Entrepreneurship is one of my favorite topics. I have immense respect for the men and women who have developed innovative ideas, taken gargantuan risks, and against all odds, proven and sold a product or service that has made the world a better place.
But entrepreneurship is shrouded in this veil of mysticism, and many people don’t understand it well. So, we try to start a business and fail, oftentimes because we didn’t understand the process.
I’ve failed with many of my business ventures. The problems were all across the board: a disconnected and unmotivated management team. A poorly-defined product. Not really understanding what value our company could provide.
I have a good idea of what entrepreneurs need to know because I learned it compliments of the School of Hard Knocks. Ultimately, the only way you will learn to be a good entrepreneur is to actually try to do it. As I’ve written about before, if you are smart about the way you manage risk, you can start a business without taking on lots of unnecessary risk, and take on smaller projects with a stronger focus on learning than on “making it big”.
But most fledgling entrepreneurs would be helped immensely with a strong mindset to approach starting their business from. This mindset is frequently obfuscated in the popular press and the minds of people who don’t understand the process.
Many people think the key to entrepreneurship is:
-Just try to make cool products, and people will naturally want to buy them.
-Being able to provide better customer service than the other competitors.
-Out-marketing the other guy.
-Way too hard to actually know
Any one of those things can be true (except for the last!); but they all miss the greater point. The most important takeaway of the Basic Entrepreneurial Mindset is that entrepreneurs are focused on the customer first. Inventing cool products is meaningless unless someone wants to buy it. Perhaps you already have a product in mind. That’s fine, but the point is that your efforts should be to meet the customer’s needs. Many entrepreneurs do this the opposite way.
Do you ever buy something you don’t want or don’t need? Of course not. So why would someone buy something you made if they didn’t want it?
A successful entrepreneur’s basic framework considers these things (in order): (I will provide examples of my website here to show how I thought of these things)
1. What’s the need?
An entrepreneur, first and foremost, studies the market for unmet needs, and innovates there. An unmet need doesn’t have to mean a new product or service; it just means “different”, and can be either substantial or incremental improvement.
So this doesn’t mean just inventing something cool, and hoping that it turns into a business!
There’s tons of blogs on personal development and self improvement. But I saw that most of these blogs use anecdotal advice and platitudes, and lack true analytical substance. These blogs try to treat the symptom (by giving “tips”) rather than curing the cause (“why do you feel shy in the first place?”). I know that platitudes and anecdotes don’t really appeal to analytical and intelligent people (who want to understand a problem’s cause rather than quick fixes); but analytical and smart people still need personal development help. So there was a gap in the market, an unmet need.
2. What’s my product?
Many entrepreneurs innovate through ideas. But the only real innovation is an actual product (or service). This makes sense, since people buy products, not ideas. I made this mistake with early ventures: talking about these great ideas, and trying to get investors without even a prototype. A product should be rigorously defined (you know exactly what it is), and should be framed in terms of its use to the consumer.
My product is blog articles that address development issues in an intelligent, analytical way. I write articles that are almost always 1,500 words long, that usually begin with addressing people’s misconceptions with the topic at hand. I then address a new and unusual way to look at the issue, and use examples from my own life, others’ lives, or research to bolster my point (notice what’s going on in this article?).
3. Who has the need, and will they buy it?
Who has the need, and how can you prove it?
This is important because many aspiring entrepreneurs put the cart before the horse. They have an idea of something they think would make the world better, but they don’t actually ask “will other people see a need too?”
And even if they want it, what is it actually worth to them? Will they part with their money?
In 2008, Americans spent $11.06 billion on products form the self-improvement industry. This grew 13.6% from the prior year. In general terms, the market is huge.
Websites like Steve Pavlina’s blog (a great blog, which is comparable to what I write in many respects) has over 20,000 unique visitors per day.
My blog is free to read, but the content is “worth” more than nothing. The value of the blog comes from its future value: the goal that, as the blog becomes more popular, I will be recognized as an authority on the issues I write about, and will be able to help more and more people.
4. Can I run a business that will inform customers, meet their demands, and remain profitable ?
I have some friends that are tech entrepreneurs. Their approach is “product first, then management later”. They’re entrepreneurs at heart: they’re innovators, they’re dreamers. They want to make the world a better place. They’ve built something great.
But they run into problems. They can’t get their product shipped on time. They buy bad parts. Their software becomes buggy, and it’s too late to do anything about it.
Anyone can come up with an idea. Fewer people can develop that idea into a product or service. But even fewer people can do that and actually manage the business side of the operation.
I’m sure you can get away with not managing the business side if you sell your idea to someone else who can manage the business side (the classic big tech company buying out the start up), or if your business partners are good managers. But in general, it’s something that many people “forget” about in the entrepreneurial process.
Do I know how to do these things, or know someone who can?
-How to raise money and start up captial?
-How to sell my product?
-How to make sure there’s no problems in production (quality control)?
-How to manage growth and employees?
-How to spend and manage money wisely?
In the future, I will write specific articles on these topics.
Fixed costs are very low (a monthly fee for hosting, and a yearly fee for the domain name). The only real cost is my time, and the only employee is me. I devote 80% of my time to writing articles, and 20% to advertising and promoting articles on various websites (I have a few defined channels for doing this, and am still exploring others). I try to write about 3 new articles before advertising (since this is a one-man show and I can only write so many articles a week, I don’t want people coming back too soon and being disappointed about a lack of new content).
The subtle difference between this framework and what you see in most other places is the focus on the customer’s need above all else. This is especially true in an “invent something cool, and they will come” age like ours. Figuring out if the customer has a need is done through scaling efforts, and not taking on too much risk up front. Entrepreneurs that invent the product first might be lucky because the product is something that customers do, in fact, want to buy. But why take that chance?