Nowadays, society challenges you to follow your dreams and to put your passion into practice by exercising your entrepreneurial spirit along with the ultimate goal of achieving a profitable business. Still you’re inclined to stand back and ask yourself, do I have what it takes?
If we look at statistics, a high percentage of companies fail within their first 3 years; typically less than half of all companies survive for a five-year period. The available data in the start-up sector is not exactly reassuring. However, you are determined to launch your idea on the market. Planning, research and determination can take your passion, your business idea, to the next level: profit.
Let’s start with basics:
The main reasons why businesses fail in their first years of activity lie in a lack of planning, a lack of capital and funding, a faulty infrastructure or business model, unsuccessful marketing initiatives, failure to listen to customers, failure to adapt to market changes, inaccurate forecasting by management, a lack of managerial experience and the list goes on.
But even so, what does it take to become a successful entrepreneur?
Entrepreneurial skills – Entrepreneurs are determined and competitive. Your skills and abilities are the differentiating value in today’s market. What constitutes entrepreneurship skills has been the subject of much discussion.
The Organisation for Economic Co-operation and Development has identified three main groups of skills required by entrepreneurs:
- Technical – communication, environment monitoring, problem solving, technology implementation and use, interpersonal and organisational skills.
- Business management – planning and goal setting, decision making, human resources management, marketing, finance, accounting, customer relations, quality control, negotiation, business launch, growth management, compliance with regulations skills.
- Personal entrepreneurial – self-control and discipline, risk management, innovation, persistence, leadership, change management, network building, and strategic thinking.
Where do you fall in there?
Research – Don’t skip the research. Your idea may seem valuable to you but may not be a match with the market’s demand. For instance, many small business owners believe artificial intelligence, big data or cybersecurity to be the next most promising industry. Adapt your idea according to different requirements and market stages.
Your business model – lay down your strategy
A business model is simply a company’s plan for making a profit. It identifies the products or services the business will provide, the target market that has been identified, and the expenses it anticipates.
A new business in development has to have a business model to attract investment, help recruit talent, and motivate management and staff. Established businesses have to revisit and update their business plans often, or they’ll fail to anticipate new trends and challenges ahead. Investors need to review and evaluate the business plans of companies that interest them according to Investopedia.
“A business model describes the rationale of how an organization creates, delivers, and captures value” ― Alexander Osterwalder
A business model for a new enterprise should also cover projected startup costs and sources of financing, the target customer base for the business, a marketing strategy, a review of the competition, and projections of revenues and expenses. A common mistake in creating a business model is underestimating the costs of funding the business until it becomes profitable. Counting costs to the introduction of a product is not enough. A company has to keep the business running until revenues exceed expenses.
Capital & Funding – If you have what you believe is a successful business idea but lack the capital and the financial resources, you should consider opportunities for partnering with other established businesses or finding the proper funding such as business angels or crowdfunding platforms that match your business.
And lastly, bear in mind that your passion only when combined with a proper business model and your remarkable entrepreneurial skills will turn your business into a profitable one.