How to Become an Entrepreneur (Leadership)

Hi, I'm Meredith from HubSpot and today I'm going to talk about how to become an entrepreneur. If you enjoy this video, don't forget to like it and subscribe to our channel. Post any questions or suggestions you have in the comments below. Let's get started Being your own boss, Calling all the shots, Hustling to hit your goals for many people, entrepreneurship is the ultimate career goal. But as awesome as running your own business sounds, it's also incredibly difficult. How difficult? Well, 75% of startups fail. But here's the good news. Starting a company can be one of the most rewarding, exhilarating and interesting opportunities you'll ever get. If you're aware of the risks and you're still dead set on being an entrepreneur, then we have some strategies and advice for you. 1. Identify a profitable startup idea One of the best ways to do this is to ask your friends what annoys them. Founders get their inspiration from their frustrations all the time. For instance, Andrew Cortina and Ikram Magdan Ismail founded Venmo, which was later acquired by PayPal the after they had trouble paying each other back by check. With this in mind, ask your friends to keep track of the day to day things that annoy them and look for problems you might be able to solve. Part of that involves planning for the future. As the world changes, people need different products. The rise of Uber, Lyft and other ride sharing apps created a demand for a third party app that will tell you the cheapest fares at the exact moment you want to get ahead of the curve. Read trend predictions for your industry or market, or check out universal trend forecasting publications. Checking out what other people have come up with can be a great way to kick your own thought process into gear. It also presents opportunities to make something better or cheaper. You don't always need to develop something brand new. If you can offer an existing product at a lower price point, better quality, or ideally both, you'll have plenty of customers. Better yet, there's clearly an existing demand and many people start successful businesses after noticing a gap in the market. But be sure to focus on a category that's growing. Pick one that fascinates you, but isn't overly competitive. Once you do, consider questions like what can be done to improve the products here? Can I add a new feature? What about a different material? Can I personalize it somehow? 2. Validate your startup idea Great, you've got an idea, but don't quit your day job just yet. Before you go all in, you need to know other people will actually want your product. And no, your friends and family don't count. Here's where the idea of a minimum viable product or MVP comes into play. An MVP is the simplest, most basic version of your tool or service possible. It's functional enough to satisfy early customers and get a sense of what you should improve. Doing interviews with potential customers is a great option here. Show them a working demo of your product. Ask what they like and what they don't, how much they'd pay for it and how often they'd use it. If you want to test the market's interest before building anything, build a landing page that describes your product or service. Ask people to submit their email addresses in exchange for early access, a free subscription, membership or product, a discount, product, updates, or some other compelling offer. Then promote the video on social media and paid search and see how many visitors convert to signups. Number three Find a Co Founder Conventional wisdom says you should look for a co founder when starting a new business. There are three main advantages to having a It's easier to get funding. Whether or not multiple founders actually contributes to a company's success, many venture capitalist investors believe it does. They're reluctant to back solo founders. As an example, single founder is the first thing on why Combinator co founder Paul Graham's list of causes of failure, he writes, have you ever noticed how few successful startups are founded by just one person? It seems unlikely this is a coincidence. A co founder understands exactly what you're going through and makes you feel less alone. They can provide different skills, knowledge and connections. Maybe you're great at selling, while your co founder is more technical. You've got lots of connections and they've actually started a business before. But there are also drawbacks to having a co founder. There's conflict. You and your partner will inevitably disagree. A little healthy disagreement is productive, but if you don't find a solution relatively quickly, you'll waste valuable time and energy and you'll have to split the equity. And where do you find a co founder in the first place? Well, when you do, look for someone with the same business ethics, work habits and complementary personality. In addition, they need to believe in your vision, contribute the right skills, and have a desire to be your co founder in the first place. Get funding to start a business so how can you get your business funded? There are a few ways. Many entrepreneurs rely on their friends and family for an initial investment, typically called a seed round. You can exchange funding for a stake in your startup. That is, your cousin receives 4% of the company. After giving you $12,000, request personal loans with or without interest or even donations. You can also apply for a small business grant. Federal, state and local governments have programs to help small businesses, including low interest loans, venture capital and grants. To find programs your company qualifies for, check out grants.gov There are also crowdfunding platforms. Kickstarter, Indiegogo, GoFundMe and Fundable let you get backing through an online campaign. Plus, crowdfunding doesn't just generate capital. It can also help you get early product feedback, brand awareness and sometimes if you have an interesting story or especially cool product press. Pitching to angel investors is another option. These investors look for early stage companies that can 10x or more their investment. They'll be extremely diligent in making sure you understand your target customers, the product space, how you'll make money and how you'll scale. Make sure you're prepared with a solid business plan and early signs of traction. Venture capital firms Another option Look for young private companies like angel investors. VC firms are looking for high risk, high return investments. The returns they expect depend on how mature your startup is. You could use a credit card for a short term cash option, but it's typically not a good idea to use your credit card to pay for business expenses. Unless of course you can pay the balance. But sometimes you have no choice. You need money, and fast. But sacrificing your credit score and racking up credit card debt will hurt your business in the long run, not to mention your personal financial health. You can't apply for a loan in your company's first year as lenders are unwilling to make such a high risk investment. But you can take advantage of the Small Business Administration's microloan program. Small businesses can receive up to $50,000. The average SBA loan is $13,000. Microlenders and nonprofit lenders are other options which often seek out minority and disadvantaged entrepreneurs. Finally, you have the option to bootstrap it, which allows you and your co founder, if you have one, to hold onto a much bigger percentage of the company. Some companies never raise funding at all. Their founders pay for initial costs by themselves and then when the company becomes profitable, its revenue covers all expenses. But keep in mind that you may grow less quickly without big infusions of cash. If you do decide to bootstrap, keep your budget as lean as possible to extend your company's lifetime. Now number five Incorporate your business. At a certain point you need to decide whether you want to incorporate your business as a sole proprietor. You and your company are considered to be the same entity. But once you incorporate, your business becomes separate from you. From a legal standpoint, your business can then buy and sell property, incur taxes, sue and be sued, set up contracts and commit crimes. There are advantages to incorporating. First and most important, a corporation protects you from businesses, debts and obligations. Creditors can typically only seek repayment from the corporation's assets and not your personal assets like your house, car, bank account, and so on. You're also not legally liable for the corporation's actions. In contrast, as a sole proprietor, anyone who sues your business is suing you. Having a corporation lets you transfer shares. You can sell some of your ownership in a company, transfer it or give it away. If you want to accept external investments or bring a partner on board you, you need the ability to divest. Corporation status also gives you more credibility, which helps you attract investment capital. Lastly, corporations can deduct normal business expenses before they allocate income. Of course, incorporating also has its disadvantages. It creates an additional tax burden since you'll have to periodically file with the state and pay yearly fees. The processes can be relatively time consuming and hiring a lawyer can cost anywhere from a few hundred to a few thousand dollars. But you don't have to incorporate. There are a variety of business structures to choose from, but if you have a co founder, need external funding and would like legal protection, it's a good option. Once you've decided to incorporate, you must choose between becoming a limited liability company, LLC or S corporation. The SBA has a handy guide on choosing the right entity structure. Looking for even more help strengthening your business acumen? Click the link in the description to learn more. Thanks for watching. If you enjoyed this video, be sure to like it and subscribe. Let me know how you're doing in the comments below.