How to Become a Successful Entrepreneur: Three Important Factors
Being successful as an entrepreneur takes a lot of luck and hard work. It doesn’t matter if you invest $200 or $2 million, most wannabe entrepreneurs end up losing their money. It doesn’t matter how determined they are, the vast majority fail.
In fact, only 1% of those who start an online business of any kind actually make any money from it – so image the odds of making $1 billion! According to self-proclaimed ‘IBM brat’ Mike Maples Jr., even if your start up is funded the odds of making $1 billion are around 1 in 10,000 or 0.01%.
So why do so many fail? What was in their minds when they decided to invest their money in their own idea? Often it is because of the idea. Maybe you have invented a 3-D mirror, which shows your face in three dimensions when you look into it. Have you done the market research to find how many would want such a thing? Maybe you failed to notice that 3-D TV has not taken off as expected.
What is needed to attract venture capital? A VC firm might discuss projects with over a thousand wannabe entrepreneurs every year and only offer funding to two or three of them. Venture capitalists expect to lose out on the bulk of their investments in the knowledge that they only need a few to succeed to make a good profit. Why should they invest in your idea unless it is truly unique and worth considering?
They don’t just put all the ideas into a hat and draw some out. They will assess the odds of your success and then make their decision. So what can you do shorten these odds? There are at least three factors you should consider before even starting your business, no matter how much of your own money you are using. These are:
1. Does it Solve a Problem or Meet a Need?
Is there a need for your new idea – let’s say it is a product rather than a service. The same applies whichever it is. Is there an existing problem that cannot be solved without your new product? Or, is it just another brick in the wall – another way to deal with an issue for which there are many more existing solutions. If the latter, then forget it.
In order to become a successful entrepreneur you need something unique; to offer an original solution to an existing problem. If there are already solutions, then it is not a problem. There must be people with an unmet need if you are to be successful – and lots of such people! A business or product itself does not attract customers – you must find the customers first and then give them what they need.
Many people are passionate about an issue, but they cannot see that there is no market. That is why you must identify a market before investing your own money. Venture capitalists will not give you a penny unless you can prove the need and the solution, and can also indicate the likely turnover and profit from sales. There must be a significant gap in the market that you can fill with your business.
2. Are You Passionate, but Realistic, about Solving the Problem?
Are you passionate about this issue? If not, then you may not have the incentive to work long hours every day of the week and to do that for years until you achieve success. However, passion is not enough. You must also be realistic – you can work for many years, convinced you have the answer, yet end up never achieving success. Be passionate, but also be prepared to admit defeat if a) You cannot find a solution, or b) You do not see a market for your end product.
Paul W Ivey said: “Study the unusually successful people you know, and you will find them imbued with enthusiasm for their work which is contagious. Not only are they themselves excited about what they are doing, but they also get you excited.”
Can you get others excited with your idea?
3. Can You Do It Yourself?
Do you have the ability to meet this need? Do you have the knowledge or skills? If not, then find an opportunity for which you have the skills to succeed. It could be a mistake to hire somebody to do this for you. The most successful entrepreneurs were able to do it themselves, and then hire people to market it and make it succeed. The key knowledge and ability must be yours.
A venture capitalist will want you to prove your own abilities before funding your enterprise. They will also want to be sure that there is sufficient need for your products or service to keep your business running for many years. In fact, they will likely be looking at a future exit strategy for you so they can realize their investment – and so you can benefit financially from your idea.