Category: Entrepreneurship

Top Myths and Facts about Entrepreneurship that will Blow your Mind.

Top Myths and Facts about Entrepreneurship that will Blow your Mind.

Entrepreneurship is commonly perceived to be incredibly rewarding. But, is starting a business the best decision for everyone? There are a lot of things to consider before one takes the plunge, and it’s always advisable to know the myths and facts associated with entrepreneurship.

It’s a well-known fact that, most entrepreneurs are successful when they execute exceptionally out of ordinary ideas.  At the same time, it’s also a fact that starting a business is the best decision to make in an effort to being a successful entrepreneur.  Are entrepreneurs born or made? Do college drop-outs make better entrepreneurs? Are entrepreneurs very high techies? Does family life suffer on account of entrepreneurship?  These are some of the queries that instantly prop up with the very mention of entrepreneurship. So, it’s quite interesting to study and note some of the most talked about myths and facts about entrepreneurship.

Myth:

Entrepreneurs are born and not made. That’s totally wrong.  Entrepreneurship is all about attitude and hard work, and not just talent that is inborn.  Many a times, this topic becomes common for group discussions and MBA interviews too. There is no guaranteed route to entrepreneurship. Even if one has seen leaders who were college drop-outs and who formed highly successful businesses, for example Bill Gates of Microsoft or Mark Zuckerberg of Facebook; this type of category is very much in the minority.

According to an Ernst & Young study, more than half the respondents they surveyed, had some experience away from the world of entrepreneurship before they actually launched their own ventures. It is some form of business experience that is considered to be a basic and important foundation that increase the chances of future entrepreneurial success along with attitude and hard work.  Thus, it completely destroys the myth about entrepreneurs been born and not made!

Fact:

Successful entrepreneurs use their innovative passion. If one can dream it, they can even do it!  Wisdom holds that, it is ‘passion’ that is the key ingredient that fuels the drive for economic growth and business sustainability. Being passionate right from the start can take one a long way going forward.

However, it must be borne in mind that, passion depends more on emotions rather than reason, and so it is also prone to being unpredictable.  It is the innovative passion that is more likely to succeed and surpass all expectations – one prime example being that of Walt Disney, one of the most innovative entrepreneurs of all time whose grand vision was simply to make people happy.

Over the years, one has seen the rapid advancement in technology leading to a transformed world. Vision and passion have been the roots of innovation. Going one step further, it’s rather the innovative passion that’s the road to successful entrepreneurship.

Myth:

Entrepreneurs are happier, have freedom and more fulfilled. Though entrepreneurship can be extremely rewarding, starting a business is not for everyone. Being an entrepreneur, chances are that one is going to find themselves involved in a lot of things and working round the clock for a very long time. Work could become their only life! Even if work is worship, not everyone will feel to have more freedom or control, as is being perceived in general. Fulfilment has nothing to do with entrepreneurship.

One can even have a feeling of fulfilment when working in a big or small company. It’s often perceived again that, most entrepreneurs live a glamorous lifestyle, and that is also not true. If they did so, their investors would crib. In reality, entrepreneurs are usually frugal, hard-working and opportunity-obsessed – they have very little time for any outside activities.

Fact:

Most new ventures start from personal savings, credit cards, or mortgages.  Entrepreneurs waste a lot of their brainpower in order to raise money for their venture. Raising money has almost become like a disease! However, it is no secret that the most popular source of financing for a startup, is through that of the business founder’s personal savings.  Some even get onto a part-time job when they are in the startup phase.

Most often, an entrepreneur will invest their personal cash balance into a start-up which is the cheapest available form of finance that is readily available. This decision by an entrepreneur to start a business is mainly due to their urge to create a change in their personal circumstances, it could be either redundancy or an inheritance. By investing personal savings, it maximises their control over the business.

At other times, re-mortgaging is another popular way of raising loan-related capital for a start-up. After taking out a second or larger mortgage on a private property, some or all of the money is invested into the business. The big risk involved in this is that, if the business fails, then the property will be lost too. Borrowing from friends and family is also common, and also quicker and cheaper to arrange.

The repayment terms too can be more flexible than a bank loan. However, borrowing in this way can add to the stress faced by an entrepreneur, particularly if the business gets into difficulties. Credit cards is one more surprisingly popular way of financing a start-up. An advantage that entrepreneurs see is, the access it gets to a free credit period of around forty days!

Myth:

Technology and outsourcing killing all jobs as reason to become an entrepreneur! That is a shocking reason – not true at all. If one thought technology to be destroying or killing jobs, then isn’t that the most lucrative and fastest-growing industry? If one is unable to find a job, chances are that they lack the latest skills or education. In that case, one may well consider to start a small business which does not require any particular exclusive skill sets.

Certainly, building a business with purpose, and building a business to just make money; makes a big difference. For knowledge workers, technology has weakened the geographical stranglehold – now with the right infrastructure, a digital marketer or a visual designer can be as efficient and effective working from a cabin even in any far-away remote area.

A study by Gartner predicts Artificial Intelligence to create more than two million jobs by 2020. So it’s shocking for anyone to switch over to becoming an entrepreneur just out of fear that technology is killing jobs. So, the myth that technology is killing jobs, and so one should move towards entrepreneurship, is completely exposed.

Fact:

Most successful entrepreneurs concentrate on minimising risk. Entrepreneurs are mostly seen as people having an appetite for taking risks, but that’s just a perception. Due to popular press mythologies, the general public is led to believe that successful entrepreneurs are simply great risk-takers than the average person. What separates a successful entrepreneur from an unsuccessful one is that, successful entrepreneurs vary their decision-making styles. They rely on systematic analysis.

Contrary to general opinion, most entrepreneurs, who succeed, before taking a plunge, carry out a systematic analysis of their market entry strategy risk, market and opportunity risk, competitive risk, financial risk, technology risk, operational risk and environmental risk. So, it’s very much a fact that most entrepreneurs thoroughly concentrate on minimising their risk factors.

The mind-blowing myths and facts surrounding entrepreneurship as seen above, one can very well conclude that being an entrepreneur isn’t just hard, it’s really hard. One’s entire life is likely to get dedicated to developing their business, and chances are that it could even fail.  It’s always advisable for someone planning to start a business to have a planned strategy in place before taking the plunge. If possible, one should even think of getting an expert or a consultant on board which could help one to get on track sooner than later.

Disclaimer: This blog was originally published in website: Digital Doughnut

Entrepreneurs: Measure the Right KPI when it comes to your Start-ups.

Entrepreneurs: Measure the Right KPI when it comes to your Start-ups.

The need for measurement is most evident when a start-up competes with itself. This is the best sort of competition for two primary reasons. Firstly, doing better than you did the previous year is a sure sign of growth. Secondly, self-competition is the perfect stimulus for self-motivation. Comparison with an external entity can sometimes have a damaging effect. But, competition with oneself creates a drive to get better and leaves no room for excuses.

The most elementary questions that cross our minds, when we think about measurement are why and how. I urge you to answer these questions before you read on.

Why should I measure? Right from marking one’s height on the wall as they are grown from a toddler to an adult, to using a stopwatch to measure Usain Bolt’s speed in training, measurement is the key to improvement. If you are unsure of what to beat to get better, what are you competing against? You need a benchmark to measure progress. A performance index at the end of each year is the best benchmark for the next, considering a constantly growing start-up.

How should I measure? There are many ratios which act as progress indicators. They can be classified under the broad category of Key Performance Indicators.

KPIs are vital to the growth of a start-up. There are numerous KPIs that can be used to measure every facet of your business. However, using every available KPI can be illogical and redundant. Picking smart KPIs for most relevant measurement is truly a challenge. The choice of KPIs for any business depends on the industry. The rest are specific to the way each business is modeled and managed.

Here, we will deal with the most common KPIs, which hold good for any start-up to accelerate growth:

Customer Acquisition Cost:

Every business – product based or service driven – needs customers to sustain operations and consequently grow. But, how efficient is your approach to acquiring customers? This can be answered when you calculate the average resources spent on gaining a customer. When compared with customer retention rate and attrition rate, the customer acquisition cost makes more sense and acts as a good indicator to know if your start-up is improving its assets or bleeding finances without apt compensation.

Lifetime Value:

Over time, the term brand loyalty has become so cliched, that its significance in the business world has faded. However, brand loyalty could be the difference between a sustained business and one that looks set to end before it can establish itself in the market. Customer lifetime value is the net value of all transactions, across the entire period of an average customer’s relationship with your business. The higher this number, the better for your business, because it significantly reduces the stress placed on finances by the customer acquisition cost. It also justifies the resources spent on acquiring a new customer.

The ratio of lifetime value to customer acquisition cost is known as the golden metric in business. When calculated, a number under three is considered to be poor. However, until a start-up establishes itself in the market, it is hard to acquire a customer following or brand loyalty. Keep your eye on this number to ensure that it rises with every passing year, but don’t get disheartened if your golden metric starts off below 3.

Profit margin:

The bottom line of every organization is directly affected by profits margins, making it the easiest to grasp of all metrics. Simply put, the profit margin is the difference between the selling price and cost of production. Its simplicity should not tarnish its importance, as this metric is a very good indicator of sustainability and growth potential of a start-up.

There are dozens of other KPIs that are specific to varying industries. Some KPIs are used to measure your business against industry standards or leaders. Though these may seem a bit much for budding start-ups, it’s never futile to measure KPIs and device strategies for improvement. These smart tips should come in handy while selecting the right KPIs for steady business growth:

The salmon strategy:

It is fascinating to watch salmon swim upstream, against the current, to spawn in their home stream. Sometimes businesses must take a page out of the salmon’s book and work backward to solve certain problems. The most notable quandary faced by start-ups is the choice of KPIs. Sometimes its easier to choose KPIs based on the data that is readily available to you. A balance sheet is mandatory for any organization, making most of the primary KPIs easily attainable.

From over two decades of experience, I have noticed that the hardest KPIs to measure are the ones that are related to marketing. With the advancement in technology, it is relatively easier to keep tabs on your marketing team. The use of link management platforms is a novel method to erase obscurity and measure marketing campaigns purposefully. The analytics on these platforms are so comprehensive that precision is never compromised. Social networks, such as Facebook, provide their analytics but do not explicitly state the number of bots that have clicked on your link. Invariably your measurement is flawed.

Split the responsibility:

Division of labor, based on one’s skill set is the best way to tackle any challenge. In keeping with this axiom, measurement of KPIs is often split into few sizeable chunks and assigned to particular teams. Not only does this ease the burden of measurement, but ownership also ensures that these teams take upon themselves the onus of improvement. Such motivation is a key ingredient to the growth of any start-up.

Measurement without action is futile:

The sole purpose of measuring KPIs is to improve upon existing business tactics. Without such impetus to improve, measurement is like a mirage of success. Be it to up the bottom line or expand the business, the need for progressive action is only surpassed by adept execution.

Concentrate on the most important KPIs:

KPIs vary in importance depending on the type of business and strategies employed to achieve business goals. The most important KPIs for a start-up may be the customer acquisition cost, whereas an established brand, in the same segment of the business, may consider customer lifetime value to be more significant than the rest. Whatever be your elixir to accelerated growth, the right KPI must be measured and monitored on a regular basis to stay on track to success.

This blog was originally published in website: Digital Doughnut