One of my friends quit his job and decided to start his own business. I asked him what he wanted to do, and he said he wanted to provide accounting services to companies. I offered him a couple of spare seats available in the office and told him I’d be happy to be his first customer. Do you think he went for it? He had the experience, knowledge, opportunity, the first client, even the workplace, but he didn’t take the risk, he didn’t even try.
So what makes an entrepreneur? What is a startup? Two different questions, but the answer is faith. Faith in yourself, in the idea, in the project.
TO BECOME AN ENTREPRENEUR, YOU DON’T HAVE TO BE SMART, HAVE A HIGH IQ OR DEEP KNOWLEDGE IN A CERTAIN FIELD. THERE IS NO DIRECT CORRELATION BETWEEN MAKING IT AS AN ENTREPRENEUR AND HOW SMART YOU ARE.
Much more important is the ability to anticipate, feel, motivate, disconnect from your day-to-day routine, see the big picture – all the things that have nothing to do with your IQ. Probably, EQ would be more useful here than just the intelligence quotient.
Most of the entrepreneurs I know are working or used to work in large companies. Therefore, to them business is supposed to operate in a certain way, so they begin to picture a startup from the point of view of an office worker, with all the departments, job titles and job responsibilities. As Steve Blank (American entrepreneur known as the “Godfather of Silicon Valley”, who created eight successful startups and came up with the client development methodology) points out in his lectures, large companies have business plans and conduct market surveys – and so does a wannabe entrepreneur with office work background, which delays the launch of the startup and product development. In their head, this “entrepreneur” has already built a giant empire and sees how expensive it is to run it, so they are paralyzed with fear and are afraid to start.
There are people who like taking risks: they usually engage in extreme sports or choose careers where you have to overcome fear, like stuntmen or commandos. You can even identify such people using the DISC behavior assessment model, where persons with strong DI and weak SC traits are usually more decisive and prone to risk. But this does not mean that SC-type individuals cannot become entrepreneurs.
WARRIOR GENE CARRIERS, WHO ARE ALMOST ONE OUT OF EVErY THREE PEOPLE IN THE WORLD, ARE MOSTLY MEN PRONE TO FINANCIAL RISK WHICH OFTEN LEADS TO SUCCESS.
In business you have to understand your strengths and recognize your weaknesses, perceive yourself the way you are rather than what you would like to be.
I know a lot of smart people: former students of Kazakh-Turkish colleges, people with degrees in physics or mathematics, graduates of the best local and international universities, winners of Kazakhstani and international student competitions. Before they start something, they weigh all sorts of risks, merging them into one giant risk. To handle the fear, you’ve got to have inner confidence and faith in your business idea, so my advice is to look at each risk separately so they are easier to overcome; because after all, risk is a potential unpleasant situation in the future which may or may not happen. Take, for example, health risks: we have to face them everywhere, e.g. when we eat, drive to work, do sports. So why do we accept certain risks as a part of our lives but are afraid to take risks associated with being an entrepreneur? The answer is simple: We do not encounter them in our day-to-day life, so we are not accustomed to them. At least once a week, people I know or total strangers ask for my opinion about their business idea or try to get me to push them, and my answer is always the same: Go for it, try, cross the line, work your entrepreneur muscle. You are already several steps ahead of the rest: firstly, you have realized that you want to become entrepreneurs, secondly, you have somehow thought through your business idea, and thirdly, you have came for advice. Unfortunately, I have yet to meet people who could learn from the mistakes of others, so don’t procrastinate, make your share of mistakes at the early stages of your business, and they will become your most valuable business lessons.
So I hope you have overcome your fear and are ready to embark on an entrepreneurial career. You need to know about the two main startup models: follow your natural bent and use a systematic approach. In the first case you are doing your favorite thing, for example, rescue people, and you know better than others how to do it right – in that case you will treat your business as if it were your baby. Or you understand how business operates, you can see and feel the business model, for you it is a clear algorithm, you know what resources are required you need to invest to get what your clients want.
EFFECTIVE MODELS ARE ALWAYS VERY SIMPLE, JUST AS WATER WHICH FLOWS NATURALLY FORCED BY GRAVITY, SO IT IS MORE PRODUCTIVE TO POUR IT RATHER THAN PUMP IT UPWARDS.
According to TRIZ (Theory of Inventive Problem Solving), to find the most effective solution you must first provide the ideal final result (IFR) and only then adjust it for non-ideal conditions. This method is very effective for developing a business model. You will not be able to build an effective business model at the first go – your task is to lay proper DNA in the foundation, because a lot in your business will change and evolve due to factors that you couldn’t have foreseen. You have to understand your business model so thoroughly that you’d only one page to describe it.
I remember how overwhelmed and freaked out I felt when I quit my job to start my first business. So now that you’ve made this decision you don’t know where to start? My advice is to start selling, bluff a little, then sell again and bluff again. It doesn’t matter if you are selling a product or a service, you’ll have to bluff anyway.
THE ART OF ENTREPRENEURSHIP IS TO TAKE ADVANTAGE OF AN OPPORTUNITY WITHOUT THE RESOURCES.
You come to a potential customer: he liked the presentation that you sent earlier, so now he wants to make sure that you will be able to fulfil an order, and he will definitely ask you: “Have you done this before?” You may have worked on similar projects in the past, or may have watched others doing it. If you don’t sound assertive, it is unlikely that you will get this order. So the only way you can pull this off is by speaking calmly and projecting confidence. Believe everything you are saying.
Don’t make things too complicated at the beginning – it’s going to get more complicated anyway once your business starts to grow. At the same time you and your team are going to have to learn new skills.
IN CERTAIN AREAS YOUR EMPLOYEES NEED TO BE MORE COMPETENT THAN YOU
For example, you have a project-oriented company, you provide services in the field of information technologies or construction. As the number of your projects will grow, you will start learning and implementing project management techniques, perhaps you will even create a project office which isn’t always what it sounds: sometimes it’s just about monitoring and recording changes and sometimes it’s about change management. Projects worth tens of thousands and hundreds of millions of dollars cannot be managed in the same way, just as higher-level tasks cannot be solved by lower-level methods, meaning you solve a cubic equation using methods developed for quadratic equations. IPMA describes 42 competencies necessary for successful project management, PMI further subdivides them into 5 groups consisting of 47 project management processes. Are all competencies equally important? No. For the successful implementation of small projects you need just a handful of competencies, which in my opinion include time and cost management from technical competencies and self-control from personal ones.
Also, avoid the pitfalls of overorganization. Employee turnover, risk management, the desire to have predictable results will eventually push you to systematizing or standardizing. And never re-invent the wheel, as you would waste time and come to a generally accepted ISO 9001 standard for quality management – there you will find the consistent approach, flowcharts, internal audit. To understand your current level of business standardization, use ISO 15504 to assess the maturity of business processes. The absolute majority of companies in Kazakhstan are at levels I, II and III. What ability to compete can we seriously talk about, when we have virtually no companies at levels IV and V?
Once I was appalled at the price of a fish dish in the new menu which was 1.7 times our average check. When I asked how come, it turned out the management focused on the pricing model used by our chain, whereby the prime cost should not exceed 30%, and you need to have at least one fish dish in the menu. Because it was the only option, they decided to keep that dish at that price. They made an independent decision based on the previously established principles. Sooner or later you will have to start delegating. You can manage your company by giving tasks and assignments, through projects or values – this concept overlaps with the administration maturity model.
The absolute majority will never dare and start their own business. To overcome the fear, you need to understand its nature which is simple: we get scared by the unknown. There is only one thing you can do. Make yourself understand that to start, you don’t need a detailed business plan: it’s enough if you have a simple model in mind of how to make a profit, are not afraid to sell and bluff. Try to keep things simple early on, otherwise you will suffocate your startup.