To become an entrepreneur is a worthy ambition. However, is there a proven formula that ensures the safe launch of startups and SMEs (Small and Medium Enterprises)? Statistics indicate that nearly 60 percent of startups fail to take off and an equal percentage of SMEs fail to pay back their loans due to bankruptcy.
According to the Webster dictionary an entrepreneur is someone who organizes and manages a business undertaking assuming the risks for the sake of profits. This implies that an entrepreneur is a professional who is self-employed and working on his or her own.
Individuals become entrepreneurs because of ambition, inspiration or sheer necessity. But, it is essential to understand that to succeed in their chosen business, first and foremost they need a marketable product or service that potential customers/clients need. Only then, will they be able to turn their inspired ideas into commercially viable business propositions. In addition, to achieve scalability and success, they need to develop the following key components.
Build an inspiring vision
To be successful in your business, an inspiring vision is a must. It is knowing where you want to go and having a strategy how to get there. Just having a market winning product or service will not suffice. Most startups and entrepreneurs fail to grasp, that vision and success go hand in hand with each other.
Next in line, is the need for a viable business plan.
The importance of a well written business plan cannot be over emphasized. When you spend time crafting a business plan, your reasons for opting to enter the business arena becomes clear. Realization will dawn on the required resources – manpower, as well as finance, to make the business a success.
You will be able to define the scope of your business, identify target markets and plan how to meet your sales prospects. This way, you will be able to build a strong business case and justification that will keep you inspired and passionate.
Have the right people on board
Business plan is not a one-time process but needs to become a living document that you constantly update as new insights, and information becomes available. As the saying goes, in business, if you fail to plan, you will plan to fail. Ensure you have in your staff disciplined self-starters and trustworthy people. Many startups and businesses run into difficulties because they have the wrong people on board.
Activate in your staff the right motivational trigger to get the best output from them. Some of them would respond to monetary rewards while others for affiliation, greater degree of autonomy or a sense of achievement. In all these, some will only tend to sponge and demand much but give very little in return. Such employees will not take you very far.
Practice team leadership
By virtue, be a good team leader and through example set high work ethics. This way, your employees will be inspired to be around you and follow your example, because ‘leadership is action not position’.
Having sufficient working capital is vital for a thriving business. Many entrepreneurs take this aspect lightly and run into deep trouble. Projected income and expenses should include the total expenditure and running costs. When launching a business, cash is king! It is amazing how fast one’s savings could get eaten up before sales start to pick up, if one is not prudent with spending.
It is advisable to have approximately three to six month’s working capital as reserve or backup buffer to fall back on, during seasons when business could be dull. This would ensure the staying power of a budding business.
Seek support
One way to minimize startup mistakes is to get expert advice from friends and established business acquaintances. It is important that new entrepreneurs be aligned with associations from whom they could receive genuine and professional help.
Entrepreneurs need to have a realistic knowledge of their strengths and wisely compensate for weaknesses by outsourcing, since they will be called upon to wear a range of hats during their entrepreneurial journey, as accountant, administrator, manager, leader, marketer, salesperson, etc.
Develop confidence
So, ensure that you have the necessary skills, knowledge and aptitude to make your business work before embarking on the journey as an entrepreneur. Discipline yourself to put in nine hours of work, and, “Congratulations! Now you are responsible for your own paycheck!”
(The writer is an HRD practitioner)