You might be encouraged when seeing the list of the wealthiest people in the world in 2021, and to realize that the majority are business owners. They became wealthy by creating value. To realize profit and accumulate wealth. Those entrepreneurs have to come up with the right idea of a product or service, find customers with the relevant needs, cope with the competition and legal business environment, and be able to engage in other time-consuming activities. After generating profits, they invested in various income-generating assets that contribute to the overall stock of their wealth.
Having said that, we must be aware that starting a successful business, however, requires entrepreneurial spirit, the courage to take additional risks, and above all, initial investment capital, which can be either saved in advance or inherited.
Also, you can be discouraged by some news when thinking about starting your own business. For instance, In 2018, before the COVID 19 pandemic, in the United States alone, around 18 out of 20 businesses failed in the first ten years. More specifically, roughly 80 percent of small businesses survive the first year and most businesses fail within the first year. Worst, the success rate gets significantly worse as times passes. Only about half of small businesses survive past the five-year mark, ranging from 45.4 percent to 51 percent. Beyond that, only about one in three small businesses get to 10 years.
All this above information might sound discouraging. However, by identifying the primary causes of small business failure, adjustments can be made to allow new entrepreneurs to place the shares in their favor.
An entrepreneur needs to temper the type of fear that might accompany that hard reality with deep research, courageous and cautious optimism. Of course, we must consider the risks and count the costs before investing both capital and time in a business. However, if you have an idea that could significantly improve the lives of others and maybe even your life, then perhaps it’s worth pursuing.
One of the advantages for you when your create own business is to have more control over the profits you generate versus being an employee with a set salary. An entrepreneur who seeks to achieve financial freedom can increase his revenue and profit margins to ensure his business is to generate income, the more profits the business generates, the more an entrepreneur can pay himself a dividend or bonus, depending on the legal structure of the business.
What is Business Plan
It is also advisable for an entrepreneur who either wants to set up a new business or go into partnership to first to have a business plan. The important of business plan is that, firstly, it will help you to better understand the business and risk involved. Secondly, the nature of procedures is required by authorities, such as governments and banks, in most countries.
When constructing a business plan, you should start by asking yourself a few basic questions, such as:
1. What is the business about?
2. How big is the market and what is the competition in the potential market?
3. What is the product or project, and how does it compare with others, if any?
4. How much turnover and profit can be expected?
5. Why is financial capital necessary to develop the business?
To be a successful entrepreneur, you should be creative and innovative about the product or the services you want to offer. There are some features of products or services that you should consider to give you the important edge over competitors. Therefore, to give an advantage to a new business, your product or service must be:
1. An entirely new idea, or
2. An improved version of a product or service that already exists
3. Cheaper than the others
4. More reliable as to delivery or after-sales service
5. More readily available to local customers
How To Achieve Competitive Advantages
An entrepreneur must understand that a competitive advantage of his business would be his firm’s ability to be successful over time and earn consistent profits over rival firms in the industry. This can be achieved by delivering a product or service that cannot be matched easily. You can also identify commitment to a generic strategy, such as cost, differentiation, or focus as a means to gain a competitive advantage.
The entrepreneur must introduce a low-cost strategy by providing a product at a relatively cheaper price by reducing a firm’s cost. The strategy of differentiation entails providing a unique product, which can be clearly distinguished from the other existing products in the market. An entrepreneur has to create a focus strategy aimed at targeting a selective group of customers whose needs are being exclusively catered for. The focus strategy may also contain both a cost element and a differentiation aspect. The type of strategy to be used by an entrepreneur must cater to the consumer’s needs.
A cost strategy can be achieved by an entrepreneur through operational excellence or cost reduction, better handling of sources of finance, and new modes of production and delivery of goods. Differentiation strategies have more to do with brand development, promotions, positioning of products in niche markets, customer satisfaction, and being responsive towards customer needs and wants. Hence, it is not surprising that differentiation strategies closely identify with the marketing strategy of a business.
Starting a business is a process that requires an enormous amount of thought and careful examination. First, an entrepreneur needs to take a great examination of his strengths, weaknesses, and skills. This will allow him to start thinking about what they can and cannot do. It is also critical that entrepreneurs are aware of their self-abilities, even if they already have the best business idea as they might not have the skills or personality traits to enable them to create a successful business. It is often best to come up with business ideas where we are naturally better suited to being successful.
How To Create A Successful Business
Also, from the first stage of creation of a business, an entrepreneur should be absolutely clear about why he wants to create a business in the first place. There are several reasons why someone should choose to turn his back on a job and career given the uncertainty of starting a business. So, the clearer an entrepreneur is about what exactly he is trying to achieve, the better chance he has of achieving it.
For instance, an individual who seeks to achieve high profits might, but not necessarily, want to establish a company that operates in the financial services industry, where profits are typically much higher than other start-up business sectors. Someone who seeks power and influence could achieve this through any form of media business.
An entrepreneur who seeks out fame might be best suited to an entertainment-related business. Someone who wants to save the world might start a green business that tackles climate change through renewable energy.
Most of the time, the only difference between an entrepreneur who starts a successful business and an entrepreneur who fails is passion. When it comes to starting a business, if you are passionate about the business idea, you will be more likely to be successful. The main reason for this is simple, you will work harder and persevere more on a business you are passionate about, and thus be more likely to succeed.
Logic dictates that if an entrepreneur wants to run a successful business, then they should begin in an area they already have a passion for. To figure out what businesses or areas of business an entrepreneur could be passionate about, they can start by thinking about the areas, activities, and anything they are passionate about. People are usually passionate about anything that interests them and they have strong opinions about.
Also, to create a successful business, an entrepreneur should think about what significant problems he could solve and how. The majority of successful companies were born out of a mission to solve real problems that affect millions of people and provide a solution through their products and services.
For example, many entrepreneurs, such as Elon Musk, started their companies with an aim to reduce pollution by manufacturing cars that are purely electric. Elon Musk, for instance, developed a business to revolutionize transportation on earth, through electric car manufacture Tesla, and in space, via rocket producer SpaceX. Although the electric car industry has existed for a decade, entrepreneurs like Elon Musk have made significant improvements to the electric car industry.
Until January 2022, several companies, such as Tesla, are well on their way to having built a hugely successfully multi-billion-dollar business in the process. The business helped Elon Musk to top the Forbes magazine list as number one world’s wealthy with a net worth of 306.5 billion USD in 2021.
An entrepreneur can also enter an existing business area, where solutions or products are already available, but they can also develop or improve it better than existing companies either regarding efficiency, innovation, or cost.
For example, Apple entered the mobile phone market more than a decade ago as an underdog with a new innovative product, and until 2022, a market leader. Despite the fact the phone industry and technology had been available for years, no one brought the same level of innovation to the market as the iPhone.
An entrepreneur can look for areas that can potentially provide significant savings to the customer. These types of businesses grow incredibly fast, particularly during recessions. For example, Poundland is a great example of this kind of business, since it used price as the primary differentiator to its competitors from the outset. By offering the lowest price possible on a large range of consumer products, the business has grown to a highly successful high street chain.
Furthermore, people who want to become entrepreneurs may research a field of business or industry that has not undergone innovation. This is often the case in non-tech industries that are slow to push forward change while the status quo remains profitable.
These industries often have tremendous opportunities to disrupt them with new ideas, technologies, innovations, systems, and methods. For example, in 2009, the taxi industry changed rapidly with the introduction of Uber, allowing customers to find and hire taxis easily.
To learn more about how to start a business and other investment in the First Investor, you can purchase the book and receive a discount by clicking on The First Investor .