How To Become an Entrepreneur in 7 Steps (With FAQ)
An entrepreneur is someone who creates or otherwise manages an original business Becoming an entrepreneur may not have a degree requirement nor specific professional requirements but it takes lots of knowledge, passion and a drive to achieve. If you want to become an entrepreneur, understanding the steps to take on this career path can help you start your own business venture effectively.In this article, we share what an entrepreneur is, including what to consider when becoming an entrepreneur and address some common questions about the career opportunity.
What is an entrepreneur?
An entrepreneur is an individual who creates and manages a business. They often take on greater risks than the average business person, possibly reaping greater rewards. Economists recognize entrepreneurship as an essential resource in production. Entrepreneurs use land, labor and capital to give back to the economy by providing goods and services.For most new projects, an entrepreneur creates a business plan that lays out the resources required for hiring, financing and the leadership of a new business. Capital funding can be hard to come by for new entrepreneurs and their projects, so they often start small and invest their own resources into the project. Some entrepreneurs start projects alone, taking on the risk-reward ratio with little help. Others seek partnerships. With the benefit of additional credit and resources, businesses tend to grow faster, seeing greater success.Related: 17 of the Best Self-Employed Jobs
Entrepreneurs and the economy
To succeed, entrepreneurs coordinate with capitalist economies. They’re identified as a resource that can build profit and provide new opportunities. Entrepreneurs make difficult decisions, often taking risks to achieve their goals. It’s because they’re willing to take these risks that entrepreneurs make a significant impact on their local economies.Related: The Best Business Degrees for Your Field
How to become an entrepreneur
“Entrepreneur” is an exciting title for many as it can be a fulfilling and rewarding career. The entrepreneurial path tends to start with a great idea. Those interested can create a plan and include the following steps for becoming an entrepreneur:
1. Identify a problem
After you’ve come up with your great idea, like a restaurant concept, delivery service, coaching specialty or new app, you can then start creating the business plan. Often, you find a concept or process that may make consumers’ lives easier. For example, after watching the news, an entrepreneur finds their city lacks sufficient daycare centers for the working population. Through further research, the entrepreneur discovers surrounding counties share the same problem.
2. Expand your formal and informal education
Education is essential in an entrepreneurial career. This may be a college degree program, apprenticeship or a variety of work experience. Learn the basics of business, build your vocabulary and develop solid business acumen. Problems occur frequently when starting a business and knowing how to overcome them is vital for the entity to thrive.Before getting started, you may want to explore a variety of success stories and even failures of certain business entrepreneurs. Doing so, may likely both help you comprehend the tenacity that’s required and inspire you. Start by following entrepreneurs from your university or alma mater or even find influencers on social networking sites.Related: How To Become an Online Entrepreneur: Definition, Steps and Skills https://www.kinggimp.com/
3. Build your network
It may be a challenge to get a business venture going but you can make it easier by enlisting help from other professionals or mentors. Those who take the time to network and make new connections can gain valuable benefits. Contacts may provide helpful starting loans, relevant advice or present new and greater opportunities.Look for entrepreneurs among family, friends, neighbors or university alumni networks and reach out to them for informational interviews. Also, take the time to learn about angel investors and funding for entrepreneurs and small business grants. You can find grant information on the United States Small Business Administration’s website.Related: 6 Networking Statistics That Show the Importance of Networking
4. Reach financial stability
Experts advise that new entrepreneurs have a decent amount of savings since starting expenses can equal more than initial profits. Consider working with a financial expert on what your P&L (profits & losses) worksheet may look like one, two and three years out. Many entrepreneurs find they really start to make a profit in three to five years and a lot can change in the market during that time. If you have a backup stream of income, support or an additional revenue stream, this can transition to a new business idea easier to manage and help educate your expectations.Related: Starting a Business While on Unemployment
5. Solve the problem with a business idea
Continuing with the previous example, the entrepreneur’s solution is to open a childcare facility with multiple corporate partners who support the tri-county area. With so many businesses employing parents with small children and no business already providing dependable childcare, there are plenty of customers and revenue to be made. You can now formulate the business plan.
6. Test the idea
After you form a solid idea, it’s time to test the idea. Local business owners are the best place to start. You can survey multiple business owners in the area, assessing their needs and the need of others they might know for childcare. Results show that the vast majority are unsatisfied with their current childcare, citing long commutes or work interruption as their chief complaints.You may learn two valuable pieces of information:
- Most community members need the service.
- There are three large employers with a sufficient amount of employees and potential onsite daycare space.
A competitor analysis can provide areas of improvement in the business plan.
7. Raise money
It’s good to have savings but the entrepreneur may need a lot more to start the business. There are three primary ways to obtain capital:
- Self-funding. This method refers to the act of starting a business without help. It can be done by cutting costs or using an individual’s own money.
- Apply for a loan. A common method for raising capital is applying for a bank loan. Individuals can apply for generic loans to cover start-up costs.
- Find an investor. Networking helps in finding those who can provide financial aid. Pitching a business plan to an angel investor is a great option. These firms require entrepreneurs and their businesses to meet specific requirements to apply.
Related: 10 Tips To Help You Network Like a Pro
Frequently asked questions about becoming an entrepreneur
If you’re thinking about becoming an entrepreneur, you likely have several questions. Here are the most common questions you might have:
Frequently asked questions
Are there any educational requirements?
Entrepreneurs are in business for themselves. Since they’re often their own boss, entrepreneurs may not need higher education. There are plenty of helpful resources on the internet to guide individuals on their new career paths. Having a college degree can be quite beneficial. Degrees in business, economics or a related field offer valuable insight into the field. Earning a Master’s in Business Administration may look better to potential investors.A lot of life experience can also help. For example, if you’ve worked in customer service, hospitality, the service industry or even health care, you have a true sense of many elements to make a business successful and also unpredictable scenarios. This can help you to be adaptable and flexible to changing market conditions.Related: 14 Entrepreneur Resources for Starting a Successful Business
How do new entrepreneurs advertise their businesses on their own?
Advertising is expensive and takes proper instruction to truly understand. Entrepreneurs may not always need a complicated campaign or scripted commercial. They can instead use digital marketing to advertise their business. Social media platforms allow business owners to advertise on their sites and even offer guides on how to use their ad management systems.One key thing is to consider the power of word-of-mouth marketing. You may want to understand your target market and how would they help be your best advocate. This includes being clear on your values, mission, products, services and how you’re different from the competition.Related: 50 Creative Marketing Ideas To Promote Your Business
Do entrepreneurs need to be creative?
Harness creativity to conceptualize a business since the entrepreneur’s goal is to come up with creative solutions to problems. Each entrepreneur may have a different sense of creativity such as art, marketing, finances, promotions or partners. Having strong skills such as mathematics and problem-solving can help you start your business effectively.Related: 10 Ways To Improve Your Creative Problem-Solving Skills
How do new entrepreneurs start a business on their own?
To start a business, entrepreneurs can educate themselves on the industry they’re entering. They understand the requirements and expectations needed for success. Financing may be challenging this early in a new entrepreneur’s career but they can benefit the venture by only investing in what is necessary for the business to operate.
What are the common barriers to becoming an entrepreneur?
One of the biggest barriers is simply coming up with a reasonable idea. Many factors play into a business idea such as location, audience and general need. Another common barrier is the lack of opportunity. If individuals seek to open a business in a particular town or city, researching the area can help them make sure there’s a need for their product or service.There are many unknowns in entrepreneurship, so it takes someone with tenacity, a willingness to learn and a dedication to making their idea come to life. Many entrepreneurs find great value in having a day job as they build their side business. This allows them to have the finances to pay their day-to-day bills and give their passion to their side project.
Can you start a business in college?
You can become an entrepreneur in college but it requires a strong conviction and desire to succeed. Students can devote time and energy to both their studies and their business and maintain a proper balance. If you decide to start a business while still in college, consider how factors like student loans may affect your credit or the amount of money you may need.Explore resources and networking groups on campus so you have the support of others who may be pursuing their own business ideas. This can also allow you to meet and greet local entrepreneurs, participate in pitch contests and be exposed to many who may help spread your idea and introduce you to great partners and areas of consideration to work toward success.
Please note that none of the companies mentioned in this article are affiliated with Indeed.