Being an entrepreneur is more than being passionate about something or having a great idea. It requires an understanding of various aspects of business to have a long-lasting enterprise. According to an article by Harvard Law School Forum on Corporate Governance, 75% of venture capital backed startups fail. As an entrepreneur with over a decade of experience, and having gone through the COVID-19 pandemic, here are four crucial areas every entrepreneur needs to master to succeed:
1. Accounting and Finance
New entrepreneurs, and executives alike have to understand accounting and finance. Accounting and finance are the backbone of any business. I am glad to have studied accounting and finance. If an entrepreneur doesn’t understand these principles, it's impossible to know where your business stands financially, tax consequences, and where you can cut costs and the activities that truly lead to an increase in revenues. This knowledge helps you make informed decisions, manage cash flow, create budgets, and create more accurate forecasts. A problem that most entrepreneurs have is that they just view things as tax write offs or they do not understand the tax consequences behind their decisions until they meet with their tax professional. Having this background allows you to communicate with banks, tax professionals, investors and stakeholders more effectively and it builds more confidence in your ability to run the enterprise.
2. Marketing
Understanding marketing is key, it is your bridge to your capturing the attention of your target audience and connecting with them. Understanding their needs and preferences and knowing how to reach them. This all entails research and forming a strategy that will send a message to them to buy your product and or services. This also involves building brand awareness to drive sales. Afterall why would your target market buy your product when there is a shop down the block offering the same product and or services.
Today's digital age offers a new opportunity for entrepreneurs. Mastering online marketing, social media, and data analytics can build your brand more effectively than traditional marketing strategies in the past and build your credibility much faster at a much lower cost. With everyone on their screens, reaching your target audience has never been as accessible. Therefore, it is crucial for an entrepreneur in this era to learn about social media and online marketing.
3. Leadership
Leadership is another crucial principle to effectively running an organization. The ability to guide a team towards your vision is a skill that will set your organization up for success. According to a Gallup article, 2 in 10 employees feel connected to their company’s culture. As an entrepreneur, you need to be able to motivate your team, foster a positive work environment, and manage conflicts effectively. Otherwise, the connection to company culture and overall productivity will suffer. Another problem with leadership is how productivity is managed. Many leaders resort to failed problem solving tactics such as micromanagement and ultimatums. Good leadership is about using collaborative strategies.
Leaders often find themselves acting as managers. The key distinction between being a leader and being a manager is that a leader’s focus is on what the team needs to reach a goal and a manager’s focus is on the course of action taken by the team to reach a result. It sounds one in the same, but in practice both roles are perceived by the team differently. A leader is ultimately focused on the needs of the team while directing the managers towards the ultimate goal. If you have too many leaders acting as managers, you will have a team that resents their work, feels that their needs to do their job effectively aren’t being considered, and overall, they feel disconnected from the company culture. That is why an entrepreneur needs to understand these dynamics.
4. Vision
Having a vision for the direction of an organization is what sets successful entrepreneurs apart. The desire to start a business is the first step, but then you need a clear idea of what you want to achieve and how you plan to get there. Otherwise, as the saying goes, a vision without a plan is only a dream. Your vision will guide your decisions, inspire your team, and attract customers and investors. In today's digital age where starting a business is easier than ever as resources to start a business has never been as accessible, having a vision is essential for long-term success. Some are natural visionaries, and some can find the vision, getting to that aha moment takes some soul searching with those that you trust to keep you working towards your purpose. This discussion is just as crucial as the discussion you have with your tax professional or attorney. Your vision will make your operation progress when coupled with leadership skills.
In conclusion, being an entrepreneur requires a diverse skill set and a deep understanding of various business aspects. While this is not an exhaustive list, these principles that I listed are fundamental to businesses in any industry and of all sizes. If you are not proficient in any or all of these aspects, that should not stop you from pursuing your dream of becoming an entrepreneur. There are classes, coaches, and plenty of free information online that can guide you to the right direction. In addition, there is a free resource by the US SBA called Score, which connects you to an experienced business coach. Now more than ever, it is very accessible to become an entrepreneur.
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