Money will come when you are doing the right thing.
—Mike Phillips
Before you take on any project—whether it’s renovating your home, planning a family vacation, or making a big purchase—a key first step is exploration. What’s out there? What are your options? What are the latest and greatest ideas? By exploring the choices, you open your mind and heart to exciting possibilities you may have never considered.
This is especially true when you’re starting a business. There is no single path, and you can change your life right now. You have complete freedom to choose what you want to do, how hard you want to work, and how much money you want to make, which can be liberating and daunting at the very same time.
If you have already determined exactly what that path is and the type of business you wish to launch, great! Use the information in this chapter to gain insights into how you might adapt your approach to your business, customers, and employees.
However, if you like the idea of choosing your future but have not come up with a path that fits, then you are at the right place. The focus of this chapter is to help those whose direction is not yet clear. If that’s your situation, you will want to engage deeply with the materials in this chapter and with the associated resources and exercises, which will help get your creative thoughts and ideas percolating and get you on the path to reaching your ultimate goal.
This section is intended to get your mental wheels turning and your inspiration firing by offering you insights on identifying the business that works best for you and how to approach it in a way that maximizes the likelihood of success.
THE THREE ENTREPRENEURIAL APPROACHES
You’ve probably never thought about it before—I know I hadn’t when I first started my business—but there are three distinct approaches to choosing a new business. While there are variations that may incorporate more than one of these in combination, here are the three general routes most entrepreneurs take when starting up a business:
—Mike Phillips
Before you take on any project—whether it’s renovating your home, planning a family vacation, or making a big purchase—a key first step is exploration. What’s out there? What are your options? What are the latest and greatest ideas? By exploring the choices, you open your mind and heart to exciting possibilities you may have never considered.
This is especially true when you’re starting a business. There is no single path, and you can change your life right now. You have complete freedom to choose what you want to do, how hard you want to work, and how much money you want to make, which can be liberating and daunting at the very same time.
If you have already determined exactly what that path is and the type of business you wish to launch, great! Use the information in this chapter to gain insights into how you might adapt your approach to your business, customers, and employees.
However, if you like the idea of choosing your future but have not come up with a path that fits, then you are at the right place. The focus of this chapter is to help those whose direction is not yet clear. If that’s your situation, you will want to engage deeply with the materials in this chapter and with the associated resources and exercises, which will help get your creative thoughts and ideas percolating and get you on the path to reaching your ultimate goal.
This section is intended to get your mental wheels turning and your inspiration firing by offering you insights on identifying the business that works best for you and how to approach it in a way that maximizes the likelihood of success.
THE THREE ENTREPRENEURIAL APPROACHES
You’ve probably never thought about it before—I know I hadn’t when I first started my business—but there are three distinct approaches to choosing a new business. While there are variations that may incorporate more than one of these in combination, here are the three general routes most entrepreneurs take when starting up a business:
- Do what you know.
- Do what others do.
- Solve a problem.
Let’s start with a detailed understanding of each approach, explore some pros and cons of each, and then look at examples of how each type of approach can lead to fulfilling, successful businesses.
THE FIRST APPROACH TO ENTREPRENEURSHIP:
DO WHAT YOU KNOW
Maybe you’ve worked in a particular industry for another company, and you have acquired skills and knowledge over time in that industry. Perhaps you grew up learning a specific skill from your family. Or maybe you’ve devoted time and energy to a hobby that could become a profitable business. If so, starting your own company in the same field may make sense. For instance, a bartender or waitress may decide to open a restaurant; a woodworking hobbyist may become a full-time carpenter; a staff graphic designer may start his own Web design company; or a corporate accountant may open her own firm. All these are examples of doing what you know in order to make money your way. Of course, there are pros and cons to every approach.
DO WHAT YOU KNOW: THE PROS
Your Risk Is Lower
The advantage of starting a business based on the experience you’ve attained, whether working for someone else or on the side as a hobby, is that you already possess the knowledge you need to move forward. Unlike starting a business in a brand-new industry (a teacher who wants to open a gift shop or a lawyer who decides to open a bed and breakfast), you are essentially selling the skills, expertise, and knowledge you’ve already developed. Of the three approaches discussed in this chapter, this is likely the fastest way to start a business. And since you already possess the knowledge, the venture is less risky; you are not starting from square one, and you know the nuances of both your skill set and the industry in general.
The risks in this approach, although somewhat minimized, lay in the specific areas of the business you have not had to deal with when working for someone else. That could include any area outside your specific area of expertise. If you were in sales, bookkeeping may be new. If you were in production, sales and finance may be areas you will need to learn. The best way to mitigate these risks is to identify and acknowledge them immediately and compensate for them in your business planning process. You may hire qualified people, get training in these areas, or adapt your model to better fit your strengths.
You Can Leverage Your Existing Clientele
We all know the power of the Rolodex (or your BlackBerry’s contact list)! Having an existing network of contacts and clients—people with whom you’ve already cultivated strong relationships—can give you the leading edge you need to launch powerfully into business. If you have created strong bonds and worked to build trust with your clients, it is likely that they will follow you when you create your own venture.
Your Learning Curve Is Short
There are still things you will need to learn quickly if you take this approach to being an entrepreneur. You may need to learn to set up a business structure and build or sell your products or services, but you will be doing so with an enormous advantage: your knowledge of the industry. That knowledge affords you a significant time and learning advantage. With other approaches, entrepreneurs start out with a lot more to learn and a much greater degree of uncertainty.
You Understand the Challenges of the Industry
If you’re a copywriter for an advertising agency who wants to start freelancing or a sales representative for a medical company who plans to start up a distributorship, you already understand the industry and the challenges that are associated with it. This gives you an enormous advantage over the entrepreneur who starts without any industry knowledge and who might require years to gain it, often by “learning the hard way,” figuring things out, and making mistakes. How many failed restaurants were started by individuals who thought that since they ate out often, they knew enough to open and run a restaurant?
