Knowing the critical factors in the entrepreneurial process is not enough in this journey. We will be looking at the questions that every entrepreneur must answer before getting on the plane.
Several business ventures are launched each year but many soon fizzle out after some time. For every hundred start-ups, about 30 get to their first year while only 5 celebrates the fifth anniversary. This is discouraging. Why such dismal odds? The reasons are attributed to:
- Passion: Most people go into business in which they cannot do free of charge. In as much as you can do it free, you are likely to enjoy every bit while doing it even though money is not coming as expected.
- The motive for starting the business: Most business owners go into business when they see an opportunity to make money. Once the business is not making enough money again, they become tired and worried looking for another opportunity.
iii. Lack of expertise: Getting good hands while starting your business may not be easy since you may not have enough money to pay them. This is where your business model will be put to test. How do you run your business without experts?
- Finance: Most start-ups do not have enough money to kick off. It takes time after your resilience and determination before the business is noticed by investors for possible funding. Rarely will investors put their capital in a start-up since it is a risky venture where the resilience of the owner of the business has not been tested.
We need to understand that no two ventures take the same path. This makes it difficult for an entrepreneur to look for a formula to navigate the myriad choices arising as their enterprise evolves. A right decision for one venture may be a disaster for another one.
What are these questions that an entrepreneur must first answer? Bhide recommends three (3) questions:
- Where do I want to go?
- How will I get there?
- Can I do it?
- Where Do I Want To Go?
In order to properly articulate your goals for the business, you must clarify the following:
What you want personally from your business
This is a difficult thing to do in business because most entrepreneurs find it difficult to be truthful to themselves. But, it is very important to be sincere with yourself about what you want personally. Is it a quick profit so that you can move on? Is it time to build your business gradually from scratch? Is it an outlet for intellectuals and great performers? Is it a flexible lifestyle? The immortality of building an institution that embodies your values?
The kind of business required
This very key. What kind of business do you want to build? Is it a sustainable business that will span from generation to generation? Is it renewable through changing generation of technology, employees, and customers? Can you systematize it? Will it be big enough to support an infrastructure that won’t require your daily intervention? At this point, your vision for the business will be put to test. Do you really understand the vision you have for your organization even though everything around you is saying otherwise? What steps are you taking in making it work?
Your risk tolerance
In the first instance, you can’t be an entrepreneur without taking a risk. Entrepreneurship is a risk in itself. How long can you withstand the risks? Do you have enough shock absorbers? Can you keep going when things start falling apart? Some of the risks include trusting inexperienced employees and team members, personally guaranteeing debt, tolerating delayed payoffs etc. At this point, you may want to surround yourself with trusted people that can help lift you up when the ship is down.
2. How will I get there?
Bhide’s second question for very entrepreneur to answer is: how will I get there? is usually difficult for entrepreneurs to answer because there is no definite pathway in getting to their destinations. Nevertheless, it is very important to still answer the question in order to have a charted path which may or may not change. But, seriously, it does change most of the time.
Successful strategies are:
To provide clear direction
A concise term for the customers, employees and investors to understand is critical here. Imagine a business that the employees do not understand, the success is bleak. Therefore, an entrepreneur should articulate the organization’s policies, geographic reach, operations, capabilities, and decision making framework in such a way that it can be understood by investors and others.
To generate sufficient profits and growth
Ensure that your strategy produces desired business results required to generate enough profit and grow the business. For example, a restaurant owner decided to change her strategy from restaurant visit to home and office delivery when the profit started dwindling.
To serve the enterprise long-term
There is a need to anticipate future market saturation, intensified competition, and major technological change. A good strategy will accommodate these scenarios. This is key to stay long in business. Most businesses cannot compete favourably because of intense competition and the owner lacks the knowledge to critically analyse competition and see how she can have high market share.
To establish the right growth rate
Most entrepreneurs expect customers to start rushing their businesses when they start having no plan for growth rate. When they start and customers are not coming, they become discouraged and concerned with what is happening. Therefore, we recommend a good plan for growth rate over time that will attract customers and capital without causing unnecessary stress for you and the employees.
3. Can I do it?
Most entrepreneurs find it difficult to address this last question because almost every start up may not have the capability to carry out the strategy laid down for the business. A great strategy is worthless if it cannot be executed. The requirements for answering this question are:
- Adequate resources
Good skills, knowledge, and values from the employee are needed to implement the good strategy that has been developed. To get good workforce you will need considerable capital depending on the business model you operate. An employee-centric model may require monthly payment of salary without much contribution or hope for the employee in the organization whereas a partner-centric model may require the invitation of talents to build the business together with the hope to enjoy consideration in the long run.
2. Good infrastructure
The need to build a strong organizational system for easy execution of a task is essential. Investment in specialized roles, monitoring of available funds, maintenance of financial records and auditing of the process may need a huge capital. A start-up without much capital cannot consider these initially but rather need to focus on customer acquisition and value proposition.
3. Role flexibility
Building your business the way you wanted it may shift your role from running the system to teaching others to do it, projecting the desired result over a period of time and manage the work environment.
4. Good state of mind
Business can be run by someone with a sound mind. At a point, an entrepreneur with a start up business may be overwhelmed with various responsibilities that could affect his health status if care is not taken. Therefore, it is critical that he should not forget his health as well as carrying out a reality check on himself and thought processes to be sure that he is intact. He made need to visit healthcare facilities to carry out some medical checkups may be every six months.
Bhide. (2006). The Questions Every Entrepreneur Must Answer. Harvard Business Review. Retrieved from www.hbrreprints.org
Adetokunbo Adekanla is the innovation consultant at Thinking House Consulting.