The Entrepreneur's Route

Scenario

· You have an idea: ✓
· You or your partner possesses a unique skill set : ✓
· You have relevant industry experience: ✓
· You have relevant industry contacts: ✓
· You have capital: ✓

Strategy

Which approach did you use to work out the business idea? Is it causation or effectuation? In causation, you start by identifying a problem or market gap then see what resources will be needed to address that market gap, while in effectuation, you look at your skills, experience, contacts, and capital, and then see what market need can be addressed with what you already have. Former is recommended as entrepreneurs usually use it in contrast to the causal approach.

In effectuation, you ask yourself what type of business my means (skills, contacts, experience) allows me to start. In the light of the answer you set a goal, and then consult your contacts who can help you in setting a business, take their feedback, and evolve your proposition. The customers are also from within your contacts, so are the suppliers, vendors, or any third-party contractors.

So your focus is to find a synergy between all stakeholders, satisfy a particular customer need which you can satisfy with the help of the suppliers, vendors, or third-party contractors in your network. It’s an iterative process as in the process of meeting your customer demands you will discover new opportunities, and will eventually find a way.

It’s like constructing a big jigsaw puzzle when you don’t know how the final picture will look, also when each puzzle piece keeps changing itself as well …

Having sufficient capital can be a barrier, and strength as well. Barrier because it often restricts you to think more creatively, and not force you to leverage the resources existing in your network. One must always remember that one’s credibility with stakeholders is the greatest asset that needs to be strengthened with time …

Know your affordable loss, and only invest that which you can afford to lose (if you lose the amount you will comfortably sleep at night). Contrary to general perception, entrepreneurs globally are not gamblers, they very carefully calculate the risks, and try to minimize them as much as possible.

Now see where it can be invested, ask yourself which of the resources I must possess without which it would be really difficult to satisfy my customers or expand my customer base. Office space is a good instrument to build credibility with the customers, so consider renting a decent place if necessary.

Do not jump toward investing in fixed assets unless extremely necessary, if manufacturing needs to be done prefer outsourcing; find creative ways to leverage the resources in one's networks to get the job done. Use your cash as little as possible, and save it for rainy days! Prepare for the time when you will have to pay salaries to your employees, and business would be going in a loss!

It takes a while (one or two years, sometimes three) to reach a point where you settle down with a portfolio of products with a continuous stream of revenues.

If it’s a service, then identify potential customers to deliver the service. If you cannot find partners in your immediate network, you might have to partner with someone who has the necessary connections (click here to see how to expand your network).

Further, if your service requires help from third-party contractors, then better search for them as well. A prior connection with all stakeholders is a must. Focus on ways to build credibility (see page 86) with the potential stakeholders before you begin to work with them.

If your proposition needs refinement, then you must engage with some potential customer to give you feedback on your offering (click here to see how to validate your business idea)

Once you are connected with all the stakeholders and can deliver a product or service to a target audience in your network (click here to know how to identify a target audience), focus on one customer at a time! Remember your goal is to gain experience in the market, customer behavior, and behavior of other stakeholders. 

Let growth happen slowly, and gradually, let happy customers bring more customers by generating positive word of mouth which is considered to be the best marketing strategy by business experts. Now gradually build your customer base while reinvesting profits. Hire people to help you only when you think you can't meet customer demand on your own! (click here for hiring strategies)