10 steps to success in self-employment

STEP 1 – HAVE A STRONG IDEA

The first step to undertake is undoubtedly to have good, innovative, differentiated ideas that can achieve strong market acceptance.

For to be an entrepreneur it is necessary to have a strong Business Idea, which responds to an identified, and not yet sufficiently exploited, OPPORTUNITY, and know how to take advantage in an INNOVATIVE way.

The sources of ideas can be divided into three main groups:

1. ANALYSE THE PROBLEMS/NEEDS OF THE SURROUNDING ENVIRONMENT
2. IMPORT BUSINESS IDEAS THAT HAVE BEEN SUCCESSFUL ELSEWHERE
3. EXPLORE CHANGE AND BUSINESS TRENDS

Of course, it is necessary to have the ability to identify opportunities. In addition to being sensitive, you need to gather information and increase your knowledge.

However, a good idea is not synonymous of success. To minimize the risks of failure it is necessary to let the idea mature and assess its risks and potential, in particular by understanding market trends

STEP 2 – STUDY THE WHOLE ENVIRONMENT

The maturation process must include an in-depth study of the entire internal and external environment, starting with an analysis of the entrepreneur profile, since being an entrepreneur actually requires a set of characteristics and skills that not everyone has, and therefore the potential gaps should be minimized before moving forward with the business.

One must have the know-how, be creative, be convincing, be resilient and self-confident to implement an idea and ensure acceptance of the product/ service, as well as be dynamic and attentive to business opportunities in order to adapt services to market and economic fluctuations.

The way you deal with risk is another relevant factor. As an entrepreneur, it is essential that you have the willingness to take some risks but in a measured way. To risk is to accept challenges.

Leadership is another essential feature. Being able to structure the business, organize the operation of the company, manage the human and material resources is fundamental to understand how value can be added in the company.

In the external environment, the market and trends that are expected to influence the business, as well as the current legislation, must be analyzed.

It is necessary to have a thorough knowledge of both the profile of potential customers, the type of product/ service they are looking for and the size of the market, as well as the suppliers and the competition, their strengths and weaknesses, the prices charged and the usual margins.

This whole study is time- and, sometimes, resource-intensive, as some of the data to be obtained, may represent some costs. This study should make use of the immense amount of information available online, portals with statistical information, business and sector associations, legislation and portals of official entities.

STEP 3 – DEFINE THE BUSINESS MODEL FOCUSING ESPECIALLY ON PRESENTING A GOOD VALUE PROPOSITION

Defining the Business Model is essential to be able to move from an idea to business, or rather, transform the idea into a business.

It is important to realize that an idea alone has no value. It is its implementation and how it will take place that may or may not turn the idea into something valuable.

When creating a business model, the first questions to be answered are ”who the customer is” and ”what the customer values”.

Knowing these answers, you will be able to define a value proposition for your customers, that is, to define how your offer will represent something that your customer values. Then you’ll be able to tell me how you’ll get money in this business.

Then, it will be necessary to define how you will create, maintain and deepen the relationship with your customers and also which channels you will use to reach them.

Having all these issues defined you will be in a position to advance in the business model to the operationalization part, that is, to carry out the business to which you propose what are the key activities, what are the key resources you will have to hold, what will be the key partnerships to implement and what are the costs associated with these activities.

STEP 4 – PREPARE THE BUSINESS PLAN

There is an enormous temptation in many entrepreneurs to move from the IDEA phase to the BUSINESS PLAN phase without going through the study of the environment and without defining the business model. This temptation is a mistake because a Business Plan is a very important tool which’s usefulness depends on the quality of the information it contains.

A business plan should include detailed information on all critical points of the business, from the explanation of the idea and its potential to the profile of partners and managers, market analysis, description and justification of the strategy, operation and investments required for its operation, projection and justification of the forecast results and treasury maps, also mentioning issues related to management control to be implemented and exit strategy in case of failure.

A Business Plan is fundamental in defining objectives and strategies to achieve them and is a “living” tool because one must be aware that many things can change over time or happen differently from what has been planned, so the Business Plan should be regularly reviewed presenting new strategies and innovative solutions for the new challenges that arise.

STEP 5 – ESTABLISH PARTNERSHIPS

Companies must dedicate themselves to what they do best, with greater efficiency and productivity, delivering to partners all those activities that they can, cheaper and more efficiently than the company itself.

Among the key activities for your business, which you defined in the Business Model, you must define those you will do, based on internal resources and those in which you will use partners. It should then establish partnerships with reference partners and prevent, where possible in a contractual way, how partnerships will work, in particular taking into account issues such as confidentiality (where this is relevant), exclusivity (where this makes sense), price maintenance guarantee, quality control, sharing of responsibilities in the event of failures. The company should also study alternatives if it is necessary to change partners.

STEP 6 – CREATE A GOOD TEAM

Sometimes some want to undertake on their own even if they recognize their limitations. For example, anyone who wants to go it alone and says he doesn’t like making commercial presentations. Or anyone who knows a lot about a particular métier but knows nothing about management. These entrepreneurs should have a good commercial or manager on their team, or they will be doomed to failure.

The creation of a diverse work team, with people who have knowledge in different areas that are complementary to those of the entrepreneur, can be decisive in ensuring the management of the various areas of the company and its success.

When setting up the team, it is important to pay attention to certain issues, namely trust in the professional relationships established, the definition of positions and functions according to the aptitudes of each member, and the establishment and transmit to the team the objectives to be achieved at each moment.

STEP 7 – GET ADEQUATE FUNDING

The question of financing is often decisive when starting a new business. It must, therefore, be treated with special care.

It is not uncommon for the new entrepreneur to be very concerned with guaranteeing resources to make the initial investment and to be satisfied when he reaches these resources, forgetting the financing of the operational part, especially the working capital necessary to lead the company to overcome the cash deficits of the activity, which are natural in the first months.

Two other usual mistakes of new entrepreneurs concerning financing are, on the one hand, the rush to obtain financing, not studying which options are best suited to their case, and on the other hand, the idea that there are entities or incentive systems where it is just to arrive, to ask for 100% of the money you need without even putting in own capital and that is already there.

The issue of financing is a crucial one, thus the entrepreneur should seek to finance himself adequately by studying and defining the financing profile to adopt, the solution that best suits his case, the amount that will be necessary, the costs of financing and the time and form of debt repayment.

Sources of Financing are divided into 3 types:

• Capital (Equity, Business Angels, Venture Capital Funds, Crowdfunding)
• Incentives (European Union grants, funds and programmes)
• Debt (Bank, …)

The solution for each case can come from only one source or be a combination of the various sources.

STEP 8 – COMMUNICATE EFFECTIVELY

Communication is one of the most important issues to take care of when starting a new business.

It is evident that no one buys what they don’t know and what they don’t disclose doesn’t exist. Even in cases like street shops, the time when it was possible to open a commercial space and stand behind the counter waiting for customers to come in and buy has passed.

Nowadays,  competition is not only fierce but also global, all issues related to communication and promotion are fundamental, so having a communication strategy and resources to put it into practice are issues that any entrepreneur should have as a priority.

Of course, doing very comprehensive advertising campaigns and using means of high market penetration is something that costs a lot of money and is only within reach of large companies. However, there is a wide range of tools and means of communication, some of them low-cost, that can and should be put into practice, not only at the opening of the activity but during its development. Communication is not something that can be exhausted in the opening month, so there must always be a set of defined actions and a budget allocated to go advertising.

Many new entrepreneurs have the illusion that it is enough to have an online page or a social network or that it is enough to open the door and wait for the business to flow. This illusion will hardly be confirmed by what communicating effectively is one of the key activities that an entrepreneur cannot neglect.

STEP 9 – DEFINE OBJECTIVES AND MAKE MANAGEMENT CONTROL

A new entrepreneur must know by heart the goals he or she must achieve to achieve the sustainability of his or her business and must control the activity regularly in order to know whether or not he or she is meeting the defined goals.

To perform management, control the entrepreneur must define what Anglo-Saxons call the Key Performance Indicators (KPI’s) or the most important performance indicators that should be controlled. We are talking about sales, gross margin, costs and others which, case by case, each entrepreneur must define, for example, the number of commercial visits to be made, the percentage of approved budgets, the number of visitors to the online store, etc.

KPI’s are quantifiable measures to understand whether the objectives are being met. Their definition and control are very important because it is through them that one understands the need to take new attitudes to achieve the expected results.

Systematic management control allows you to measure and act on your business, avoiding deviations and allowing preventive measures to be taken before major ills happen.

STEP 10 – REGULARLY RETHINK AND READJUST THE STRATEGY

Steps 1 to 8 of this one bring advice especially for the preparation phase and the beginning of the implementation of the projects. However, the great adventure begins with the beginning of activity and one thing is certain: no matter how good the preparation has been (and the same is fundamental) there will always be something that does not go according to plan. Therefore it is so important to have the objectives clearly defined and to carry out the management control referred to in the previous paragraph. And when the business is not going as planned (or because it is below expectations, or because it is growing too fast, or because there have been changes in the market, or for some other reason and they may be numerous) it is necessary to rethink and readjust the strategy by defining new actions or they will have new objectives that must be controlled again. This is a fundamental ongoing cycle because the ability to decide and change strategies on time is essential to the success of a business project.

Source: http://sitiodoempreendedor.nersant.pt/