How To Become A Successful Entrepreneur For 2010
- Post Written by John Kairupan on February 6, 2010
Photo courtesy of K’s Glimpses
If there is any time for you to become a successful entrepreneur now would be the time. In this article I want to give you some invaluable strategies which you’ll need to become a successful entrepreneur in 2010.
As the world economy comes out of its recession and starts picking up more and more people will start spending again. People are going to needs your services – what you are passionate about. Now is the time to find new innovative ways to solve problems for people. Now is the time to take advantage of technological advances through the internet and provide a product or service that people will love.
Although politicians and financial experts are claiming the recession is now at an end and from a technical perspective, the recession is very likely over at this point, but it’s still going to feel like a very weak economy for some time. I want to correlate this statement and consider it in your business plan.
How much does the economy matter to your business plan? Is it possible to start a business at the end of a recession in a still, weak economy? If your industry is still in a slump can you succeed?
Remember every business is affected by outside economic factors. No matter how well a business concept is or how well organized its operations are, economic conditions play a significant role in the ultimate success of an enterprise.
Here are some of the many ways those outside the economic influences will affect you as an entrepreneur:
• Your ability to raise money from investors and the terms you will be offered.
• The availability and interest rates of conventional financing such as bank loans or equipment leases.
• The spending habits and financial strength of your potential customers.
• The terms you are able to secure from your suppliers if your selling products.
• The availability and responsiveness of professionals and other service providers, such as attorneys, accountants and consultants.
Surprisingly, a weak overall economy often leads to the creation of many healthy new businesses. Over the last three decades there have been patterns during the tail-end of recession:
New business formation has held relatively steady, and the jobs and innovations created by entrepreneurs and new businesses have led the overall economy recovery. Indeed, some of the great, large companies that are now house hold names were founded during the end of a recession, including companies such as Microsoft, Kinkos, Hewlett Packard, and FedEx.
This is not just a coincidence. An economy near the end of a recession gives new businesses many advantages and offers substantial opportunities.
Here is why: In uncertain economic conditions, existing companies are typically cautious, even scared. Some are financially damaged. As such, they eliminate new initiatives and put their primary emphasis on cost cutting. They cut back on marketing, research & development, new product launches, customer service, and so on. They reduce capital expenditures and stop expanding and innovating. In some cases they eliminate product lines or complete divisions.
This leaves many customers upset and unhappy. Entire target markets are neglected. That creates the perfect environment for new, more innovative businesses to thrive.
New entrepreneurs and companies are thus able to come in and grab market share from existing companies – a situation that would have been much more difficult, if not impossible if those older companies had been focused on growth, quality, or service instead of reducing costs.
As you develop your company’s strategy position, here are some strategies in uncertain economic conditions that you should take advantage of. So here is my list on
How to become a successful entrepreneur for 2010.
Raise money through sales or conventional financing: As an entrepreneur it will be both more difficult and more costly in terms of equity to secure funding from investors so look for other options. The best strategy is always to try and raise money through sales. Go out and get customers and then, if necessary, get conventional financing (such as bank loans or equipment leases) to manage cash flow. During a slow economy it is possible that interest rates will be lower and the cost of such conventional financing less.
Offer customers innovative ways to reduce risks and costs: Often, customers are under financial pressure, and are seeking cheaper, more value driven alternatives than they get them from current product or service providers. Keep in mind that customers are seeking for immediate benefits, not just higher overall return on investment.
Look for customers that bring you immediate income: Just as customers are looking for immediate benefits, you should target customers who bring you immediate income, rather than just long term benefits, name recognition, and so on. Cash is critical and should be your first priority when choosing a target market.
Choose “counter-cyclical” industries: Some industries have historically performed particularly well during economic downturns. These include personal care and products & services such as beauty salons, repair services, bill collection services, inexpensive entertainment, and small personal indulgences. Look for those industries that are either counter-cyclical or minimally affected by the economy.
Seek outsourcing opportunities: As big companies reduce their permanent in-house workforce, they look for outside contractors to pick up the slack. Hiring outside contractors is not only cheaper for them, but easier to justify to their management. Look for opportunities to be an outside contractor to bigger companies.
Lock in lower costs and favorable terms: A weak economy is a good time to secure low rates and favorable terms on items such as rent, equipment leases, raw materials, and inventory. Having lower fixed costs and flexible terms, will enable you to be more competitive when the economy recovers.
Integrate social entrepreneurship. I have a lot to say about this one because this is a new rising positive trend. The definition of social entrepreneurship is – the work of an entrepreneur who assesses success in terms of the impact he/she has on society. Essentially, a social entrepreneur uses business methods to solve social problems.
For successful social entrepreneurs, untapped markets are people or communities in need, who haven’t been reached by other initiatives. Social entrepreneurs apply business practices to solve societal problems, such as pollution, poor nutrition, and poverty.
The idea of blending a social mission with business is not new. One of the founding forces behind the movement is the Ashoka Foundation. Since its inception in 1981, it has granted multi-year living stipends to support more than 2,000 fellows dedicated to finding answers to a host of social ills through business ventures.
Indeed, the concept of building a profitable business model in which doing good is an intrinsic part of the business and not just a philanthropic sideline has been gaining ground in recent years.
Furthermore, as the economy picks up, both the government and the private sector are looking for inventive ways to bring back prosperity, and many are counting on these entrepreneurs as a powerful tool for change.
Social entrepreneurship correlates to this growing realization that entrepreneurs are the key to a vibrant economy and to solutions that are badly needed. Many social entrepreneurs have shown they can accomplish their mission and have been able to deliver social good and report a cash flow.
There are many books written about it and here are two of which I recommend as reading materials: one is titled “Successfully Launching New Ventures” by Bruce Barringer and Duane Ireland. Another is “How to Change the World” by David Bornstein. The later has become the Bible for social entrepreneurship.
Use social networking. I saved this one for last because as an emerging successful entrepreneur, this is as a key strategy to promote your business. We have all heard of Facebook, Myspace and Twitter. However, there are many other check out these top social networking sites for business. As an entrepreneur it is important to utilize these online networking tools to develop relationships and potential customers. If you are not sure, find a coach or hire a social networking specialist to assist you with your social networking plan. Laura Roeder has an amazing newsletter and coaching program.
If you have any other strategies for becoming a successful entrepreneur for 2010, I would love to hear them.
2 Comments on “How To Become A Successful Entrepreneur For 2010”
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A good article, I enjoyed reading that…
By the way, for the people interesting in working in Social Businesses and Entreprises, we have got a job board section uploaded everyday on our website…
All the best, Thomas, ClearlySo.
Thanks for the mention John