7 Steps to Become an Entrepreneur
If you’re thinking about how to become an entrepreneur, congratulations, because you’ve already taken the first step.
Being an entrepreneur is less about specific accomplishments or accolades and more about the mindset.
In fact, if you were to search for “entrepreneurial mindset,” you’re likely to find dozens of blogs, videos, and webinars discussing the secrets and characteristics of how entrepreneurs work to develop a mindset that focuses on achieving success. So, if you’re thinking about it, you’re probably motivated to explore it more deeply and perhaps, ultimately, pursue it.
The Importance of an Entrepreneurial Mindset
Why Develop an Entrepreneurial Mindset?
Developing a mindset is crucial because to truly be an entrepreneur and embody that creative drive and determination, you need to develop a fundamental nature in how you think of a problem or approach an issue. Just following a checklist of “have an idea, get a loan, and then start a business” isn’t going to help when you encounter a problem for which you don’t already have an answer. No list, no matter how thorough, is going to light that fire of inspiration to help see you through difficult times.
Can Anyone Develop an Entrepreneurial Mindset?
Not everyone has an intrinsic mindset of an entrepreneur, but the principles and processes can be learned. Becoming an entrepreneur is about recognizing the knowledge you need to acquire and the moves you’ll need to make.
7 Steps to Becoming an Entrepreneur
1. Build Your Skill Set and Knowledge Base
No matter what, you want to start and stay curious. There’s a lot out there to learn, more than you’ll ever have time to master. Any entrepreneur needs to be adaptable and open to new information. This can seem daunting, but there are a few things you can do to simplify the process of continual learning.
First Principles Approach
• Take a “first principles” approach to problems. As Elon Musk has said, first principles is a “good framework for thinking… boil things down to their fundamental truths and reason up from there, as opposed to reasoning by analogy.”
Research and Networking
• Get comfortable with research – subscribe to trade publications to see what’s trending within an industry. Research the market you’re interested in exploring. Get out and meet people who are doing the things you want to do; not only can they provide good advice, but they’ll also be an invaluable part of your network.
Focus and Specialization
• Focus your attention on what matters. While some serial entrepreneurs have a reputation for being jacks-of-all-trades as they jump around from industry to industry, you can likely find more success by focusing on an area of interest and specialization. Pursue a degree or program that teaches entrepreneurial skills and knowledge specific to the industry that you want to get into.
2. Build Your Network
No one ever succeeded alone. Every successful entrepreneur has benefited from their own network of mentors, partners, employees, and investors. Once you’ve found a mentor or advisor who can assist you, it’s important to reach out and find other systems of support.
Partnerships and Teams
• Partner with a co-founder or small team that will offer complementary skills to your own. Being part of a larger whole provides additional skills and expertise, plus it can make it easier to secure funding.
Support from Friends and Family
• Talk to friends and family about your venture. Not only are they the surest way to secure additional support, but some might also be sources of possible “seed” funds or low/no-interest loans.
Professional Help
• Research and vet professionals like financial advisors and lawyers that you feel comfortable trusting and relying on – you’re going to need them.
3. State Your Idea, Claim Your Niche
If you don’t already have a solid idea, then it’s time to consider what type of product or service you’re able to offer and – more importantly – what’s going to set you apart from everyone else.
Identifying Problems and Solutions
• Start exploring solutions for everyday problems or frustrations experienced by friends, family, and your target markets. The most innovative startups often provide simple solutions to common problems.
Market Differentiation
• Determine if you’re going to meet an underserved demand or improve on an existing service. The former is a way to claim a space within a market and differentiate yourself from competitors. The latter is more disruptive, allowing you to position your business as a new way of doing things.
Research and Validation
• Do your research on the categories and fields you’re thinking of entering and start asking questions about how a new product/service can exist within that space. If you’re unsure how to do the legwork or need to dedicate time to other aspects of your startup, consider hiring a marketing researcher for assistance.
4. Find and Understand a Market
The best product in the world isn’t going to succeed if there isn’t a market interested in buying it. Starting broad may seem like a good idea, but trying to sell to everyone means that you’re really selling to no one. To get a better idea of what your market is going to be, you’ll need to develop an understanding of what people are looking for.
Identifying Potential Buyers
• Who are the people most likely to buy from you or would be most interested in your service?
Developing Buyer Profiles
• Develop profiles of your potential buyers – what jobs do they have? What lifestyles do they lead? What needs do they have? What pain points do they experience?
Narrowing Your Focus
• Narrow your list down to the best opportunities and select the one that you want to start with first.
Conducting Market Research
• Set up interviews or surveys with people who fit that profile to continue refining that initial understanding. Which pain points are most urgent for them? Would they prioritize convenience over price? What benefits of your product/service might excite them the most?
5. Design Your Business and Idea
Once you’ve settled on what you want to do, then you’re going to have to outline your business structure and develop your product to show that it’s viable. That’s the only way you’re going to be able to win over investors.
Creating a Business Plan
• Create a business model or business plan that details how your business will be organized, a prospective budget for the future, and how your business will make money. Consider using business plan templates from Score and HubSpot.
Planning the Sales Process
• Plan out the sales process that you’ll use to acquire new customers. What’s your marketing strategy? Are you using certain social media accounts? Are you attempting a viral marketing campaign? What sales materials will you need? Most importantly, what’s the process by which you’ll convert those who express interest into actual sales?
Developing a Proof of Concept
• Build out a proof of concept or minimum viable product (MVP). The MVP should be capable of executing the basic and most important functions of your idea.
6. Secure Funding
You have a plan and a product, now it’s time to secure the funding that you’ll actually need to start up your business and get it running. Depending on your product and market, you have several options available.
Friends and Family Funding
• Secure initial funding or loans from friends and family. Trust levels are high, and you might even be able to receive the funds without having to pay interest or offer too much of a share in your company.
Venture Capital and Angel Investors
• Make a pitch to secure funding from venture capital (VC) firms or angel investors. Both can provide large amounts of initial funding for startups with the promise of even larger returns through owning stakes in the company. Start by looking at organizations that connect entrepreneurs with funders, such as the National Venture Capital Association and Angel Investment Network.
Small Business Grants and Loans
• Secure small business grants and loans. These investments differ from VCs and angel investors by offering smaller amounts of initial capital and having specific requirements. Read more about business grants and business loans at the SBA.
Crowdfunding
• Run a crowdfunding campaign through platforms like Fundable or WeFunder. Crowdfunding allows you to secure smaller donations from a larger number of people.
7. Build Your Business
Once you’ve secured funding, the real work begins. Time to put that funding into place, build out your first real product, and get it out to your target market.
Establishing a Location
• Establish a location for your business, whether you’re renting office space or leasing a building. Or, if your business is entirely online, ensure you have a professional website to promote your business and allow customers to learn about your product and contact your business.
Business Structure and Incorporation
• Consider the actual structure of your organization and your plans for incorporating your business. At the very least, consider registering as a limited liability company (LLC) to build credibility and protect your personal finances.
Promoting and Marketing
• Keep working on promoting and marketing your business. After the initial buzz dies off, you’ll need to reach out to new prospective customers and announce the latest updates and developments of your product. Review the metrics of your campaigns and social media channels to determine what’s working, what’s not, and what you should be doing to effectively advertise.
Common Entrepreneurship Pitfalls
Not every business succeeds; in fact, roughly 50% of businesses fail within the first few years. Here are some common pitfalls aspiring entrepreneurs need to be mindful of:
Running Out of Money
• The number one killer of startups is running out of money. The best you can do is to get a solid plan in place and be open to shifting your direction or focus as needed.
Too Much Debt
• High levels of debt can cripple businesses, choking off additional sources of income. Be cautious about taking on high-interest loans that can hinder your business.
Not Separating Personal and Business Finances
• Overleveraging yourself in a new startup can ruin you financially. Ensure you separate personal and business finances to protect yourself and your business.
Internal Conflict
• Disagreements with co-founders or employees can disrupt production and communication. Try to resolve conflicts amicably and maintain a positive working environment.
Incompatible Culture
• Different workstyles and value systems can make it difficult to pivot when change is needed. Manage the culture of your business effectively to keep everything moving forward.
Typical Entrepreneurship Salary Ranges
An entrepreneur’s salary range can vary widely. Entrepreneurs can risk losing money or stand to make millions, with the most successful of startup entrepreneurs in a league of their own.
Intrapreneurs
• Intrapreneurs, who use their drive and knowledge within established companies, can make on average over $110,000 a year. The highest-level executives can make upwards of $142,000 a year, with the most successful positions making more than $200,000.
Finding the Best Entrepreneurship Degree Program
If you’re looking for an advantage in becoming an entrepreneur, consider investing in a degree that covers the theory and practice of successful entrepreneurship.
Business Principles
• Find a program that highlights the study of business principles, including finance, marketing, management, and accounting. Look for specialized entrepreneurship classes on concepts like Social Branding, Launching and Leading Startups, or Venture Capital and Private Equity.
Hands-On Experience
• Investigate whether the program promotes hands-on experience through collaborative research opportunities, business competitions, study abroad, and real-world networking events.
Flexibility
• Determine if the program is flexible enough to work with your schedule. Online degree programs can be an affordable way to advance your education and career.
Consider starting your search for entrepreneurial degrees with the University of San Diego’s Master of Science in Innovation, Technology, and Entrepreneurship. It’s a degree jointly developed and awarded by the university’s schools of business and engineering to assist tech innovators, business professionals, and startup entrepreneurs in bringing their ideas to the fullest potential.
Entrepreneur FAQs
Why Are There Seven Rules?
The number is somewhat arbitrary. Lists of “how to become an entrepreneur” can vary widely but aim to impart fundamental concepts and habits for future endeavors.
What Are My Resources for Securing Funding?
You have access to multiple resources for securing funding. Options include:
• Grants.gov for program qualifications
• Crowdfunding sites like Kickstarter, Indiegogo, GoFundMe
• Pitching to Angel Investors and Venture Capital firms
• SBA microloans or nonprofit lenders
• Using personal credit responsibly
Is It Better to Go It Alone or Find a Co-Founder?
Consider your working style. Co-founders can provide mutual support, skill diversification, and easier funding but may also lead to less autonomy and potential conflicts.
How Can I Market My Business?
Start the marketing process early, even during the funding phase. Generate initial excitement and interest to turn early adopters into advocates for your business.
What’s the Difference Between an Entrepreneur and a Freelancer?
Freelancers earn money through direct work, while entrepreneurs focus on creating and growing a business for future returns. Entrepreneurs aim for exponential growth, while freelancers and small business owners often seek steady, gradual growth.
What’s the Difference Between an Entrepreneur and an Intrapreneur?
Intrapreneurs have the same innovative drive as entrepreneurs but work within established companies. They lead new initiatives and product development with less risk but also less freedom than entrepreneurs. Intrapreneurship can be a first step toward entrepreneurship.
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