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Becoming an entrepreneur is no easy feat. Many components go into a business, such as creating an idea for a business, marketing your idea, hiring employees, managing budgets, and fulfilling your purpose. However, I’m going to break down the FIVE most essential things you need to know before starting a business so that you can start off on the right foot.
# 1 Knowledge
Before starting a business, you need to educate yourself on the various subjects of business, such as finance, the industry you want to start a business in, and your target market.
Every entrepreneur needs financial literacy to run a successful business. Financial literacy consists of one’s ability to apply and understand financial concepts. Becoming financially literate benefits everyone, whether you are an entrepreneur or not.
Here are some common concepts of financial literacy you must master for success:
Most people assume all debt is bad debt. However, there are actually two different kinds of debt – Good and Bad.
Bad debt consists of anything that takes money out of your pocket, such as:
- Auto Loans
- Personal Loans
- Credit Card Loans
On the other hand, good debt is anything that puts money into your pocket, such as:
- A Business
- Real Estate Properties
- Other People’s Money
Assets and Liabilities
Similar to good and bad debt, assets put money into your pocket, while liabilities take money out of your pocket. Here are some common assets and liabilities you might experience in your business:
- Accounts Receivable
- Depreciation of Buildings, Land, Machinery, etc.
- Raw Materials
- Intellectual Property
- Accounts Payable
- Interest Payable
- Employee Salaries
Reading and Understanding Financial Documents
Reading and understanding your business’s financial documents is critical for your business’s health. For example, you must understand how to read a Balance Sheet, Income Statement, and Cash Flow Statement.
A Balance Sheet is a snapshot of a business’s assets, liabilities, and shareholder equity at the end of an accounting period. The purpose of a Balance Sheet is to understand the financial health of your business.
An Income Statement is a snapshot of your business’s revenues and expenses for a given period. The purpose of an Income Statement is to determine whether your business made a profit or experienced a loss for a particular period of time.
Cash Flow Statement
A Cash Flow Statement shows the cash flow going in and out of your business. A Cash Flow Statement determines how well your business manages and generates cash.
ROI, or Return on Investment, is a calculation used to measure the profitability of an investment. As an entrepreneur, getting the highest return on your investments will increase your revenue while minimizing costs.
Here are some examples of ROI:
- Investments (Stocks and Shares)
- Hiring Employees
Industry and Market Knowledge
Before starting your business, you need to understand your industry and how you’re going to create value within that industry. For example, let’s say you want to start an agency. The first thing you need to do is study the other agencies within your niche. Suppose your niche is running ads for small businesses under 100 people to increase revenue. In that case, you need to research the ad and small business industries to understand your target market better.
Once you’ve researched your industry, you need to research your target market. Based on the example above, your target market is small businesses under 100 people who need ads run to increase revenue. Researching your target market is critical before starting your business to determine how to bring your own unique value into your industry.
#2 Entrepreneur Community
Entrepreneurship can be a lonely road. Many entrepreneurs fail due to a lack of support because they have no one to turn to for guidance, advice, accountability, or friendship. So, it’s important to find a like-minded community filled with individuals with similar goals to you.
My company, ENTRE, provides an online community of entrepreneurs just starting their online businesses. Within this community, everyone shares their wins, losses, provides advice, keeps others accountable, and builds long-lasting friendships.
Some of the most successful entrepreneurs in the world had a mentor. For example, Steve Jobs, Bill Gates, and Oprah had mentors to guide them through the difficulties of entrepreneurship. These mentors gave them advice, kept them accountable, taught them valuable skills, and prevented them from making mistakes.
#3 Entrepreneur Mindset
Your mindset can make or break your success as an entrepreneur. You must develop a success and goal-oriented mindset if you want to succeed in starting a successful business.
Here are some tips for developing an entrepreneur mindset:
- Replace Negative Thoughts With Positive Ones
- Practice Gratitude
- Meditate or Journal
- Find a Mentor
- Challenge Yourself
- Embrace Failure
- Track Your Progress
- Celebrate Wins (Yes, even small ones)
- Find a Supportive Community
#4 Valuable Skills
To succeed as an entrepreneur, you must develop the following valuable skills:
Sales is just another word for relationship-building. The purpose of learning sales as an entrepreneur is to influence people to believe in your mission, not simply sell your product or service. Click here to read more about the importance of sales as an entrepreneur.
If you can’t market your business, it will fail. Unfortunately, many entrepreneurs get caught up in the details of their business when they should be using marketing to determine whether the market even wants their business.
As an entrepreneur, you must understand why consumers purchase products and services. Understanding these concepts allows you to align your marketing efforts to your customer’s subconscious thought patterns.
Being an effective communicator is critical for an entrepreneur. For example, you need to be able to communicate your mission to your audience, build a connection with your employees, and strengthen the bond with clients and shareholders. Failing to learn communication skills may result in increased conflict, misunderstandings, and loss of business.
Before starting a business, you need to become disciplined. Discipline is the key to becoming consistent. Consistency brings results, even if you don’t see them for a while.
The first step to becoming disciplined is practicing discipline in small things, such as developing simple habits. For example, you might start journaling every day or make your bed. Even though those habits seem small, your mind learns how to perform difficult tasks without relying on motivation.
Every entrepreneur needs personal development to become the best version of themselves. Personal development consists of improving yourself through learning new skills, finding a hobby, increasing your knowledge, etc. Anything that improves your life and is relevant to your goals is considered personal development. You can improve your personal development by reading books, enrolling in online courses, and joining an online or in-person group related to a skill or hobby.
As an entrepreneur, professional development is essential to improving as a business owner and leader. Professional development consists of learning skills related to your profession. As an entrepreneur, professional development consists of sales, marketing, communication, leadership, financial literacy, etc. You can improve your professional development by reading books, taking online courses, and attending live events and seminars.
Entrepreneurs need physical development to keep them healthy and balanced while running a business. Physical development consists of purposeful exercise, nutrition, and mental health. For example, you can improve your physical development by implementing exercise into your weekly routine, eating whole, unprocessed foods, setting boundaries around work, and getting quality sleep.
#5 Define Your Purpose For Becoming An Entrepreneur
Your purpose is the reason behind your business. It’s the lifeblood that turns your idea into a mission. Before starting your business, you must determine your purpose and how your business will help you fulfill that purpose. You can determine your purpose by looking at your unique talents and skills and figuring out how to impact the world with those abilities.
Resources Every Entrepreneur Needs
- Books for Entrepreneurs
- How to Become More Entrepreneurial
- 5 Mistakes New Entrepreneurs Make
- 6 Lessons I’ve Learned in My Entrepreneurial Journey
- The Best Investments That Will Make You Wealthy
- The Top 5 Books for Investing in Yourself
- 8 Wealth Secrets the Government Doesn’t Want You to Know
Feeling Overwhelmed As A Newbie Entrepreneur?
If you want to begin your entrepreneurial journey but don’t know where to begin, ENTRE has got you covered.
My company ENTRE teaches everyday humans how to leverage their skills and gifts to create an online business that gives them control over their time, life, and income.
So, if you’re ready to jump into entrepreneurship and receive the proper skills, guidance, and coaching you need to create a successful online business, click here. ↴