Do you Need Formal Business Training To Be an Entrepreneur?
Physician-turned-entrepreneur Andrea Paul shares her insights on what entrepreneurs without MBAs need to know.
As I wrote about in my article about changing career paths, I started my first company with no formal business experience or education. So, as you might suspect, my answer to the question of whether entrepreneurship requires an MBA is no. Many well-known and successful business owners had no formal business education, and in fact some never finished high school or college (Walt Disney and Richard Branson, to name a couple)! There is a lot to learn, but it can be learned as you grow and there is a lot to be said for using common sense and making thoughtful decisions.
So what are some things you should take some time to teach yourself? Here are 5 things I think will help you in your pursuit of successful entrepreneurship without any business background:
Do research on the target market for your business. You need to know these numbers cold. What is the market size? What is the gap in the market you will be filling? These are questions that every investor will ask you. If the market is too small, consider how you can expand your idea to cover more ground. Also, understand Top-Down and Bottom-Up market sizing and when to use which. Top-Down is your total addressable market (TAM): this is the largest possible market size your business realistically can address. A Bottom-Up market analysis would take the unit economics of your product (price per item or sale) and multiply that out to the number of people or sales that would make up the target market for that product. You should tabulate both and find they are at least in the same general range, then use the one that makes more sense, or both, but definitely know the answer to both!
2) Financial basics:
Know your numbers. If you have revenue, you should know that number (top-line revenue) as well as your costs and net revenue and EBITDA (Earnings before interest, tax, depreciation and amortization). Know your cost of customer acquisition as well as the long term value of that customer. You should also know all of the other expenses related to marketing, manufacturing, technology costs, and anything else needed to get your idea to market (FDA approval, patents, etc). Make sure that your numbers match up to your KPIs. Lots of entrepreneurs estimate a certain number of users, but their financials don’t match. Also, make sure you know the unit economics of your product offerings.
Fortunately, search engine and social media marketing is fairly intuitive as long as you know who to target and what keywords to focus on. You don’t want to be too broad and waste valuable marketing dollars, but you also don’t want to be too narrow. Consider all marketing avenues that might be most effective for your target audience. Maybe direct mail or telephone or local advertisements make more sense than online techniques, depending on what you are selling. Consider working with an ad agency and SEO firm to help you, if this is not your area of expertise.
If you are raising money from investors, you need to have a polished deck and investor pitch ready. It is absolutely worth spending money on a professional design for your website and pitch deck! First impressions are very important. Practice your pitch a ton, and consider having a consultant help you fine-tune it. You’re asking for hundreds of thousands, or even millions of dollars. Every detail matters.
5) Customer and Competition:
Know your customer. There is probably nothing more important than that, because if you don’t know exactly who your customer is you won’t be likely to succeed. Start interacting with customers ASAP, even before you have a finished product. You don’t want to end up investing a ton into a product that misses the mark when it comes to what the customer actually wants/needs. Knowing the competitive landscape is also critically important. Who else is in the space, and how much overlap is there? What is your competitive advantage going to be?
These 5 are a great starting points, and you’ll be able to identify other gaps in your knowledge you need to fill in as you go. Most of all, don’t let your lack of formal business education intimidate you or make you feel “less than.” If you know your market, your customer, and have a solid plan, you are well on your way to success!
Andrea Paul is a physician-turned-entrepreneur who co-founded BoardVitals, a medical education technology company that was recently acquired. She is also a mentor and advisor to several health, medical, and wellness technology companies and actively involved in many non-profit/charity endeavors. Andrea remains at the helm of BoardVitals as their Chief Medical Officer. Follow her on Linkedin or her Facebook Page.