Everyone wants to be an entrepreneur but not everybody has a plan
As news continues to break that Snapchat defied the odds and raised over $1.8 billion in funding, many people have been reminded of the money to be made in technology and other entrepreneurial start-ups.
Yet, some become preoccupied with the perks of being a lone ranger. From working independently at home to freedom of thought, the benefits of going it alone can be enticing.
However, one of the major constants in the world is that businesses fail, especially new ones. Dun and Bradstreet identified over 13,000 failed business in Australia during the first quarter of 2016.
Entrepreneurs, like all business leaders, must have a plan to ensure they stay focused on the idea and goals they set.
Knowing your customer
The first question all good entrepreneurs must ask themselves is what's the problem to be solved. Founder of Alltopstartups.com and Entrepreneur contributor Thomas Oppong pointed out that consumers currently face a 'paradox of choice' and thus, an entrepreneur must 'focus on building a must have [product], not a nice to have product'.
The next step is to create a good or service that offers something above and beyond what is currently available. One only has to look at the way Google reinvented search, or how Netflix solved on-demand media streaming to see that resolving customer pain points is a successful strategy.
This will become your value proposition and drive why you do what you do. Can you offer a product with zero carbon footprint? Can you add more features, while making it smaller? These are the questions you will have to answer.
However before you can attend to any of this you need to understand your customer. Analysing the size of the targeted market or the number of potential customers is a good place to start, but entrepreneurs should not stop here.
Take the success of Skullcandy, which makes earphones and other accessories, for instance. In a Forbes article, investor Alan Hall said that founder Rick Alden knew his customers down to a tee.
'He knows what they wear from their toes to the tops of their heads. He knows they are, or want to be, cool and accepted by their peers. He knows what they watch and where they shop. He knows what apps they have on their cellphones and iPads,' Hall argued.
Among the major lessons never taught in business school is that your enterprise will only be as strong as you are. So it's important to evaluate who you really are. Knowing your own strengths and weaknesses can offer a starting point to understand why you want to be an entrepreneur.
It doesn't matter if you're a millennial who is looking to build their own destiny or a baby boomer who is financially secure but continues to seek success. Your background, age and other characteristics will impact how you can approach the venture.
You need to make an effort to understand who you are, as working to your strengths and compensating for your weaknesses can be a beneficial strategy. It’s also essential to play to your passions.
'The happiest and most successful people I know don't just love what they do, they're obsessed with solving an important problem, something that matters to them,' Dropbox co-founder Drew Houston said during the 2013 MIT commencement address. 'They remind me of a dog chasing a tennis ball: Their eyes go a little crazy, the leash snaps and they go bounding off, plowing through whatever gets in the way.'
No matter who you are or where you come from, knowing yourself and your customer base is essential to starting a business. It's not just about having a good idea or product, you have to be passionate about it and so do your customers.
By: TEC Alumni Chair, CEO mentor and coach Richard Appleby