Being a Successful Entrepreneur: What You Won’t Learn From Books
This article originally appeared on DigiServed blog.
Becoming an entrepreneur is maybe the most difficult skill in business, demanding constant learning and adaptation. A successful entrepreneur should always be questioning and examining ways to exploit demand and create products and services which fulfil a specific need. Knowing what to do is only the first step. It’s actually understanding that is the real key to becoming a successful entrepreneur — and that’s not something that can usually be taught in books.
Why is MVP and early user feedback so important?
As an entrepreneur, you have very limited time and money to prove that your idea is a good product market fit. In most cases, you will only have a few months to launch your product and be able to prove that users love it, in order to raise funding. On the other hand, when building a new product, almost all your decisions will be based on assumptions. You have no data, no feedback and no input, which significantly increases the risk of building the wrong product. And the reality is that often, after putting your product in front of users, most of your assumptions prove to have been wrong, and you start pivoting, to address this issue. Pivots are safer bets as they are based on user feedback.
MVP is where the line is drawn between assumptions and user feedback-based decisions. Launching too early and missing important features might distort user feedback and lead to wrong pivots. So defining the MVP is an art which identifies the amount of investment needed in order to launch a product. Too much means high risk, too low might mean unlimited risk, as launching something that makes no sense makes for guaranteed failure.
Why you need a user acquisition model from the start
You might have a brilliant idea that simply doesn’t offer favourable unit economics to scale and there are entrepreneurs who build something that is not deemed sexy but grows because, for instance, their user lifetime value (LTV) is bigger than their cost of acquisition (CPA), and they can simply pump money into Adwords to scale the business.
It’s important to think about acquisition models from the start. The model you use might well affect your product design and the features you build. You have to be able to design a product ready to scale. If, for instance, your plan is to grow your product using social networks, you will need to design something that has fun and engaging copywriting, and is sticky and playful. Think then, about how to make it super easy and transparent to share information on social networks.
Consider the acquisition factor in your business plan and spend some time on your strategy. At the end of the day, you should have a rough action plan which details how to acquire customers after you launch your product.
Manage your own psychology and expectations
The harsh reality is that many startups either fail or are unable to grow. One of the main causes is the entrepreneur’s unrealistic expectations.
When you launch your business, ensure not only that you are clear on the reasons you’re starting on this journey, but also that your expectations are realistic. Plan contingencies and be prepared for a long and arduous journey from the start. Then, should you launch your product and receive only a handful of orders for the first two to three months, you will then be in a position to be able to go through numerous pivots until you find a viable business model.
Hire the right people
The same way you should not found a startup simply in order to become a billionaire, don’t hire people who are evidently driven by money.
Building a startup can take an exceptionally long period of time. Inevitably, a money-driven employee is certainly to grow quickly disappointed and disillusioned during the early stages, when the startup is likely to struggle.
Hire people who share your vision and drive, people who want to build, innovate and above all, to learn and experience. These people, even when the startup has its low moments, will still find meaning and value in what they are doing and in turn, demonstrate commitment to the business.
Why marginally better is not enough
When you build a new product, it’s not enough to be marginally better than anything else out there. It should be distinctively better. Just a small innovation or improvement against an established business is unlikely to make a splash.
Put yourself in the shoes of your future user, who will usually be already attached to a particular product or brand. They have spent time learning how to use it and may be tied to it somehow, whether through technology or financially. Bear in mind that by nature, humans are generally resistant to change. So if someone offers a user a product that is proven to be 10 percent better, this will usually not be enough to switch the user to this new product. The process of switching has a cost itself.
Moreover, an established business has its own community, marketing and brand. Users may well know and trust their existing brand, while your product will be relatively unknown. So why should a user take the risk to try something new just for 5–10% improvement?