Paul B. Brown lays out a blueprint for entrepreneurial success that everyone can follow. His mantra for the aspiring entrepreneur is “Act. Learn. Build. Repeat.” He extrapolates on this simple motto to cover topics such as how to market successfully, how to discover what people really need, how to manage a growing company, and how to deal with fear. Brown provides a simple yet effective framework for approaching entrepreneurial efforts.
HOW THIS BOOK CAN HELP
Brown offers a blueprint for entrepreneurial magic drawn from decades of analysis. In an attempt to distill the essence of entrepreneurship, he tackles the subject in a variety of ways. He focuses on entrepreneurial thinking rather than behavior, emphasizes the need to design for market desires, looks at how to “compete differently” in order to establish a business, explains how to make use of limited resources, proffers advice on how to build a team, extols the art of turning setbacks into benefits, and showcases how entrepreneurs stay motivated for the long haul. Brown analyzes the perceived risks of an entrepreneurial career and explains how focusing on acceptable losses rather than expected returns allows the best entrepreneurs to keep a handle on themselves, their visions, and their companies.A person who wishes to be an entrepreneur should follow three simple but important steps:
- Determine where his or her passions lie.
- Find an equally passionate partner.
- Go out and change the world.
HOW THE BEST ENTREPRENEURS THINK
American culture views entrepreneurs as semi-mythic figures, heroic savants who toil for years and sacrifice everything for a chance at achieving astonishing success. However, this is just a myth. Instead of chasing one perfect idea, successful entrepreneurs generate and evaluate thousands of ideas on their way to a final product. They seek out input, work in tandem with others, balance their passions with their commitments, and follow many different routes to success.Since entrepreneurs spring from a plethora of backgrounds and do not follow one path to their goals, what do they have in common? According to Brown, “Entrepreneurs have a passion for discovering opportunities. Once they do, they act.” A willingness to act on a passion is the sole litmus test for the entrepreneur.Once they have chosen to act, successful entrepreneurs follow a pattern. When building ventures, they assess the feasibility for themselves and the marketplace. They attempt to discern whether an idea is worth chasing. Finally, they ask themselves, “Do I want to do it?” The best entrepreneurs, when they decide to create their companies, act in similar ways. They:*Determine what they want to do or create.*Take a small step toward that goal.*Evaluate their progress and the lessons learned.*Build that learning into the next step they take.These entrepreneurs refuse to reinvent the wheel, instead distilling the lessons learned by others and incorporating those experiences into their own choices. This mantra of the successful entrepreneur can be summarized as “Act. Learn. Build. Repeat.”
ALWAYS START WITH A MARKET NEED (AND NOT THE GREAT IDEA)
Successful entrepreneurs rarely start with the right idea at the right time. Instead, they tailor their efforts toward solving an existing market need. This allows entrepreneurs to avoid consumer confusion, take advantage of an existing market, move rapidly on their inspirations–and avoid creating something that does not result in a viable product.The best entrepreneurs develop and capitalize on insights, defined as a “penetrating customer truths rich enough to generate significant ideas” that can help a business. There are two ways to capitalize on business insights:
Entrepreneurs looking to improve existing products could achieve success by becoming the low-price provider, making a name as a high-quality specialist, having the best solution to the problem, having the fastest solution to the problem, offering greater convenience or a better experience, and transporting the idea to a different industry.Many entrepreneurs spend too much time in the planning stage. Planning for new business development rarely goes off without a hitch, and the important part of meeting a market need revolves around a rapid response. If a person is truly meeting a market need, he or she will find that most of the research is already done. The best course of action is to find a need, test it to make sure it is big enough, and get underway quickly.
- Solving for an unexpressed need, which tries to address the tension in unsolved problems.
- Improving an existing product, which simply tries to create a meaningfully better version of something.
THE SECRET OF MARKETING? COMPETE DIFFERENTLY
Marketing, according to Brown, is simple: Decide who the customers are, and figure out what it takes to get them buying. Putting this into practice involves several fundamentals:*Always focusing on customers’ needs.*Understanding and focusing on one’s specialties.*Making judicious, small marketing bets.*Making those bets quickly (rather than lingering on market research).*Making those concentrated, modest bets in the right places in order to establish a firm foothold in the field.*Avoiding rote formulas; since every company is trying to do something different, received wisdom and borrowed battle plans can only go so far.*Inventing a prototypical customer at which to aim the marketing campaign.*Making one big improvement to an existing product instead of trying to reinvent the wheel.*Finding limited markets in which the company can have a competitive edge.*Asking for the sale–which many people surprisingly fail to do.*Tailoring corporate images to create powerful impressions.*Maintaining a “point of difference” in the product so that it improves customers’ lives in some way.It is extremely important to create a loyal customer base. Lifelong customers lift sales, provide competitive leverage, offer a permanent revenue base, boost margins, and build barriers to competition. Such brand loyalty is invaluable to a company, and often makes the difference between icons and “also-rans.” To cultivate this type of loyalty, entrepreneurs must focus on listening to their potential and existing customers. If a change is clamored for, it needs to be made. Good customer service must always be an integral part of any business or marketing strategy.
DO NOT SET OUT TO BECOME RICH
The desire to strike it big is interwoven with the myths of the entrepreneur. However, a desire for wealth is a bad reason to start a company or push a product. Instead, an entrepreneur should set a commercial goal and fulfill it. If wealth happens to be the by-product, so much the better, but wealth for its own sake makes a poor ambition for a burgeoning entrepreneur.Failed entrepreneurs often leap into markets they do not understand simply because they are attracted by the amount of money to be made. Instead of focusing on profits, Brown recommends focusing on doing commerce well–on transferring vision into reality. The most successful entrepreneurs create empires by solving problems and producing great products. A myopic focus on money can stymie creativity and blur the real issues to be addressed.When starting out, budding entrepreneurs may be reluctant to ask for payment or unsure how to get paid properly. Best practices include avoiding high receivables, obtaining payment up front, refusing to do the work without having received some kind of payment, sending bills out quickly, and developing a personalized and persistent follow-up.To achieve true success, a person should be focusing on building a good business rather than building a big bank account. Instead of stockpiling funds before going to market, entrepreneurs would do well to embark on a rapid beginning with a modest amount of cash on hand. The rewards will be well worth the risk.
YOU NEED LESS MONEY THAN YOU THINK
According to Brown, the average cost of starting a company is $109,016. Firms without employees run up costs of $44,793, and home-based organizations often clock in at $58,448. These are relatively low figures, well within the reach of many aspiring entrepreneurs when multiple funding sources are factored in. Typically, a third of the funding for a new venture will come from bank loans. Close to another third may come from a founder’s personal savings account. Most outside funding comes as debt rather than equity.Funding sources to avoid include credit cards, many of which have high interest rates, as well as venture capitalists and government funding. These are generally not significant enough to sustain a company. Entrepreneurs must also know what their “acceptable loss” level is, and never risk more than they can afford to lose.By making careful, small-scale funding bets, founders can grow their new companies without taking on too much risk. Keeping expenses low allows for experimentation and innovation.
BUILDING THE TEAM
Once a company is on its feet and growing, an entrepreneur will need to consider hiring other employees. Before beginning the process, entrepreneurs should consider the following three points: 1. Hire earlier than needed. The decision to expand a company from a one-person endeavor into a workforce can be a difficult one to make. Business owners should make this decision early, and look for people who complement the skills already on display in the organization. Most entrepreneurs excel in generating ideas and injecting passion into their work, but do not often make good managers. They must therefore be sure to evaluate their companies’ needs and pair prospective employees to them. 2. Delegate earlier than needed. Relinquishing responsibility is difficult, especially for stereotypical entrepreneurs who have created labors of love and are reluctant to cede control over any facet of their operations. However, learning to delegate is a vital tool if the entrepreneur hopes to grow the company. Rigid hierarchies of command and control create bottlenecks, impede creativity, and stifle progress. The sooner delegation is learned and applied, the better. 3. Hire better than needed. Business owners should not skimp when it comes to talent. Once an owner has identified the needs that exist in the company, he or she should invest in hiring the right people for the right price. Additionally, entrepreneurs should consistently reassess the performance of their staffs and should never hesitate to make whatever moves are necessary to create a great team.Regardless of its size, a good team will be diverse. The idea that “great minds think alike” may provide a harmonious environment, but it will probably not be a very effective one. Differing points of view, which can come from different backgrounds and perspectives, will provide more and usually better ideas.
HOW THE MOST SUCCESSFUL PEOPLE TURN OBSTACLES INTO ASSETS
As clichéd as it might sound, challenges can–and often do–provide opportunities. When faced with challenges, successful entrepreneurs focus on their goals rather than their plans. Adhering too closely to a specific plan can make companies slow to adjust to unexpected contingencies, but leveraging those contingencies can prove to be invaluable.Brown offers strategies to account for every obstacle entrepreneurs may come across. For example, if a person encounters unexpected good fortune, he or she would be wise to stay the course or even ramp up efforts to maximize potential gain. If a person encounters misfortune, Brown urges calm acceptance. Problematic situations should be plumbed for new information, and bad news can offer a chance to create innovative solutions. Entrepreneurs should seek to solve problems where possible, and when not, use the problems to discover new opportunities.All problem situations require entrepreneurs to maintain a positive mind-set. Successful people do not whine or complain about problems, but instead accept them and move on. Most importantly, they persevere. In following the Act-Learn-Build-Repeat model, they regroup following a challenge or failure, which is far preferable to people who are so risk-averse they fail to try anything new.
GETTING MOTIVATED AND STAYING MOTIVATED FOR THE LONG HAUL
Mustering up sufficient motivation to start a business can be difficult. While motivation via threat or sheer effort can be effective, it is not a particularly good long-term strategy. Entrepreneurs should instead identify desirable goals and decide on courses of action to reach those goals, making it more difficult for them to create excuses when they fail to take action.Brown urges his readers to push themselves to do something by following ideas to their conclusions and taking systematic, small-scale steps toward their ambitions. Once underway, this momentum can be kept up through a variety of motivating factors, such as personal pride, a sense of mission, visualization, support groups, the knowledge that others are relying on one’s efforts, and the desire to create a legacy.No one in business would deny that it is crucial for people to learn from their mistakes. Turning rejection and disappointment into workable insights and lessons is the mark of true experience and progress. Most entrepreneurs will fail at different points in their efforts, and failure is not easy to deal with. However, it is a necessary component for building the skill set and wisdom it takes to succeed on a larger level.Entrepreneurs should identify their objectives and take the necessary steps within their means to achieve them. This often means learning to simplify. Much like delegating, simplifying may be difficult at first, but ultimately it involves determining the best use of the entrepreneur’s time. It may sometimes mean working not on something an entrepreneur “should” do, but rather what he or she is best at.Finally, when the going gets tough, a supreme focus on the end goal can help people mount obstacles and re-route around potential difficulties.
BEING AN ENTREPRENEUR IS LESS SCARY THAN YOU THINK
The unknown is frightening. Fear of failure is common among entrepreneurs and aspiring entrepreneurs, with many feeling that the failure of an idea reflects on their failure as individuals. They fear what others will think of them and the lasting consequences that come with failure. However, would-be entrepreneurs must remember to take time to explore their target markets, identify interests, and gauge needs. These tasks can begin immediately, and do not demand much time or resources. By beginning small and moving forward, entrepreneurs can surmount their fears and begin to build their dreams.