A lot of young entrepreneurs don’t ask the right questions before launching a company. I failed 3 times before launching my first successful company. In this post I’ll show you what I’ve learned so you don’t make the same mistakes I did.
Also, as Millennial Money has grown, I have been getting more and more emails each week from readers who want to start an online business, launch a consulting business, or start some other type of company.
[easy-tweet tweet=”If you want to really build wealth then you should become an entrepreneur.” user=”MillennialMoney”]
I thought it would be valuable to share some of the advice I have been giving everyone who hits me up and wants to become an entrepreneur.
What I’ve learned as an Entrepreneur
Sure, it’s never been easier.
For less than $20 you can launch a blog. For $199 you can create an LLC and be off and running.
We’ve all seen Shark Tank. Everyone thinks they can launch an app, or a clothing company, or an online store or whatever. Some can. But many won’t be successful.
Being an entrepreneur is a lot harder than you think. Like a lot harder. Like probably the hardest thing you’ve ever worked for and (then even) harder.
Even though it’s easy to launch a company, it’s hard to execute on an idea, keep up with the pace of innovation, and gain market share.
I failed 3 times before I had a successful company. And successful meaning I made enough money from the company that I could take a salary, sustain myself living off of the income, and invest for the future.
I’m not going sugar-coat it. Most people aren’t cut out to be an entrepreneur.
7 Steps: How to be an Entrepreneur
Here are 7 things I think that you should know if want to be or you are currently in the process of becoming an entrepreneur. Most entrepreneurs fail, but I hope these ideas give you a better shot. Here’s what I’ve learned.
1. It’s not just the idea, it’s the execution
This took me a long time to learn. I had 3 failed companies before I had 3 successful ones. Or rather I had 3 really good ideas that I tried. Why did I fail? Because I failed to execute. It was a simple as that. It’s the same reason why so many startups fail. Becoming a successful entrepreneur is all in the execution.
A lot of people have good ideas. In fact, at least 5 other people probably have your same idea right now. So when you come up with a really good idea, then come up with 10 more. Then be prepared to execute and dedicate everything you have to bring your idea to life.
Most people fail to execute.
If you want to learn more here is the best book I’ve read on executing a strategy: Your Strategy Needs a Strategy: How to Choose and Execute the Right Approach
2. Find something you really love (like really really love to do)
Most of the time being a solopreneur or entrepreneur sucks. Like it seriously sucks. It is going to take a ton of time to get your blog, product, service etc. off the ground. You have to love it. If you don’t really love it then you won’t stick with it and you won’t invest the “above and beyond” time that it takes for most companies to reach an inflection point.
I made this mistake – the first app company that I tried to launch was in a niche (nightclub bookings) that I just didn’t care about. Sure it was a good idea, but I failed to stick with it because I didn’t like going to clubs and eventually just lost interest. You have to really love what you do – it will show in your pitches, it will show in your product, and it will keep you burning the midnight oil when no one else cares.
3. Come up with an actual business and marketing strategy
It’s actually tough to come up with a good business and marketing strategy. Most new entrepreneurs sacrifice one for the other, but you really need both. Saying that you want to “grow revenue 20%” the first year is not a business strategy. Saying that you are going to “use social media” is not a marketing strategy. Research what goes into building both and build them.
One of the best definitions of strategy that I’ve read is: “A business strategy is a set of guiding principles that, when communicated and adopted in the organization, generates the desired pattern of decision making. A strategy is therefore about how people throughout the organization should make decisions and allocate resources in order accomplish key objectives” from Michael Watkins in this Harvard Business Review article on de-mystifying strategy.
Michael Watkins also wrote a great book on how to come up with a great business strategy in your first 90 days that I highly recommend: The First 90 Days: Proven Strategies for Getting Up to Speed Faster and Smarter, Updated and Expanded
If you really want to blow your mind, here is the best book on strategy that I have ever read and one of my all time top 5 favorite books: Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant
4. Bootstrap as long as you can
I think most companies take on venture capital or investment way too early. Money is definitely getting tighter to raise for startups, but in some industries like edtech and fintech the investments are still massive and tons of money is available. But don’t take it too soon.
The sooner that you take money, the sooner you will have to listen to often demanding VC’s who will want to have a say in the big decisions you make. You will go from free and inspired, to being under a microscope. Here are two great articles from Tech Crunch worth reading if you are interested in getting investors for your company: Venture Capital is a Hell of a Drug and The Pitfalls of Venture Funding.
There are so many free and cheap resources available to new entrepreneurs, as well incubators, and collaborative workspaces where you can learn from other entrepreneurs. I don’t recommend taking on any investments before you really have something you need money for and scale is not always a good reason. Bigger is not always better. A lot of companies fail because they try to get too big too fast.
Try to be as lean as possible. An incredible book on this topic, as well as getting to market quickly, and worth reading, if you have any interest at all in being an entrepreneur, is: The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses
5. Don’t invest ALL of your money into your start-up
A lot of founders make this mistake and I did too when I launched my first company. I took all of my money ($10,400) and put it into an app idea (this was in the beginning of the app economy and I knew apps were going to be huge). It was all of my money and I lost it pretty quickly. Then I had to move back home with my parents and start from scratch.
You should always have some money saved up before going out on your own. I typically recommend that any entrepreneur should have at least 6 months of expenses saved since it takes a lot of companies at least 6 months to start making money. Maybe you have been investing your emergency fund and can use some of the growth, but I strongly recommend against cashing out your 401k.
Keep as much money saved as you can, especially in your retirement accounts. It always makes me sad when I hear about entrepreneurs who risked (and lost) their retirement savings. You can still be an entrepreneur and keep your 401k account. It’s often not worth the risk.
6. You will burnout, but here’s how to avoid it
I learned this the hard way. I burned out a few times really really hard. You can’t work consistently for 80+ hours a week. Or at least you can’t do it as easily after you turn 25. When I was in my mid-20’s on my way to becoming a millennial millionaire I was absolutely crazy. I worked 16-18 hours a day non-stop for years. 7 days a week.
It was all work all the time. I would fall asleep on my laptop and wake up with my laptop. It was unhealthy. It actually hurt my performance. And looking back it’s easy for me to see in hindsight that I was super inefficient and wasted a ton of time.
Sleep more. Work out. Do Yoga. Just do it. Build better habits. Sleep is more valuable than anything else. You will think better when you sleep. It took me a long time to learn this. Working out is just good for you. And Yoga keeps you chill especially if you are working long hours. Just those 3 things will give you an advantage – seriously.
Find your most efficient work time and only work during that time. This is different for everyone. I work best between 1 pm – 1 am (I always have). I am writing this post now at 11 pm. I can crank out a 2,000-word post at 11 pm, but can’t write a single word at 9 am. My mother is the same way. Sleep patterns are genetic. I am not a morning person. I don’t really start working before 11 am every day unless I really have to, but it’s not my best self.
If you want to learn how to be more efficient I strongly recommend learning about the 80/20 principle. It changed my life. I started spending my time on the tasks that actually moved the needle and wasting less time. Read the original book about it (before Tim Ferris popularized the idea): The 80/20 Principle: The Secret to Achieving More with Less
7. Always be monitoring, testing, and adapting
The world moves really fast, and markets and opportunities change quickly. If you are an entrepreneur just starting out, you need to move as fast as you can. You also need to adapt and be responsive to market changes. Technology has rapidly increased the rate of innovation and change. For many small companies, it’s really hard to keep up.
Most companies that fail just didn’t adapt quickly enough. The only way to do this is to live very close to the market that you serve and understand how you really compete. I have seen many online businesses fail because of a simple Google algorithm update that wiped out their organic traffic, or others that failed when a bigger player just simply took their idea, copied them, and took it to the masses.
Any great idea will get copied quickly by other companies monitoring the market. So you need to make sure you iterate, evolve, and try to capture market share as quickly as you can.
A great book to read on the topic is: The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business
There are no excuses – as an entrepreneur you control your destiny
Becoming an entrepreneur has changed my life. It’s taught me more about the world and more about myself. I am forever grateful for my own mentors and the opportunity to learn from their mistakes. I hope you’ve learned something from mine.
If you’re not an entrepreneur don’t worry that doesn’t mean you can’t still maximize your value! We aren’t all driven to create. Sometimes it’s just not worth the risk – it’s up to you to decide.
But if you are an entrepreneur, then I wish you the best of luck in launching or growing your company. It’s worth it.
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