Where Most Entrepreneurs Go Wrong With Money!

Where Most Entrepreneurs Go Wrong With Money!

One of the most asked questions by beginner entrepreneurs is, “What do you need to know before starting a business?” When it comes to entrepreneurship, people usually envision a high-growth, change-the-world kind of startup, like Facebook or Google, but entrepreneurs come in all different shapes and sizes.

There are three main things to keep in mind when you’re about to begin a new business:

  • What type of entrepreneur do you want to be?

The first step of being an entrepreneur is to establish what kind of entrepreneur you want to be: hobby-firm, traditional small business, or a high-growth, unicorn-type of business.
There’s no right or wrong path, and your choice will set the pace for all other decisions that you’ll make as you start down the road of entrepreneurship. It will affect the risks you take, the resources you need, your expectations for making money, and even the process you follow.
For example, selling cakes to your neighbors is quite different from starting a technology business. Figuring out what you want to do will set expectations and dictate the entire process moving forward.

  • How much interest and demand is there for your business?

The second thing to establish is whether there’s demand for the type of business you’re interested in starting. Find out if this is a product or service people want. If you’re a high-growth, high-potential entrepreneur, then you need to have something special that will differentiate you from your competitors. For instance if you want to start a cake business, you need to figure out whether, there’s a high demand for cake.
You need to determine whether there’s enough unmet demand or customer satisfaction to warrant starting that kind of business. And looking at whether your business is local, regional, or global will help you figure out the next steps in the process.

  • How much will it cost you?

Another key aspect the new entrepreneur needs to figure out is the cost involved. Even if you’re able to outsource and bootstrap and do all kinds of things to reduce costs, knowing the main ones will determine pricing and how many customers you may potentially have  regardless of the type of business.
It’s a fundamental concept that the price needs to be greater than cost. Many entrepreneurs miss that point. If your costs are so high that it means pricing it above what customers are willing to pay, then the business isn’t feasible.

Remember that starting a business requires plenty of patience and hard work, but you don’t need to start full time right away.
Consider becoming a hybrid entrepreneur by keeping your day job and working on your company on nights and weekends. This allows you to take your time on the business and learn more about the potential customers and the costs involved.

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