If you’re considering starting an entrepreneurial journey because you want to run your own business, stop. I understand the appeal of being your own boss. There’s a lot of freedom in it—much more than working for someone else—but if you have set your sights on running your own business, you haven’t set them high enough.
Launching a business is not the target you should be shooting for. Rather, your goal should be launching a successful business.
Forgive me if the distinction seems obvious to you. I want to make sure you get started on the right foot. In 2021, more than 5 million business applications were filed in the U.S.
That’s a lot of entrepreneurs, but there will be many that don’t succeed. Statistics show that 20% of startups fail in the first year. Within five years, 50% fail. While there are plenty of possible reasons for a business failing, many of them boil down to the fact that the founder did not do their homework before launching.
If you want to make sure your business is successful before you start, I have some homework for you. It involves wrestling with three questions that I believe all aspiring entrepreneurs need to answer before starting their entrepreneurial journey.
Question 1: What problem am I solving?
The best companies don’t sell products; they sell solutions. That being the case, before you start your entrepreneurial journey, you need to ask yourself what problem you are solving with your product or service.
This is a critical question to work through because if you ultimately cannot solve someone’s problem, then there’s really no room in the market for whatever you are attempting to do.
As you are considering this question, it might help you to take into account the magnitude of the problem that your product or service solves.
In other words, how much consumer pain is associated with not having your product or service available? The lower the pain, the more difficult it will be to get people to go ahead and buy, subscribe or take whatever action step you are trying to get them to take.
The greater the pain, however, the greater the need. If you have the solution to a problem that is causing a lot of people a lot of pain, there’s a high probability that you can leverage it to establish a business that will succeed.
Question 2: What makes my product different?
Sometimes, the solution that will launch you on your entrepreneurial journey is something brand-new. The digital camera is an example of this. Photographic film was a problem. It was costly, unforgiving and time-consuming.
Rather than figuring out how to make a better film, some smart people at Kodak created a product that did away with the need for film altogether.
Your product or service does not need to be revolutionary, introducing a new technology or innovating an industry, but it needs to be different from what is already available. If it’s a new take on a product or service that is already available, it needs to be a better new take. It needs to be unique.
Before you start your entrepreneurial journey, you need to determine your absolute, true-blue, end-of-the-day value proposition. Without a unique value proposition that differentiates you, it’s too easy to get lost among all of the other products and services out there that are jockeying to be the solution to the same problem.
To address this issue, the first place that most companies go is price. They set up their value proposition as being cheaper than all the other options. Before you copy this strategy, though, keep in mind that a better price isn’t always what the customer wants.
The low price might be an attractive benefit, but it isn’t necessarily a solution. Your ultimate goal should be to provide an excellent, problem-solving service at a slightly lower cost than your biggest competitors, while also offering far more value than the competitors provide.
Question 3: How are you going to scale and hire the right people?
You might start your entrepreneurial journey alone, but you can’t continue that way for very long. You need people assisting you on the journey, so don’t wait to consider how you will scale and hire the right people.
The “right” people aren’t just those who have the time and the skills. As an adamant entrepreneur who is passionate about something, you need to surround yourself with others who have the same passion.
If people aren’t there because they care deeply about the business, then they’re probably just there to collect a paycheck from you. They aren’t the kind of people who can help your business succeed, so don’t waste time establishing relationships with them.
The right people are the ones who connect emotionally to your mission. I have seen great business ideas fail because the founder hired people who weren’t committed to the business.
So, there’s your homework. Keep dreaming about having your own business, but don’t settle for a business that won’t succeed. Make it successful by making it helpful, unique and positioned for growth.
