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Introduction
This is a book for people who are interested in starting a business.
Maybe you have an unfulfilled passion that you want to transform into your livelihood. Maybe you hate your job and want to get off the corporate treadmill. Maybe you dream of financial independence and want to “be your own boss.” Or perhaps you are a willing (or unwilling) participant in the “gig economy” and want to learn how to make a living at it. Perhaps you’ve even started a business before but aren’t quite sure you’ve got everything figured out. Whatever your circumstance, you will find value in this book.
I’ve spent over twenty years in the new venture ecosystem as an entrepreneurship professor, consultant, business school dean, and founder of my own ventures. When I began working with entrepreneurs, starting a business was hard and expensive. The dot-com boom and bust of the late 1990s/early 2000s demystified the process for the general public and made successful entrepreneurs into rock stars. Since then, technology has made starting a business much easier and less expensive, and self-employment is now a highly desirable career path for many.
Yet there are still profound misunderstandings among the general public about how to start and run a successful business. These misunderstandings are amplified by fawning press accounts that make extreme outliers of entrepreneurial success seem like the norm, as well as lifestyle-oriented blogs, books, and podcasts that make starting and running a business seem as easy as falling off a log.
My intent is to interject a dose of reality into all the hype. Yes, starting a business can be tremendously rewarding both psychologically and (possibly) monetarily. But it is also very hard work and will completely dominate your life, especially at first. You will have to deal with constant risk and uncertainty. How you approach these things will largely determine how successful you can be.
How This Book Is Organized
This book starts at the most fundamental level—the mindset and cognitive factors critical to success as an entrepreneur. There’s a reason for this. In my 20-plus years working in the entrepreneurial ecosystem, I’ve found time and again that the right mindset is far more important to the success of a new venture than economic factors, airtight intellectual property protection, or killer financial projections. Over and over again I’ve seen ventures fail that seemed to have everything going for them. I’ve also seen too many ventures to count that succeeded despite so-called “experts” (i.e., me) thinking they had no chance at all. The intangibles are usually far more important than the tangibles in all creative domains, and, as you will see, I view starting a new venture as the ultimate creative act.
The next section of the book outlines the strategic issues you’re going to have to grapple with in order to determine the two most critical elements of a new venture—your value proposition and your business model. Your value proposition lays out who your customers are and how you distinguish yourself from your competition. Your business model addresses how you will run your business and how you will meet your profitability goals.
Finally, I include a basic outline of a traditional business plan with specific instructions for how to write it. Although many of you have no need for a formal business plan, there are good reasons to pull all of your thinking and planning into a series of concise, useful documents and other media, and I’ll go over how to do so.
Although this book is intended for everyone in the entrepreneurial ecosystem, I am focusing on the 99 percent of entrepreneurs who are not looking to raise large amounts of capital to rapidly scale into an eight-figure company. I will certainly touch on the different ways to raise money and the venture capital process, but this is only relevant to the vast majority of nascent entrepreneurs as a point of interest.
If you are reading this book, chances are you’re seriously considering delving into the complicated, exhilarating, frustrating, and rewarding world of entrepreneurship. Congratulations! It won’t be easy, but it may just be the best thing you’ve ever done. I look forward to helping you begin your journey.
Chapter by Chapter
“Chapter 1: Your Big Idea” discusses the nature of opportunities. Believe it or not, not all ideas are created equal, and being able to discern the difference between an idea and an opportunity is one of the first steps to getting started on your own entrepreneurial path. In this chapter you will learn where opportunities come from and what makes an opportunity great.
It’s no secret that starting your own business comes with significant risk and a mountain of hard work. For many new entrepreneurs their biggest obstacle is their own outlook and attitude. “Chapter 2: What Are You Afraid Of?” tackles some of the biggest misconceptions that hold back many would-be entrepreneurs. While it is true that the world of entrepreneurship is not for everyone, in many cases the fears of failure or the reluctance to start for various reasons are unfounded.
Despite what a Google search might tell you, the “secret” to entrepreneurial success is much more than a list of generic traits such as hard work and vision. As you will learn in “Chapter 3: What You Really Need to Succeed as an Entrepreneur” it is often the intangible aspects of starting a business that are the best predictors of success—not the tangible ones.
In “Chapter 4: Your Company – The First Steps” our discussion shifts to the practical aspects of starting your business including your company’s legal form. Chapter 5: What Are You Selling?”covers your product or service, how to set prices, and the strategy behind different pricing methods.
The next two chapters “Chapter 6: Markets and Customers” and “Chapter 7: Industries and Competitors” examine the people who will purchase what you are selling (your customers) and the firms that will compete with you. I’ll tell you right now—no matter how new, groundbreaking, or disruptive your product is you have competitors!
With the fundamentals regarding strategic positioning covered, “Chapter 8: Your Value Proposition” introduces the concept that makes or breaks many small businesses and startups—a robust and well-defined value proposition. In many cases, a startup’s value proposition acts as a shorthand for the startup itself. The value of your value proposition cannot be overstated.
“Chapter 9: Operations” dives into the nuts and bolts of how to structure your business with a focus on value, what to keep in house and what to outsource, and how to find and exploit efficiencies within your value chain—no matter what kind of business you are starting.
“Chapter 10: Marketing” explores the methods your business will use to reach more customers in your target demographic. In this chapter we discuss the promotional mix, distribution channels, and the sales cycle. Marketing plays a role in every business—new or well-established—and in this chapter you will learn how to use the promotional mix to grow your business.