If you are like me, you read a lot of “Young Entrepreneur” stories in the news media. For people in the midst of a career, we wonder whether the window to become an Entrepreneur has passed. The truth of the matter is that it has just started to open. Research by Carl Schram has shown that the average entrepreneur is nearly 40 years old.
The Problem with Being Young
Put simply, being a young entrepreneur can be problematic. The core reason for this is because young people are inexperienced and frequently make ill-advised decisions. Waiting until you have had a chance to gain some experience, perspective, and capital can make a huge difference.
Speaking for myself, I was very ambitious and very naive when I was young. I held many views about the way things should work. These perspectives were logical but ultimately inaccurate. The real world operates based on relationships and incentives. People don’t do things they should, they do things they want.
Why the Time is Now
Fortunately, it is easier to become an entrepreneur now than it has ever been. The reason for this is the internet. The costs to start a business have been dramatically decreased with technology. This means that you can test out your idea with a minimal outlay of capital and pivot if necessary without crippling losses.
The core aspects of running a successful business are to create a product or service that people want and to sell it cost-effectively. The internet helps with both of these objectives. Because of this, you can start a business on the side while continuing with a ‘day job’ to reduce the risk of your endeavor.
Creating a Product
The first step of your journey as an entrepreneur is to figure out what you are going to sell. Many people sell their service as a freelancer or consultant. Other people create a product to sell. Some people do both. The key to your journey will be to create a “Unique Selling Proposition” for your product or service that is valuable to customers.
It is important to understand that your product does not need to be complete before testing whether it is valuable to customers. In fact, it is better if you test for value before you create a product at all. This will ensure that you don’t waste time trying to perfect something that you can’t sell.
That last sentence was really important, so I’m going to say it again.
Don’t waste time trying to perfect something that you can’t sell.
We are beginning to see how the product and selling are linked. It’s hard to sell a bad product and there is no value in a good product that you don’t or can’t sell. What this ultimately means is that you should focus on isolating the audience and demand for your product or service first.
Once you have identified an audience, you need to start testing to ensure that there is a willingness to pay for your product or service. This step is critical because you need to figure out how to cost-efficiently sell your product. For example, let’s say it costs $50 in time and materials to create a product. If it costs you more than $50 to secure a sale, the only thing you will accomplish by growing your business is to become bankrupt. (This process is called “Growing Broke”)
It is far better to test, fail and pivot at this stage than to invest large amounts of capital in an idea that hasn’t been proven out yet. This is the critical insight – Figure out whether you can sell and scale your idea before investing a lot of money or time.
Again – that last sentence was a big deal. Let’s look at it again.
Figure out whether you can sell and scale your idea before investing a lot of money or time.
Your Next Step as an Entrepreneur
Where you go from here is to figure out your idea for a product or service and start testing it. If it results in some failures, that isn’t a problem. The thing is just to make sure that you’re not bankrupted by those failures. Test your idea and pivot to another one if it doesn’t pan out. Then pivot to another, and another.
As it turns out, learning what doesn’t work can be extremely valuable. As you go through the trial and error process, your learning will compound over time. Eventually, it is inevitable that you will hit on an idea where there is a market that you can efficiently serve. Once this happens, you no longer have an idea … you have a business.