Editor’s note: This article was first published in August 2011, during Spain’s economic crisis; its references to banks not lending and to the many entrepreneur competitions held over the course of 2011 reflect that moment.
Drawing on the articles we’ve published over time, we’ve put them in order as a step-by-step guide that we hope will be useful when creating your business. As you know, we don’t sell magic formulas here, and we start from the premise that the situation isn’t easy. In fact, current statistics show that more than 50% of new businesses fail within their first three years, and among internet-based business ideas, 8 out of 10 fail.
We can take comfort in looking at the 50% of entrepreneurs who didn’t manage to succeed, or we can focus on analyzing what the other 50% did to succeed. Let’s get started.
Introduction
First of all, we need to understand why those new businesses fail. It comes down to a combination of causes, which we explained in our article Reasons why a new business fails. That article will help you stay alert so you don’t fall into the typical entrepreneur’s mistakes.
Although some people have criticized my comparison of Hispanic and American business owners, I still think American business culture is ahead of ours, for one simple reason: American universities train entrepreneurs, while ours train managers who will end up working for someone else’s company. These two articles won’t help you start a business, but they will give you a point of reference for the kind of business owner you’d like to be, without making some of the most notorious and visible mistakes of Hispanic business culture.
- Differences between Hispanic and American business owners
- Common mistakes of Hispanic business owners
We also published a video on the secret of China’s new rich, who have a plan and a business philosophy that allow them to achieve financial freedom in 10 years. They’re born entrepreneurs. You can watch the documentary here:
The success of these Chinese entrepreneurs lies in 10 commandments they follow to the letter: The 10 Chinese commandments for entrepreneurs.
With that short introduction out of the way, let’s go back to the beginning, where entrepreneurship starts.
1. Get rid of the fear of starting a business
An entrepreneur starts out with fear and doubts. Fear is good (it keeps you alert), and doubts are good too, as long as you find the answer that solves the equation. The first thing an entrepreneur needs is to clear up those doubts and make the fear go away. We explained this in our article How to lose your fear of starting a business. Our main point there is that there’s no such thing as fear of starting a business, only fear of failure and of losing money. Once you accept that and know it could happen to you, it’s reassuring to know that if it does, it isn’t the end of the world.
Right now there’s another kind of fear, perhaps for a reasonable motive: in times of crisis, we seem to run a greater risk when starting a business, although the crisis also offers clear advantages. As we often say, some people’s fears and drawbacks are other people’s advantages and opportunities: Advantages of starting a business in a time of crisis. As you can see, what look like drawbacks can sometimes turn out to be plenty of advantages.
Once we’re no longer afraid of starting a business and know which mistakes to avoid, the next thing we need is to know what kind of business we want to start. So now what we’re missing is…
2. Business ideas
As you know, in our business ideas articles we’ve suggested countless opportunities and ideas that could become very profitable businesses. It’s a matter of weighing up your options for starting one of them. We also published an article to help you spot business opportunities: How to find business ideas.
If those tips fall short, we’ll have to push our minds to come up with that idea. So in this article we set out 7 points that will help you spot business opportunities, since a profitable business is born from solving a potential customer’s problem or need: How to come up with business ideas.
3. I have the business idea, but… no money
Our fears are gone and we know what business we want to start, so now come the first obstacles: I have no money, and in a crisis the banks won’t lend to me. Well, first of all, you should know that a bank doesn’t lend money to everyone, but it does lend to some.
Once you have the business idea, you need to focus on finding the right financing, although depending on the type of business you want to start, there’s the option of starting it without money. How? This article doesn’t apply to some businesses, but for many others it will give you the keys to getting started with no initial investment at all: How can I start a business with no money?
For those torn between starting a new business and buying one that’s already up and running, we also explained the pros and cons in answer to the question Start a business or buy one?
Continuing the search for financing, we’ll now need the business plan, always assuming you’ve already worked out the strategy you’re going to follow. Remember that at school it didn’t matter how much you’d studied: if you messed up the exam, you failed. Seeking financing for your business is exactly the same. You may have everything very clear, but if you don’t manage to present your business idea properly through the business plan, the investor or bank may say “no”, and although that isn’t the end, you’ll have to spend more time finding another way.
If you’re not sure how to put together a good business plan, in this article we set out the most important points it should include, so you could say it serves as a universal business plan: Structure of a good business plan. Choose a suitable format and, if possible, prepare a companion presentation in PowerPoint, because ideas also come in through the eyes. “We’ll soon share some completely free PowerPoint templates for business that you can download.”
You should know that banks aren’t the only ones who can finance a business: there are organizations, competitions for entrepreneurs and private investors who could help you. You just need to keep an eye out for all kinds of competitions, since there have been quite a few over the course of 2011.
If your business idea is internet-based, in this article we covered several private initiatives that could help you get financing: Where to get financing for my online business.
One way or another, if you persist, financing won’t stop you from creating your business. Remember that in any of life’s mazes there’s always a way out; it’s a matter of tracing the right path to find it. Once you have the financing, the next step is obviously opening your business, and we also have the right articles to help you, step by step, on the road to success; we’ll gather them in another summary or guide.
“I know there are no universities that teach us how to be entrepreneurs, so I hope you can think of what we cover here as an easy-to-read university for entrepreneurs.”
Update
The second part of this article is now ready. In it we explain how to make our business more profitable and how to beat the competition: How to make our business more profitable
Here are several articles about successful entrepreneurs, from whom we have a lot to learn:
- Donald Trump: the mindset of an entrepreneur
- Steve Jobs (Apple): his beginnings as an entrepreneur
- Successful entrepreneurs: the man who had to start a business to save his children’s lives
Featured image: franchise opportunities, CC BY-SA 2.0, via Flickr.
