So You Want to be an Entrepreneur?
My wife Elizabeth Larson and I became entrepreneurs in the 1990s, not because we were compelled or forced to, but as a natural extension of our previous careers.
We started our first business, Watermark Learning, in our 40s, working as what Michael Masterson calls “reluctant entrepreneurs” in his book The Reluctant Entrepreneur: Turning Dreams Into Profits. Sometimes they’re more generously referred to as “expertise entrepreneurs.” We leveraged our previous experience to offer skills-based training for technical professionals, later including business analysts and project managers. The skills from our earlier roles proved directly useful in running a small company.
There are many ways to launch and grow a small business. After 27 years of running our company, we’ve learned key lessons that have shaped our success. This article, excerpted from our recently published book, 101 Small Business Keys to Success, describes several key aspects of entrepreneurship and shares three principles for success.
Life Stages of Entrepreneurs
Many people mistakenly believe that entrepreneurship is only for the young, partly because venture capitalists often fund younger founders. However, this is not true. The table below shows three different life stages when individuals can become entrepreneurs.
Where do I fit in? If you are considering becoming an entrepreneur, the following may help guide your thinking.
1. Do I have enough experience to start my own business? There is no formula for determining sufficient expertise. You should reflect on your performance and use feedback from managers, internal customers, and any subordinates to answer this question. You might ask, “Would potential customers pay me for my expertise?”
2. Do I have one or more product ideas that are unique and that I can produce? You potentially have the makings of a lifelong entrepreneur. These entrepreneurs do not require experience like an expertise entrepreneur does, but a sound product with sufficient applicability can be a successful basis.
3. What is my risk tolerance? Having savings during the initial period helps mitigate the risk of starting your own company. Alternatively, having a spouse or partner with a stable job can provide income and health-care benefits. Greater experience and professional contacts can improve your chances of finding and serving customers and reducing the risk. If you have a higher tolerance for risk, any of the entrepreneur types can work for you.
4. Has my experience led to frustration with the status quo? Have I identified a problem that individuals or organizations have that I can alleviate? These questions are related and crucial to successfully launching your venture. The section on Inspiration provides more ideas on this topic.
5. Have I always wanted to own my own business, but never had the chance to? If you have capital, consider becoming an elderpreneur by buying a small business, obtaining a franchise, or investing as a partner in an existing venture. It’s also never too late to build a career based on your expertise.
High-Level Principles for Success
Three major factors lay the foundation for entrepreneurial success: Inspiration, Passion, and Commitment. Our book covers 101 specific keys, but these three principles provide high-level guidance for applying the individual keys.
Inspiration is the trigger for any venture and comes from the need to resolve some type of problem. Passion means loving the work we do in solving customer problems. Commitment sustains us through the hard work of making the venture a reality and continuing the entrepreneurial vision.
Inspiration
The first guiding key is inspiration, which involves generating or discovering your business idea, often through innovative thinking. Inspiration frequently comes from dissatisfaction with the status quo and a desire to solve problems.
A key ingredient for the success of any small business is not the cool product you invent or a splashy launch to get attention. Identifying a problem that affects enough potential customers and providing an affordable solution can establish the foundation for an entrepreneurial business.
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When I started Watermark Learning, the problem we aimed to solve was the limited quality and affordability of technical training available to companies. The market for the service I was providing at that time was dominated by a few large providers like IBM and Deltak. My previous employer, where I was a training director for six years, saw training mainly as a tool to attract new clients rather than addressing this issue directly.
My “inspiration” was a conviction that training could solve customer problems and be a profit center. I provided much of the training myself and could see the value that companies received with the new skills their employees gained. The key was to position and market training as a distinct offering, but I wasn’t able to sell the idea to the owners.
Frustration with the status quo often inspires and motivates entrepreneurs to leave secure jobs. For me, the training offering was undervalued, and my compensation didn’t match my effort — these issues motivated me to start my own business.
Passion
The second key to success as entrepreneurs is passion for creating something new, something that solves a real need in the marketplace. This passion is needed to take the risk in the first place and face the possibility of failure, as every entrepreneur does. We need to love our venture enough to keep pursuing it and make it succeed.
Entrepreneurial passion does not mean blind devotion or stubborn pursuit of a goal, since we often need to alter the business. Such a change in direction is often called a “pivot.” A venture is like a relationship that adapts and develops over time. To illustrate, Watermark pivoted from a technical training provider after 8–10 years to focus on training project managers and business analysts.
Entrepreneurial passion involves “loving serving customers” rather than stubbornly sticking to what you “love to do” or to the original mission, since businesses often need to pivot. For example, Watermark shifted from technical training to training project managers and business analysts after several years.
Looking back, Elizabeth and I both had a strong passion for our business and the industry we were in. She long ago had a goal of being a teacher, and I developed a love of training not only during my 6+ years as a Training Director, but also as a trainer in my first job out of college. Our passion for training drove us to offer a unique blend of training that emphasized practical skills while supporting standards set by certifying agencies.
Commitment
The final ingredient for entrepreneurial success is to stay committed to any venture we start. Entrepreneurial commitment involves taking a product or service we feel passionate about and turning it into reality — and sticking to achieving our goal. Commitment is made up of what you might call the “4 C’s”:
Competence in the venture. We have to be good at what we do to succeed. This point is true for all entrepreneurs and especially for expertise entrepreneurs. Competence involves two aspects: expertise in delivering the product(s) offered and acquiring business management skills, which may be unfamiliar to some entrepreneurs.
Confidence in ourselves and our chances for success. Confidence is necessary to start a venture, but even more necessary to keep pursuing our vision. Success breeds more confidence, and a lack of it may be why many startups fail.
Cognizance of both our motivations and our limitations. Understanding our motivations helps form our goals and objectives. If our motivation for starting a business is to grow fast and sell for maximum gains, our approach is different from that of an entrepreneur starting an income-replacement business. Recognizing our limitations can, for instance, help mitigate the risk of incurring excessive debt or expanding into new business areas without adequate expertise.
Courage to take risks is inherent in all entrepreneurial ventures. It certainly takes courage to launch a new business. Recognizing potential risks and having contingency plans for possible setbacks provided bolstered our courage, not just at the beginning but throughout the duration of the company.
Next Steps
So, assuming you are interested (and I assume you are since you read this far), what should you do next?
1. Learn about entrepreneurism. When I started our company, I studied extensively. Besides reading books like ours about launching and running a small business, I attended a 1-day seminar at a local university. Today, there are entire college programs on entrepreneurship. The course I attended provided information about the nature of our eventual company, which became an income-replacement business.
2. Articulate the problem you are trying to solve and your solution. Every successful venture solves problems for its customers. In our case, companies were wasting time and money by not delivering effective projects and products. Our training taught them methods and techniques to understand their own customers’ problems and create solutions that directly addressed those problems.
3. Start lining up financing. Our book has several ideas, ranging from personal savings to SBA loans to outside investors. Regardless of the source of your financing, setting aside a savings cushion before launching is essential. Businesses that focus on products rather than services generally require greater financing. Give some thought to how you will handle necessities like health insurance and make arrangements.
If you have ever toyed with the idea of starting your own business, I suggest getting a copy of our book The 101 Keys to Success. It’s filled with many more practical ideas, tips, and resource links than can be covered here.
