid it at all costs. Risk is just something that needs to be accepted.

Entrepreneurs are Doers

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.”

Nolan Bushnell, Founder of Atari, Inc. and Chuck E. Cheese

It might seem obvious, but many businesses never get off the ground and many companies fail because of the inability to take action. Sometimes the fear of failure can be paralyzing. Doing what you’ve always done feels like the safe play, even if it’s not doing you any good.

The unwillingness to take action in the face of declining sales, new competition, or other strong indications that change is needed has been the beginning of the end for many businesses both big and small. Blockbuster Entertainment is a perfect example.

Blockbuster went from dominant multi-billion dollar empire to bankruptcy. They failed to recognize upstarts like Netflix and Redbox as threats, passed on a chance to acquire Netflix, and held on to outdated strategies for too long.

If you want to be successful you must take action. That could mean following through with your plans, changing direction, or tweaking your product until you get it right.

Entrepreneurs are Creative

When people hear the word creativity, the first things that might leap to mind are art or music. Yes, you can use your creativity to design a great logo, a snappy jingle, or a cool promo video, but there’s much more to using your creativity than designing marketing materials or coming up with new products.

Problems surface in business all the time. A new competitor enters the ring and undercuts your price. A customer reports a defect in your product. Sales are starting to slow. A shipment from a vendor arrives late. You could use more help, but hiring someone now would break your budget.

The solutions to these problems and many others are not always obvious. Resolving issues often requires creative thinking to come up with workarounds and solutions.

Entrepreneurs are Flexible

You have to be constantly assessing where you are, where you want to be, and how you’re going to get there. Things have a way of not going exactly as planned.

Deadlines get missed, estimates prove to be inaccurate, and results fall short of projections. Market conditions, laws, the overall economy, consumer tastes, and a host of other things that impact your business can shift in a heartbeat.

How you adjust and respond to change can make or break your business.

Entrepreneurs are Determined

Starting a business tests your determination. Do you have the what it takes to keep going after a failure? Or a string of failures?

Bill Gates and Paul Allen first teamed up to start a business called Traf-O-Data which fizzled. Then they built Microsoft.

R.H. Macy had several retail operations fail before he struck gold with his Macy’s store in New York.

WD-40 is called WD-40 because the first 39 attempts at producing a water displacing compound to prevent corrosion didn’t work.

Google, Apple, McDonald’s, Microsoft, and Coca Cola have all been behind spectacular product failures. Some of their failures are cited in textbooks and case studies as perfect examples of what not to do.

You can let failure break you or you can view it as an opportunity to learn. Only through determination will you learn from your mistakes then bounce back the way successful companies do.

People will say no. People will hang up on you. Doors will get slammed in your face. Will you collapse in a puddle of tears or will you persevere?

Entrepreneurs Can Spot an Opportunity

There’s a difference between coming up with an idea for a business and spotting a good opportunity for a business. A software program that allows you to create, format, store, and print documents right from your computer is a great idea. It’s a terrible idea for a new business right now, since it’s not 1981.

Timing plays a large role in success. Is the market currently clamoring for a new alternative? Is there room for you right now? Can you meet the needs of your target customers better, faster, or at a lower price than your competitors?

Entrepreneurial Skills

Just as there are certain traits that will help you create a successful business, there are certain skills that are extremely valuable for entrepreneurs as well. The good thing about skills is you can learn and develop them if need be. So what sort skills do entrepreneurs need?

People Skills

People are at the heart of your business no matter what product you sell or service you offer. Most successful small business owners and entrepreneurs have good people skills.

Nobody wants to give their hard earned money to a jerk. Nobody likes working for a tyrant. Nobody wants to do business with someone who is rude, standoffish, or inflexible.

Treating people well, whether they’re customers, employees, or vendors, saves you a lot of headaches and positively impacts your bottom line.

Sales Skills

Sales skills aren’t just for the sales team. When you’re an entrepreneur, you’re a salesperson whether you like it or not.

There will come a time when you’ll have to sell yourself and your ideas to people who don’t know who you are or what you can do for them. Be prepared for it.

Sales isn’t about you or how awesome your product is. It’s about the customer and what you can do for them. Build rapport, listen well, ask questions, and present solutions to a customer’s specific problems.

Customer Service Skills

According to a 2014 survey conducted by American Express, 68% of consumers are willing to spend more with a company that provides excellent service. In addition, survey respondents rated “excellent customer service” higher (20%) than “better products” (18%) when it comes to choosing a company to do business with.

So good customer service affects more than your reputation. It affects your bottom line.

You have no business without customers. Keeping customers happy has to be among your top priorities. That means being patient, listening intently, showing empathy, and communicating honestly.

Public Speaking Skills

Being a dynamic and engaging public speaker is extremely helpful for entrepreneurs. The ability to communicate an idea with clarity, confidence, and enthusiasm is useful in every area of your business.

Even if you never make a television appearance or pitch to a roomful of investors, public speaking skills are indispensable for business owners. When you’re selling to prospects, dealing with customer concerns, recruiting new talent, forging partnerships, or inspiring your employees the ability to speak eloquently and get your message across will help you immensely.

If you can’t speak eloquently, passionately, and convincingly about your business, then who will? How will you convince others to believe in your idea, follow your lead, invest in you, or buy your product?

Steps to Being an Entrepreneur

So you’re convinced you have a good idea, a viable opportunity, and you’re confident you have what it takes to become a small business owner. How do you actually become an entrepreneur?

You could wake up one day, quit your job, and just go for it. You’re taking a big risk, making success harder to achieve, and putting a lot of pressure on yourself by doing that. There are other ways to start a business that put you in a better position.

Start Part Time

By keeping your day job, you limit your risk while gathering valuable information and experience. You can test ideas, figure out if entrepreneurship is for you, and build a solid foundation before you quit your job.

You’ll be busy nights and weekends, but you’ll have more security. When you do quit your job, you’ll be moving on to an established business.

Learn from the Inside

Work in your target industry before starting a related business to gain valuable insight. You’ll learn about customers, vendors, costs, employee issues, marketing strategies, and more.

You may be inspired or come up with a twist on an existing idea. You might spot a niche within the industry that is underserved. The more you work in your chosen field before going out on your own, the better off you’ll be.

Create a New Market

Creating a new market is not a license to print money. It comes with its own unique set of challenges.

You might have to educate the public or convince them of the value of your product. For some products that comes easy. Everyone could instantly grasp the value of innovative products like portable music players and mobile phones the moment they appeared. A product like purple ketchup, not so much.

You might have to create your own distribution channels. If there’s no market, there might not be distributors or retailers willing to work with you. The Internet is perfect for initial distribution in such cases, though.

You could run into legal or regulatory issues. Disruptors like Uber and AirBNB are now facing challenges from lawmakers all over the country. The Segway was supposed to revolutionize transportation. Instead, Segways are mostly banned from sidewalks and public roads.

Understand that when you challenge convention or threaten the way an entire industry does business, there’s going to be a backlash. The kind of backlash that can impede your ability to do business.

If your strategy involves creating a new market, make sure there’s a clear need for what you’re selling. Identify potential early adopters then get your product into their hands. Gather their feedback and get them to help spread the word. Prepare yourself for challenges from the establishment. Be ready for competitors to appear, targeting you and your customers.

Becoming an Entrepreneur

Unfortunately, there is no blueprint, set of instructions, or course that can teach you how to become an entrepreneur. The good news is that if you have what it takes, starting a business can be the best decision you ever make.

Successful entrepreneurs come from all walks of life. Age, education, background, and wealth are not reliable predictors of success nor are they barriers to entry. You don’t need an invention or an original idea and you don’t have to take huge risks.

Identify a need and take action. Listen to your customers and deliver value. Give your customers what they want at a price that’s fair to both of you and you’ll make it.

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