Q: What are the key steps to becoming an entrepreneur?
A: Key steps include generating a viable business idea, creating a business plan, securing funding, building a network, and developing essential entrepreneurial skills.
What does it take to be a successful entrepreneur?
Risk-taking? Hard work? Doggedness? A can-do spirit?
If those are what you are thinking about, you aren’t wrong. But there’s a lot more to being an entrepreneur than being the person that keeps things moving.
Starting a business involves many moving parts, and those parts require some essential entrepreneurial skills you must possess to be a successful entrepreneur.
For anyone thinking of how to be an entrepreneur, there are loads of excitement and giddiness that come with finally taking the leap despite all the threats and promises of challenges ahead.
We are excited for you, too!
Not to throw a damper on things, but it helps to know that 18% of small businesses shut down within the first year, 50% by the fifth year and about 65% by the tenth year, according to the Chamber of Commerce.
Those numbers might seem even more disheartening when you consider that, on average, 4.7 million businesses are started annually in the U.S., with 2023 recording about 5.4 million new businesses, according to the Commerce Institute.
For most of the businesses that throw in their towel, the challenges often concern the inability to secure financing or steady cashflow. However, for those who can push through, from self-fulfillment and financial freedom to being an impact driver in the nation’s economy, the rewards are huge.
Now, the question is: what should you do differently to be in the top 35% of small businesses that still have their doors open after 10 years?
Are there strategies for being an entrepreneur so successful that you are confident that your retirement will be a breeze with lots of cruises, coconuts, sunshine, or whatever tickles your fancy?
Well, there are! In this entrepreneur’s business startup guide, we’ll discuss some of the key steps to becoming an entrepreneur and the essentials needed to guarantee success.
But first, who is an entrepreneur?
Who Is an Entrepreneur?
An entrepreneur is someone who creates and runs a new business venture, taking on financial risks in the hope of profit.
However, definitions vary depending on who or what you ask.
For instance, Investopedia defines an entrepreneur as “an individual who creates a new business, bearing most of the risks and enjoying most of the rewards.”
Cambridge Dictionary defines an entrepreneur as “a person who attempts to make a profit by starting a company or by operating alone in the business world, esp. when it involves taking risks.”
The key entrepreneur characteristics to pick from these definitions are that an entrepreneur is:
- An individual: The entrepreneurial journey is often a solo trip down through the corridors of industries, searching for opportunities while leveraging the benefits of relevant networks, policies, and business growth strategies.
- A risk taker: No money? Super competitive market? Limited resources? No problem! The entrepreneurial mindset borders on taking risks. As long as there are glimpses of substantial rewards and profit at the other end, the entrepreneur journeys on.
- A business creator: An entrepreneur doesn’t shy away from turning their ideas into businesses. Serial entrepreneurs don’t mind creating as many businesses as they can until they get one or more right.
Regardless of the entrepreneur in question, these traits are commonplace and essential to the entrepreneurial lifestyle.
That said, what type of successful entrepreneur would you want to be?
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Types of Entrepreneurs
Some entrepreneur resources and coaches might introduce you to as many as 10 types of entrepreneurs.
But at the end of the day, you will find that most of them are subsets of the four main types of entrepreneurs:
- Small business entrepreneurs: Small business entrepreneurs focus on developing and managing small businesses. These businesses usually have few employees and mostly engage in small-scale operations that may expand over time.
- Social entrepreneurs: Social entrepreneurs focus on addressing social issues, typically issues that address one or more sustainable development goals (SDGs) or those that address key socioeconomic problems in local communities. Most social enterprises are founded on the 3 Ps: profit, people, and planet.
- Scalable startup entrepreneurs: These entrepreneurs focus on businesses with high potential for fast profits and rapid expansion. Basically, scalable startup entrepreneurs tap into markets with high demands and keep refining their processes until they capture a large market size.
- Large company entrepreneurs: Here, large companies with finite lifecycles tap into the entrepreneurial spirits of their employees. This usually involves advanced professionals within the C-suite, who are given the creative freedom to drive and sustain innovations companywide. The entrepreneur ensures that the many variants or upgrades of the finite products address prevailing market and consumer demands while boosting the company’s bottom line.
So, when you think of the topic “how to be an entrepreneur,” in which of these categories do your ideas fall? How does your business fit into the grand scheme of industry and the national economy?
Roles and Impact of Entrepreneurs
For as much as entrepreneurs are profit-driven risk-takers, they play some key roles in driving innovation, job creation, and the overall economic growth of industries and nations.
Let’s take a quick look at how becoming an entrepreneur positions you as an impact driver.
Driving Innovations
Since most entrepreneurs are starting a business in saturated and highly competitive markets, they often lean towards finding new ways of solving problems and reaping profits.
This mindset of risk-taking and experimentation positions entrepreneurs to be leaders of innovation. This is evident in how entrepreneurs often start or go into niche businesses that target underserved or totally neglected consumers in their markets, spurring new lines of economic growth.
Job Creation
When an entrepreneur starts one or more businesses, the business invariably becomes an incubator for employment opportunities.
While the entrepreneur bears the ideas and risks, their employees serve as the machines facilitating the success of the business.
For context, small businesses started by entrepreneurs have added more than 12.9 million jobs to the U.S. economy, according to Forbes.
Truly, the cycle of job creation spurred by entrepreneurs is endless. Working with purpose-driven entrepreneurs is sometimes the motivation for employees to learn and utilize entrepreneurial skills and resources before setting out on their own.
Propelling Economic Growth
From driving innovation to business and job creation, entrepreneurs clearly make substantial contributions to economic growth.
In fact, small businesses started by entrepreneurs fuel the economy. About 99.9% of businesses in the U.S. are small businesses, and they have accounted for 43.5% to 50.7% of the U.S. gross domestic product (GDP) since the late 90s, according to the U.S. Chamber of Commerce.
Under these contexts, you can tell that entrepreneurs are integral to national growth. Entrepreneurship is a service to self and the community. Therefore, there’s every reason to get it right when you dive in.
So, let’s get into how to be an entrepreneur—not just an entrepreneur, but a successful entrepreneur.
Key Steps to Becoming an Entrepreneur
As mentioned earlier, becoming an entrepreneur and starting a business involves a lot of moving parts. Bearing in mind that there are lots of risks involved, it is absolutely necessary that you ensure careful coordination of processes leading up to and following the establishment of your business.
The business startup guides below provide some pointers to nudge you in the right direction and minimize the effects of risks.
Idea Generation
Yes, entrepreneurship involves a lot of risk-taking.
No, that doesn’t mean you should jump in and dedicate all your resources to the first idea you get.
There’s some degree of circumspection involved in entrepreneurship, especially when it comes to pursuing ideas.
From the onset, your business idea must solve a problem or fulfill a need. If you have an idea but are unable to identify the problem or need it caters to, you are putting the cart before the horse.
Entrepreneurs take risks because there’s a promise of profit at the end. If there is no market for your business idea, then you’ll simply be taking risks with no profits—probably for the fun of it.
The point is that the first step to being a successful entrepreneur is ensuring you have a viable business idea.
Here are some tips to help you brainstorm and validate your business ideas:
- Product tests: Run low-budget product tests by creating some product samples and marketing them within your network to see how your friends, family members, and ideal customers (within your network) react to them.
- Market tests: If the product or service is well-received within your network, run low-budget market tests to further validate its viability. The market test should aim to measure consumers’ perception of the product or service on a larger scale. You can do this by:
- Showcasing your products at relevant trade fairs or other industry events.
- Creating conversations around the product on social media
- Creating a coming soon page and analyzing the web traffic
If you can make some sales or attract considerable market buzz with your product, then it’d be clear you have a viable business idea.
Business Planning
Now that you’ve confirmed the viability of your business idea, it is time to create the business plan.
This stage requires a lot of strategic thinking and groundwork to ensure that you effortlessly develop and implement effective business growth strategies.
Your business plan is your ultimate business startup guide, basically detailing everything about your business, from your target market to your business model.
Here are the steps to writing a solid business plan according to the U.S. Chamber of Commerce:
You may also insert an appendix section to introduce other relevant information you couldn’t immediately include in the sections above. This may include credit history, resumes, business permits, etc.
Funding
Funding is an essential part of the journey to becoming an entrepreneur.
Recall that the inability to secure financing is a major reason that most small businesses fail within the first years.
So, how do you intend to secure funding that sustains your business for the long run?
All things being equal, most entrepreneurs might prefer to fund their ventures from their personal savings. Unfortunately, things are not always equal. Hence, even if you have enough to fund your business yourself, you may want to explore other options to pad things up.
With a solid business plan in hand, you can tap into:
- Loans: Including traditional term loans and business lines of credit. It might be best to first consider federal and state loans before looking into private lenders and financial institutions. Consider:
U.S. Small Business Administration (SBA) loans: If you can, look out for and maximize SBA loans and credit lines. Note that SBA is planning to launch a new government-backed credit line of up to USD 5,000,000 for small businesses, according to CNBC.
National Funding, Inc.: This provides financing for up to $150,000 with pay rates as low as 1.11%.
- Venture capitals: Look out for firms and funding equipment offering private equity financing to promising startups and emerging businesses. If you are taking this route, you must put in more effort into creating your business plan. Ensure that you have a strong team, a compelling pitch, proper company valuation, and, most importantly, an investor who shares in your business goals.
- Crowdfunding: Crowdfunding can help you raise money to start a business without incurring traditional debt. You can use crowdfunding platforms to secure funds from interested individuals, offering them equity and rewards in return. This type of funding offers the double advantage of bringing in money while promoting your business.
Also, be on the lookout for small business grants from the federal government and state and local governments. Securing a grant gives you a great start with fewer worries, as you don’t have to pay back.
You now have a viable business idea, the plan, and the money. You are good to go!
But there is one more thing: you need a network to help you keep your head above water and keep your business processes regularly updated.
Building a Network
In itself, entrepreneurship is a continuous learning process.
Hence, it is important to build or join a network of entrepreneurs, mentors, and industry professionals with similar business interests to gain support and advice.
With a good network, you can:
- Build connections and access new and beneficial opportunities and partnerships.
- Access entrepreneur resources needed to enrich your business growth strategies.
- Boost your business profile, making you more visible in the market.
- Leverage creative ideas and shared knowledge to refine your operations
Beyond building important relationships, networks are superb engines for securing the future of your business.
Essential Skills for Entrepreneurs
Since you want to know how to be an entrepreneur, you likely already have a successful entrepreneur you admire a lot.
What entrepreneurial skills do you notice when you observe them?
Have you noticed that they have or seem to have great communication skills and organizational skills? If you look deeper, you’ll notice more skills.
Here, we’ll take a look at four major entrepreneurial skills that successful entrepreneurs possess.
Communication Skills
A quick look at the steps to becoming an entrepreneur shows you must communicate with people at every stage.
- Your team members and employees need to know everything about your business offerings and values so they can be ideal representatives any time, any day.
- Your target customers need to know how your product or service solves problems and fulfills their needs and why they should purchase it at the established price point.
- The investors want to know what makes your business a unique entity in a pool of hundreds of similar businesses. Why do you deserve their investment for your startup funding?
You could have the quintessential product that meets the target market’s demands, but because you are unable to properly express its value, it gets buried in the sands of time.
If you are particularly socially awkward or a shy person, it may be necessary to get training in effective communication. Take a leaf from top entrepreneurs like Warren Buffet, Mark Zuckerberg and Larry pages, who are known to be self-identified introverts.
Organizational skills
We’ve mentioned a few times now that starting a business involves a lot of moving parts.
Keeping up is not as easy as making a mental note to stop by the grocery to pick up a gallon of milk before heading home. Attempting to run your startup like this sets you on a straight path to rapid burnout.
Having strong organizational skills can help you manage multiple aspects of your business efficiently. You’ll be able to achieve set goals, develop a healthy work-life balance, manage stress, and have an improved sense of well-being and fulfillment.
There are various pathways to being an organized entrepreneur, but they all boil down to:
- Breaking down tasks and operations into manageable to-do lists, identifying priorities, and placing considerable focus on them.
- Setting achievable deadlines and goals for yourself and your employees.
In so doing, you can make sense of your business processes and what matters at all times.
Strategic Thinking
Strategic thinking is what got you that brilliant idea that set you on the path to becoming an entrepreneur. It is also what will guide and sustain your business through all the ups and downs you may encounter while running it.
Strategic thinking helps you to:
- Clearly define your goals and business planning, development, and priorities.
- Identify business growth opportunities and how you can maximize them.
- Analyze market trends and consumer behaviors to extract valuable insights and make informed decisions.
Essentially, strategic thinking empowers you with a better vision to take necessary steps at the right time. As a result, you can boost your business’s profitability and durability.
Resilience
An entrepreneur is a dogged risk-taker with a can-do spirit, none of which is for huffing and puffing. They are all for developing a mental state that keeps you resilient in the face of all challenges that come with running a business.
You could have one of the best business ideas ever but lose the spirit to pursue it when faced with a tedious business registration process.
You could set up operations with a highly sought-after product, only for a larger business with more extensive marketing to introduce a similar product with lower pricing three months later.
Any number of things could happen at any time to deter you or loosen the foundations of your business, but your resilience will see you through.
Being resilient helps you stay focused and mentally strong to stay positive and make sound decisions, even when things are very tough.
Wrapping Up: How to Become an Entrepreneur
Whether you are aiming to be a small business entrepreneur, social entrepreneur, scalable startup entrepreneur, or a large company entrepreneur, you will encounter some level of risk in your journey to becoming an entrepreneur.
This “How to be an entrepreneur” startup guide provides various tips on coordinating various aspects to minimize risks. Follow the steps provided and seek further guidance from mentors and successful entrepreneurs in your field or community to localize your entrepreneurial efforts and maximize opportunities.
Further Reading:
- Technologies Powering Virtual Office Spaces
- Empowering Independence: A Guide for the Modern Independent Business Owner
- Maximizing Customer Value: A Guide to Customer Retention Analysis
- Green Marketing Definition: What It Is and How It Works
Regardless of what lies ahead, it is crucial that you communicate effectively and stay organized, strategic and resilient at every turn.
Lastly, leverage Alliance Virtual Offices’ high-performing business address and live receptionist services to elevate your entrepreneurial strategies and establish your business as an authority in any location, far or near.
