Have you heard of Sara Blakely? You may have seen her as an investor on the TV show Shark Tank. At age 27, she noticed a “void” in the marketplace. She was trying to find something flattering to wear under her white slacks, but couldn’t find anything. So she began researching and developing a hosiery concept. What was Sara’s background? She was a former Disney World ride greeter, and also sold fax machines door-to-door. She invested $5,000, her entire life savings, to start her business. Her invention, called SPANX, caught the eye of Oprah Winfrey, who promoted it on her show as one of her “favorite things”. Now a billionaire, Sara grew from selling one product out of her apartment to selling hundreds of millions of dollars in annual revenue.
An entrepreneur is a person, but entrepreneurship is a process. And entrepreneurship isn’t a perfect science. Sometimes, a dose of good old-fashioned luck comes into play! And while we will take all the luck we can get, we can narrow the need for luck by working through the entrepreneurial process. When starting a business, think, “what problem am I trying to solve?”
The Entrepreneurial Process
The official definition for entrepreneurial discovery, is the process of systematically scanning for technological, political, regulatory, social and demographic changes to discover opportunities to produce new goods and services. Lots of words. So what does it mean? Entrepreneurs constantly study and inspect the market. They challenge the status quo, look to solve a problem, look for voids or gaps, look for where certain parts of the market are underserved, and look for ways to improve upon an existing product or service, or, they might even imagine a whole new way of doing things.
When inefficiencies in the market exist, entrepreneurship flourishes. Study how consumers behave, what are their preferences, what are the current trends - perhaps conduct a market survey. Heck, you might even turn a hobby of yours into a business idea. Ultimately it gets down to, what do people want, and/or what do people need? Once entrepreneurs have surveyed the market, they start working on solutions. BUT, as entrepreneur and author Guy Kawasaki said, “Ideas are easy. Implementation is hard.” To be sure, an idea by itself isn’t enough. For an idea to become an opportunity, it needs to solve a problem, and, it also needs these three features: market, margin and mission. Will people part with their hard-earned money to purchase what I am selling (market)? And if so, can I sell it for more than it costs me to produce or provide it (margin)? And is it worthwhile… will society benefit as a result (mission)?
2. Business Plan
Next, let’s organize your business opportunity into a business plan. A business plan is a roadmap of your business’s goals and objectives, and the strategy and details of how those goals and objectives will be achieved.
The following items are commonly included in a business plan, or what you might call a Pitch Deck:
- Cover Slide
- Market Size
- Business Model (i.e. how will the company make money)
- Secret Sauce (i.e. Underlying Magic, what’s unique, competitive advantages)
- Marketing/Go-To-Market plan
- Your Team
- Product Demonstration
- Exit Opportunities
- Any Progress to date (traction/milestones)
- Proforma / Financial Projections
- Capital/Funding Requirements
This is where you gather together the necessary elements needed to start a business, including capital (fancy word for money), and the most important resource – people. Can you persuade any teammates to take this journey with you? This is where you hire employees, if you are able. You might apply for grants, loans, identify potential investors, or you might even enter a pitch contest, and maybe even be awarded funds to help start your venture. This is where bootstrapping comes in handy, meaning, being creative by working effectively with limited resources.
4. Run the Business
This is the grand opening, where you start operating your business, and offer your solution to potential customers – hopefully repeat customers. Is your marketing plan helping you find customers? What does it cost to reach and acquire customers? What’s it like to work at your company? What is the culture like? And while you are leading this challenge, you also need to manage your expenses, watching every penny, and managing your cash position, so that you don’t run out of money before you have a chance to become profitable.
This is where you evaluate if your company is a success or failure, and/or if it needs more time to prove itself. If it is a failure, then the learnings will be helpful in the future. And if it is successful, can it stay successful? Can it grow and continue to add value to customers, to its stakeholders, and to society? Of course at this stage, you have reached some level of success, so take a moment to celebrate!
Remember, people aren’t born as entrepreneurs. Entrepreneurism can be learned. It requires habits, traits, and skills that can be learned.
Constantly observe the market and the world around you. Draw from your own life experiences, and the way you have been treated as a consumer. Think about solutions that you can’t find anywhere for sale, and that would make your life easier or better. Read. Study. Learn from the “greats”. Try to adopt the practices of successful entrepreneurs. This is an organic process. You can’t force it to happen, and you can’t be afraid to fail… and fail often. As Winston Churchill said “Success is walking from failure to failure with no loss of enthusiasm.”