‘Enrepretonourship,’ seems to be one of the most overused terms in today’s business. If you own lemonade stand or similar enterprise, please stop calling yourself an entrepreneur. If you work for a corporation, bad news, you are not an entrepreneur either. If you wish to learn more about entrepreneurship, please continue to read. Below, I share my lessons learned from my GMP program at HBS.
- Definition of Entrepreneurship. Per online dictionary, an entrepreneur is “a person who starts a business and is willing to risk a loss to make money” or “one who organizes, manages, and assumes the risks of a business or enterprise.” The key theme here is 2 words: business and risk. If there’s no real business or risk, you’re not an entrepreneur.
2. Your Goals and Motivation.
Some people know, very early in their life, that they want to become an entrepreneur, for some it takes much longer. It is not uncommon to see middle age, first-time entrepreneurs. By the way, their businesses are usually more successful than those of younger contenders.
If you consider the potential entrepreneurship, there are some essential questions you have to ask yourself at a very beginning:
- if you want to be an entrepreneur
- what is the business opportunity
- when to start
How to answer those questions?
- talk with other entrepreneurs about their careers
- participate in portals and blogs such as Enterpreneur.com
- work for a startup before starting on your own
- go back to school or attend boot camps
- join club or associations such as https://ventureforamerica.org/, https://www.ypo.org/, https://www.womenpresidentsorg.com/
- visit incubators and accelerators
3. Business & Opportunity Idea Generation.
How to identify the business opportunity? Opportunity analysis process is shaped like a funnel. It starts with an idea generation and strategic focus and gradually goes into more granularity to produce a business plan.
You should start with the analysis of the industry trends and disruptors to identify the High Impact Opportunities. Evaluate the total market size to see if there is a fit between your goals and ambitions and those of investors.
Evaluate the competitive & regulatory landscape, social context, and stakeholder interests. Make sure your window of opportunity does not close before you capture a value.
Are you solving a problem big enough? Will your product fit the chosen market? Is your customer willing to pay? Is your product/service differentiated? Are you positioned strategically for further evolution?
Develop cash flow forecasts, conduct scenario tests, define
market-based experiments to test your hypothesis.
Are you able to control the risk
and reduce the uncertainty?
Do you have access to resources?
–> Build Business Plan.
4. Assessing and Controlling the Risks.
Every entrepreneur has to identify critical failure factors and be prepared to manage the business risks. They should be assessed by the business funder(s) and team(s) taking into account the following causes, that most often lead to the start-up failures and unsuccessful scaling:
- Costumer: excessive spending related to customer acquisition, proper product-market fit and repeatable scalability of the business
- Product: product should be solving a problem significant enough, so the customer is willing to pay for it. Choosing the right timing for a business scaling and avoidance of pre-mature scaling before the product-market fit. Too many product features which are ‘nice to have’ should be avoided.
- Team: hiring too many experts and team members too early. Hiring managers, not the doers. More than one level of the organizational hierarchy.
- Financials: rising too little money or too much, the latter may lead to less discipline and pre-mature scaling of the business.
- Business Models: focusing on maximizing the profits from the beginning. Not adapting the business model to the changing market. Spending too much time on either planning or executing. Not focusing enough on the business model.
When your start-up business approaches the growth phase, the risks shift towards below categories:
- Growth & Strategy Risks
-level of disruption and competitive intensity
– the degree of uncertainty of your assumptions
-business complexity and velocity
- Culture & People Risks
-rewards for entrepreneurial risk-taking
-leadership resistance to bad news
– internal competition/performance pressures
- Control Risks
-any gaps in operating controls
-experience gap of existing employees
-distribution of decision authority
5. Skills & Connections.
Last but not the least, you have to assess your skill set and connections. What expertise you have and what you lack to fund your business and begin to gain traction? What skill you are requiring and how you want to fill any knowledge gap? To whom should you connect to launch your new business and obtain help in getting relevant resources?
Entrepreneurs have to possess the set of ‘discovery’ skills:
- Associating: developing the ability to connect seemingly unrelated questions, ideas, problems
- Questioning: the ability to challenge the conventional wisdom and customer behavior
- Observing: scrutinize consumer behaviors and common phenomena
- Experimenting: design and test the hypothesis in experiments, learn by doing
- Networking: cultivate network with diverse perspective, experiences, expertise, and access to others who can help you.
The most important tip for successful networking is to start building the entrepreneurial network BEFORE you need it. You can start with work, clubs, associations, school, etc. Learn to reach out to people to offer assistance or propose common projects. Find people who think not like you, but whose opinions and perspective varies. The diversity of thoughts is critical for any start-up and will help you to build a more innovative business.
- Most successful entrepreneurs are older than you think.
- The True Meaning of ‘Entrepreneur.’
- Analyzing and Pitching Opportunities, Prof. Lynda M. Appelgate, Harvard Business School
- Becoming an Entrepreneurial Leader, Prof. Lynda M. Appelgate, Harvard Business School
- Leading High-Growth Ventures, Prof. Lynda M. Appelgate, Harvard Business School