My father used to run a farm, a challenging industry in itself as the capital intensity kept rising, making it difficult for small farm owners to sustain their businesses. Therefore, he started a small construction company where my three brothers and I worked. During my college years, I did all sorts of jobs, from washing cars and operating excavators to bookkeeping. After a long career in various roles, I want to share some advice with aspiring entrepreneurs.
Let’s start with common misconceptions about entrepreneurship.
1. Being your own boss. While starting a business allows you to control your life and never be accountable to anyone, as successful entrepreneur Neil Patel said, “No one is their own boss; everyone has their superior.”
2. Doing every job in the early stages of entrepreneurship. Focusing too much on mundane tasks can waste time, preventing you from investing in customer development or product marketing. It’s wise to focus on meeting customer needs and outsourcing time-consuming daily tasks as much as possible.
3. Entrepreneurship is the best path to riches. However, due to long working hours and the possibility of not making much money in the early stages, if your goal is wealth, it’s better to find a high-paying job.
4. You need to take on significant risks. On the contrary, the risks you take should be as minimal as possible, and avoiding risks is crucial because taking on too much risk can lead to the premature closure of a new business.
5. Promoting information on social media as an effective marketing strategy. Creating value for the target audience is essential to gaining attention; if you only post an ad with dubious product claims, you will be ignored.
Here are some recommendations:
1. Define your business concept
– Create a shortlist of potential products or services.
– Clearly define and research target customers.
– Evaluate market potential for products or services.
– Understand competitors to ensure you have a competitive advantage.
– Write a business plan, including financial forecasts (this is usually required by financial support).
– Draft an organizational chart to identify the necessary manpower.
– Develop a simple marketing and promotion plan.
– Seek legal advice, as there are many legal risks today.
2. Research competitors and the market.
– What are their strengths and weaknesses?
– Can you outperform them in terms of cost, features, quality, or satisfaction?
– What reactions do you anticipate from them when you start operating? (e.g., price reductions?)
3. Choose your business structure.
Sole proprietorship? Corporation? Partnership or LLC?
4. Register your business and obtain licenses.
– Establish your business entity.
– Apply for an employer identification number.
– Determine the required permits and apply for business licenses.
– Purchase business insurance.
5. Sort out your finances.
Provide funds for your business through local bank loans, fundraising, relatives’ investments, credit cards, savings, attracting investment partners, etc.
The main risk lies in finances, which can determine whether your business thrives or goes bankrupt. If you fail to accurately determine the capital needed to operate the cash flow, pay bills and salaries, pay suppliers and other expenses, your business will fail. Bankruptcy equals the “end” of your business and dreams, so carefully plan your business, especially the cash inflow and outflow parts, and where you can raise additional funds when needed.
You may study competitive risks from the start, but competitors may adjust their strategies based on their perception of you as a potential competitor threat. Competitive risk refers to the possibility of competitors’ actions negatively impacting your business. In a healthy competitive market, competitive risk drives improvements such as cost reduction or quality enhancement. That’s why you must clearly know your competitive advantages compared to competitors in the early stages of a new venture.
Other risks, including environmental, political-economic, and reputational risks, must be considered and planned to avoid problems. However, the biggest risk overall is that your new product or service doesn’t genuinely solve any problems for your target customers. There must be demand; if you excel in invention and creativity, you may make customers want your products and services even if they initially don’t know they want them. This is Steve Jobs’ talent and the products he created at Apple. These insights don’t come from market research but from Jobs’ innovation.
Ultimately, a well-structured and successful business brings clear and substantial returns. Running your own business provides satisfaction and accomplishment, sometimes more valuable than the money earned. You have autonomy to adjust various factors and ensure the system runs smoothly. You control the direction, mode of development, and goals for development three to five years ahead.
You also provide employment opportunities, help people and their families, and change lives through employment, products, and services, bringing significant impact to the community—this is also a form of reward! Finally, but certainly not the least important, the financial returns from operating a successful business. Recognition and legacy can allow you to pass on the business to your children, relatives, or friends, continuing the legacy while enjoying the fruits of your labor in retirement.