As the founder & CEO of an Arizona SEO company, I talk to a lot of people about entrepreneurship. During the discussions I frequently hear the misconception that starting a company requires significant capital.
If you are planning on starting the next SpaceX and launching Falcon 9 rockets to the International Space Station, then sure your business will need a major source of cash. But if you start with a web or service based company, you only need about fifty bucks for a solid start.
Chances are if you are just starting out as an entrepreneur you shouldn’t be building a capital-intensive business anyway; statistics indicate that you will probably fail on your first few companies. In fact, according to the Small Business Administration, more than 50% of small businesses fail in the first year alone. Entrepreneurship is tough.
The most important thing when starting as an entrepreneur is to just get out there – to get your feet wet, build experience, and fail as quickly as you can in the beginning. As a college student you have a massive advantage over older and more established people. You can afford to fail…over and again. You have very little to lose. You don’t have a house, you don’t have health insurance, and you don’t have a family to feed.
Ideas are useless
People who dream of starting a company often get stuck on ideas. They have the erroneous belief that what defines a company’s success is having a fresh business model that no one has tried before; a business model where they will have no competition.
If we examine social networking it’s clear that having a new idea is not necessary. Friendster was one of the earliest social networking sites on the Internet. After noticing it’s success MySpace quickly expanded into the marketplace but did a slightly better job of marketing their platform and retaining users. While MySpace was incredibly successful for several years, Mark Zuckerberg developed Facebook and has reached close to a billion users worldwide. The trend that can be extrapolated from social networking sites is that business is all in the execution.
If it were all about ideas why have Pizza Hut and McDonald’s managed to create multi-billion dollar enterprises in commodity based marketplaces?
Type of business to create
Your first business should be a web or service based company where cash flow comes in quickly. Since not having a large war chest is your weakness, you need to focus on proving your business model and generating a profitable company as quickly as possible. Once you are bringing in a predictable cash flow you can begin creating companies that take more resources to start.
How to get going
So you are interested in being an entrepreneur and based on your strengths and weaknesses you know what kind of business you want to start. So what’s next? How do you get off of the ground?
Before you do anything else make sure that there is a genuine need for your business. If you’re going into an industry that has a proven model then you can skip this step – but otherwise you need to contact potential customers and see if they would be willing to purchase what you offer. Drill into them during your market research stage. Ask as many questions as you can and don’t take what people have to say at face value. Spending quality time in this stage can save you from wasting time creating a company that is doomed to fail from the start.
The next few steps vary depending on the specifics of your business model, but getting a customer as soon as you can is critical. Make business cards, throw together a website, and keep on rocken’ and rollen’.
If you need advice feel free to reach out to me – email me at firstname.lastname@example.org.