Whether you're opening a lemonade stand on the corner of your block or starting the next Fortune 500 Company, it is important to always remember one thing, "Business is Business". All Businesses have the same key elements. I like the lemonade stand analogy because it is the most basic business model that almost all entrepreneurs start with and the easiest one to draw references to. Here are 7 crucial business elements that will help ensure you succeed as an entrepreneur:
1. The Idea
Before a business can be established it had to start as an idea in someone's head. Most great ideas are drawn from an entrepreneur's real life experiences. In this day and age, it is rare that someone will come up with an entirely unique idea. As a matter of fact, if you ever find yourself with a completely unique idea that has never been done, please contact me so I can be your attorney. For the most part, entrepreneurs are coming up with ways to"build a better mouse trap." Great entrepreneurs see a need for something that no one else can see. That ability to see what others cannot, even the when it's the most obvious thing, is what makes the difference between an average person and an entrepreneur. But an idea is not enough. Once you have this great idea to sell the world's most amazing lemonade ever what's next? It's time for a plan.
2. The Business Plan
Benjamin Franklin once said that "failing to plan is planning to fail". These words couldn't be more true. What is an idea if there is no plan to carry it out? It is just an idea that will be one of the million that never make it past your brain. A business plan is a crucial part of the entrepreneurial process. You can have this great idea for a product, but the world will never see it if you don't know how to get it to them. When brainstorming about how to sell your amazing lemonade you must decide on a course of action. Where will you put your stand? How many lemons will you initially buy? What will you put in the lemonade to make it "the best lemonade ever?" All of these questions need to be decided and structured before any business can be successful.
3. The Product
Every business consists of either a product or a service. When developing a product or service it is important to balance the uniqueness of it with the competition that already exists. It is also important to determine your potential customer base. You want to create something that will appeal to the masses. This is important to ensure a steady growth and potential investors. No one wants to get behind a product that only appeals to a small subsection of people. You must determine who is going to be your target customer and try to develop a steady and loyal customer base. In order to create customer loyalty for your brand there must be a legitimate need for your product in the market. If there isn't a need then it is up to you to create one. Going back to the lemonade stand example, why should they buy your lemonade instead of going to the stand down the street? On a hot summer day people generally would like to drink something cool and refreshing, so you put a sign on your stand that says "Ice Cold Lemonade! Treat yourself to the best lemonade ever!" There is a need for the lemonade, and you have just created the desire to purchase it with your sign. You have effectively made your lemonade the most desirable on the block.
4. Cost Structure
Okay, so you have this great idea for a product or service. You have figured out your potential customer and have formulated a plan on how to get it to them, what's next? Money. (perhaps the most important part of the entire entrepreneurial process). Let's face it, you can have the greatest idea since the internet, but if you don't have the working capital behind you, you will never be able to make it anymore than just an idea. At this point in the process, entrepreneurs will turn to their angel investors for their seed money. This usually consists of your family members and close friends, the people that believe in your crazy idea to sell lemonade on a street corner to people sitting in traffic. Once you have your first bit of money you can start on a proof of concept. It is critical that you use this money to show that your product or service works. You must be able to create a demand for your idea if you want to get more investors to back you. Once you have created a demand and a proof of concept you are ready to approach angel investors and venture capitalists to pitch your idea and try and raise more funding so you can take your business to the next level.
In order for a business to ever grow past it's first stage you are going to need more people. But not just any people, you need the right people. No business ever failed because it had all the right people working to make it better. In order to be successful you need people that can contribute to the business's ability to serve it's customers. It is essential that you partner with the right suppliers, advertisers, and money management team. Let's go back to the lemonade stand for a minute. Your stand will fail if you do not get quality lemons to create your product. People need to know where your stand is, so maybe you hire someone to go around the neighborhood and put up flyers advertising the "best lemonade on the block". Now you have people coming from all over to purchase your lemonade, so you must have someone who can handle the money and make sure it is managed properly with enough allocated to the continual operation of the stand. At the end of the day, not having the right people can make or break a business.
6. Room for Improvement
A successful business is never done growing. As an entrepreneur you must be constantly thinking of ways to grow and expand your business. It is foolish to ever think the one idea you had when you wrote your first business plan is the one that will stay with you for the rest of your business's life. Once you have fully conquered the initial aspect of your business it is time to sit down and think how you will achieve the next step. Back to the lemonade stand, you've conquered the market and now have the best lemonade in the neighborhood. Customers are coming in every day and you have so many dollar bills that you don't have any more room to store them. But whats next? Maybe you think about selling apple juice now and try and conquer that market. Bottom line, if you ever come to a point that you can't think of anymore ways to grow and improve your business then maybe it's time you start a new business, because once a business plan has become static it is doomed to fail.
7. Tough Skin
This is the last element of being a successful entrepreneur, and in my opinion the most important to ensure you keep going. You have to understand that once you start down this path there is no turning back. Your relationships with your friends and family members become a constant barrage of questions about how you're doing and if you're sure you made the right decision. They will ask if you're thinking about going back to work or if you regret leaving your job. They will treat you as if you are crazy because you decided to step outside of the traditional "life's script." You have to understand that most people are content waking up everyday and going to work. They like the idea of a steady and consistent pay check. They couldn't dream of taking such a risk. Their lives are an endless cycle of rewind and repeat. This is why you are an entrepreneur and they are not.
Being an entrepreneur is not for everyone. Making this decision is a huge risk. It's not easy to give up comfort and security for the slight possibility of success. Most people believe being successful is all about luck. A professor in law school once told me that there is no such thing as luck when it comes to business. He said that luck was nothing more than the point where opportunity and preparation meet. Opportunities pass us by everyday. Unfortunately, most people are ill prepared to handle them when they do, which is why they do not succeed. Almost everyone can draw back to a point in their life where they say: "if I only knew then what I know now, things would be so different." You must always be ready to strike when an opportunity comes your way. As long as you stay focused and hold on to these seven basic elements, you can have the most successful lemonade stand in your neighborhood.
Learn more at Benemerito Law.
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