6 Steps to Become an Entrepreneur - Complete Process
Table of Contents
The Entrepreneurial Process – Six Steps
So, you have read the stories of inspiring entrepreneurs.
You know how they struggled to overcome the odds and grow their startups and business to become the best in the business.
But – You don’t know how to become an entrepreneur?
You are struggling to know the entrepreneurial process.
You, my friend, are not alone.
We live in exciting times.
We live in times when Entrepreneurship is a career choice that most of us are not afraid of making.
Unlike our previous generations, where everyone was encouraged to find a job and settle in a life that worked in cycles of ‘Salary – expense’, we are in an era where the ‘Take a Risk –Follow your dreams – Build a Business’ cycle replaces the earlier process.
Now, how exciting is that!
Why do you need an Entrepreneurial Process?
Time to get started and become an entrepreneur.
Oh, Wait! You are new to this entrepreneurship world and are confused.
You want to take baby steps and learn the basics before becoming an entrepreneur.
And I can relate to you.
You are as confused as I was 12 years back when I had just quit my job to kick start my entrepreneurial journey without knowing ‘How to be an Entrepreneur‘.
Worry not – Regardless of whether you understand entrepreneurship or not, I promise to take you through the entrepreneurial process Step by Step.
When I started my first business – I was seriously lost.
One day I was doing market research and the next day, I was running to my Chartered Accountant’s office trying to figure out the right business structure/type for my business.
It was bloody, Chaotic!
Trust me – it took me a reasonable amount of time to figure out – there is an ‘order to the chaos.’
The order comes in the form of ‘Steps’ / ‘Process’.
Step 1 - Discovery or Opportunity Identification
Do you want to be an entrepreneur but don’t know where to start and how to do it?
Well, Mate! You need to have your Eureka moment.
Think of yourself as Archimedes running in the birthday suit shouting ‘Eureka!’.
I am joking…Please don’t do it.
The laws are pretty strict around running in birthday suits these days ☹.
Jokes apart – if you want to be an Entrepreneur, the First Step for you to do is ‘find an opportunity.’
This Step is your ‘idea’ stage, where you look at a few ideas that you want to work on.
So, how do you discover an opportunity?
I usually like to read about the latest trends in the market or topics related to my hobby and find gaps and opportunities.
Let me give you an example. Say you are crazy about cars and read every new topic that is in the market about cars.
How do you find an opportunity in this space?
If I were you, I would start at 10000 feet level with car and then further narrow down my interest about what do I love about cars:
- Am I someone who likes to talk about the nuances of cars like engine, speed, brand, etc., etc
- Or am I someone who likes to get my hands dirty and open a car’s engine and study its parts and working mechanism (in the literal sense)?
Therein lies your answer.
You could very well be a blogger, vlogger, or someone who can modify cars or, better – the next Elon Musk.
Another easier way of working on your idea is by looking at the franchise market, where they already have business models set up to validate ideas and the market.
This is what opportunity identification is all about.
It’s about finding the right opportunity (s) and then moving to the next stage of the Entrepreneurial process to evaluate them.
Step 2- Opportunity Evaluation - Market Research
The First Step of opportunity evaluation is risk evaluation and then we follow it up with market research.
Now whoever told you that entrepreneurship does not involve risks was joking.
Entrepreneurship – though driven by passion, involves risks.
So, before you start your entrepreneurial journey – I want you to sit down and assess your risk-taking abilities.
How do you do that?
The easiest method to do this is to:
- Assess your current financial situation
- Talk to your family members and check their comfort level around your decision
And last but not least, you can narrow your risk readiness by knowing your idea better.
How do you do that?
You do that by moving to the next steps of our entrepreneurial process – market research.
Before I move to the next step, I will walk down memory lane and share with you the story of a venture that started with ‘passion’ and not ‘readiness to be an entrepreneur.’
Around 11 years back, we started – Arrange My Party.
The venture failed because I was already running an existing venture and though we had partners in this venture, I was just not prepared to take the risk (emotional and financial) of starting a new venture.
Ultimately, the venture failed severely.
The venture’s failure ensured that the next time I put my hands into a new venture – I assess my situation and prepare a road map to ensure I am fully committed to the venture.
To learn more or get in-depth information on this Step, you can refer to the blog – Risks and Entrepreneurship.
Now the next sub-step of opportunity evaluation is to do market research.
Before I start explaining the importance of Market Research, let me ask you a question ‘Can you swim across a river from one side to the other side and finish the distance in 10 minutes?’
If I were you, I would be really uncomfortable doing this?
Why would I be uncomfortable?
Well – I would be uncomfortable because I don’t know anything about the river.
I don’t know:
- The width of the river
- The speed of the river at the point
Most importantly, I do not know if the river has some scary Crocodiles.
Now I am scared and will sink out of fear of ‘the unknown’ than the real challenges the river might pose.
Let me give you some more information:
The river has no crocodiles and In the last year, 1000+ novice level swimmers could swim across in five minutes.
And ask you the same question again.
Even a terrible swimmer like me would be jumping out of his pants (obviously, in swimming trunks) to cross this river.
If a novice-level swimmer can cross the river in 5 minutes – I can definitely do it in 10.
Did you notice the change in attitude before and after the information was provided?
This is the power of ‘Knowledge’.
A famous quote that comes to my mind at this stage is ‘We fear the unknown.’
Like our real life, we fear the unknown in business.
The solution to removing the darkness and knowing your idea better is – to do market research.
Imagine starting a business with knowledge of your market size, competitors, customer behavior, etc.
One of my close relatives started a multi-million-dollar hotel in a small city in India, assuming that the fancy hotel would lead to customers paying a premium to host their parties there.
Do you know what happened to the venture?
It failed miserably in the next four years and today, they are down by a few million dollars.
Now, they could have easily avoided the situation by studying the market around them and doing proper market research.
That is the power of Market Research.
Not only does Market Research prepare you better to take risks, but it helps you get ready to move to the next stage of the Step to becoming an entrepreneur – How to create a business plan.
Step 3 - Business Plan
I cannot emphasise the importance of a small business or a startup business plan.
It is pure common sense to have a map before embarking on a journey.
Without a map, you are a shit navigator who will get lost.
The same goes for the entrepreneurial journey.
You need a map to navigate through the entrepreneurial process.
In our case, the map is – business plan.
I know you are scared of the word ‘Business Plan’, which is quite understandable.
The business plan examples they have on the internet are enough to scare guys like me who have spent 12 years running a business.
You are just new to the world of entrepreneurship and should not go through the torture of creating a 100-page document.
It’s annoying and scary.
In my opinion, until and unless you are applying for a government loan, you do not need a 100-page document.
Instead, you can just get started with a simple 5-page document that is supported by a spreadsheet of the financial plan.
Let me give you some pointers on putting together a simple business plan.
A simple business plan should have:
- My analysis of my market includes market size, customer behaviour, and competitor (you get all the information from market research)
- The money that you will need as operational expenses (OPEX) and capital expenses (CAPEX) cost
- The break-even cost
- How the business will make a profit
Nothing of what I mentioned above is set in stone.
You are free to change the plan as you start your business and move along.
Before I move to the next step, I will reiterate the importance of a business plan.
The importance of a business plan lies in setting up a road map that tells you about everything, including money.
Tomorrow, you know when you will run out of money if you do not make enough sales or what worked and what did not work based on your initial assumption.
Do not forget the hotel business failure I mentioned in market research.
Had they done proper market research, they could have started their business smartly or probably not started had they known:
- The average room occupancy in hotels in their segment
- The average running cost
- The case study of some failed businesses
- The number of competitors in the market
The business plan is usually a road map that relied heavily on your market research at the end of the day.
Step 4- Setting up the company (company registration, getting finances sorted, Resourcing)
Setting up a business or getting your business started involves a couple of things, mainly: – Identifying the right business type and setting up the business
– Resource hiring
Let me explain all of them one by one:
Finding the right Business Organisation for your Business
I am confused!
That’s what I told my Chartered Accountant when deciding my first business registration.
He gave me so many options that I was scratching my head thinking ‘which one is the right choice for me’ by the end of our discussions.
Like a Good CA, he explained the charges, paperwork, and the government fees required to register a business type.
Yet, I was confused.
I was confused because I did not know the relevance and impact of each business organization in business terms. (Proprietorship, Partnership, Private Limited, LLP Enterprise, Public listed company)
I proceeded with proprietorship as it seemed the cheapest (in terms of registration) and did not cost a bomb with government and CA fees.
Was I Right?
No– I wasn’t right because, within a few months, we had to shift to private limited as it was a requirement to be a private limited company for filling some government tenders and getting empanelled with big clients.
This is why you must understand the different organizational structures and suites for starting your venture.
How to take your Business Online
Internet is an indispensable part of our lives.
Consider this – an average individual spends more than 5 hours on the internet daily.
Today, no one is out of reach of the internet.
It is a medium that has reached across different geographies, age groups, gender, interests.
From all that I know – my dad, granddad, and everyone from their generation are as active on social media as a teenager who lives two blocks away from their home and lives – breaths internet.
I cannot imagine a life without the internet and the same holds true for businesses today.
As a business owner who sells directly or indirectly on the internet, your business needs an internet presence to help you with brand awareness.
Brand awareness can help you get better employees, target customers, and most importantly, let your business’s online brochure be readily available to anyone who wants to know about your business.
As per my experience, the basics of taking a business online are:
- Buying a domain name
- Getting a platform on which the website should be developed
- A hosting space where the website will be hosted
- Professional email service to ensure your emails are sent from an email id that is linked to your domain name
- A social media presence
And then, there are advanced concepts like digital marketing, etc.
We will not go into them now.
As of now, all you got to know is – You need to take your business online and it is as important a step as anything else to help you become an entrepreneur.
How do hire employees for a new Business?
How does a small business or a startup like yours get good employees?
You might think that the market is flooded with employees, which is not a wrong assumption to have.
Every time you post a job on a job portal, you get a strong response.
However, there is a challenge that no small business or startup wants to address.
Let’s address the elephant in the room.
The market is full of candidates, but the market is not full of suitable candidates.
And suitable candidates want excellent packages!
The bottom line is – You, my friend, do not have the fortune to splurge on good candidates (until you have a rich dad or have robbed a bank 😊).
Let me engage you with my recruitment challenges as a first-time entrepreneur.
As expected, we could not attract the right talent due to a lack of funds.
So to make for the lack of qualified talent, we hired average talent and trained them to become good from average – only to see them move to better jobs.
We felt cheated and disappointed!
Months of hands-on training had gone down to drain.
We again went back to square one and started training many candidates to cover their journey from average to good.
We would train candidates for a good few years and see them leave us for good companies.
We went in cycles until I sat down and got my head around the problem.
The problem wasn’t with the candidates.
Our business was the problem.
The employees upskilled themselves from average to good, but we as a company did not grow as a company that could pay them the market rates.
They were now much more worth than what we hired them, thereby commanding a better salary.
We could not keep up with the job market’s pace.
I know it’s an undeniable problem that is frequently faced by all growing companies and not all companies go on to become multi-million dollar enterprises.
Having said that – I encourage you to put together a short plan or some notes in your business plan to compare the growth of the company v/s growth of old employees.
No one likes to be stuck to a company that hasn’t grown for years and bring their career to a standstill.
Step 5 - Managing the company
So you have started the company and now are in the stage of running/managing it.
This is where the s**t gets a little serious.
Now you are the boss man/woman who has stepped into the shoes of being an entrepreneur.
Time to get working.
Be prepared to multi-task, hustle and build something beautiful.
Always remember – no job is too big or too small for you.
It is your company and you have to work hard to succeed.
What can make it easier for you to manage a company?
One of the possible solutions is to hire fewer people.
How do you do that?
You do that by shifting your focus on automating your business as much as possible.
Your aim should be to build an ecosystem with maximum efficiency with minimum investment.
How do you do that?
Let me give you an example.
If I were to do digital marketing for my business, I would either hire an employee, or I could just use a SAAS-based tool to handle 50% of the work my employee could be doing.
I personally would buy an online Digital Marketing tool like SEMRush to manage your Digital Marketing Campaigns.
They cost roughly USD 50/month. Now compare it with hiring a good employee to do the job and you are looking at a lot more than what I wrote above.
The same goes for buying a social media, project management, or email marketing tool.
Precisely speaking, anything that can be done by machines 😊 using the internet is the right choice for you to select than hiring many employees to do the same job.
Most importantly, the real-time reporting from these tools keeps you on top of things and gives you exposure across all parts of your business operation.
And – that’s it!
Step 6 - Harvesting or growing the company
The last or the sixth step of an entrepreneurial process is ‘harvesting’ or growing.
It is an essential step as most companies hit stagnancy after a few years of being in the business.
They forget how to move to the next Step in terms of scaling.
So, how do you harvest and keep growing?
Here are a few ideas that worked for us in the past (we managed to double our turnover for three consecutive years until we crossed the elusive million dollar mark 😊):
- Look for ideas beyond your core business
- Always find ways to cross-sell and up-sell your existing service
- Invest in R & D
- Keep track of the latest trends in the market as soon as you see an opportunity. Invest in it
And with that, we have come to the end of the blog – six steps of an entrepreneurship process.
I hope you find it helpful to kickstart your entrepreneurship journey.
FAQ On Entrepreneurship Process
Why entrepreneurship is a process?
Entrepreneurship is a process because it involves many essential steps for a startup/business to start.
All the six stages of the process must be completed before an entrepreneur starts a venture. Failing to miss one might lead to a business’s failure or a Business not getting created with all required ingredients.
Think of the process as a process of preparing a pizza. Now try preparing a pizza without the pizza sauce or a pizza base – you know what the result would be.
The same is the case with entrepreneurship.
What is the last step of the entrepreneurship process?
The last step in the entrepreneurship process as per books is harvesting, and as per me (I am not a fan of college books 😊) – it is using all the knowledge you learned during the first five steps to run your Business.
What is the first step in the entrepreneurial process?
The first step in the entrepreneurial process is the ‘idea’ and assessing your risk-taking ability to be an entrepreneur. It is the step where you look for ideas and then further evaluate the idea to move to the next entrepreneurial process stages.