What is the number one reason for most small business failures? The number one reason why most small businesses fail is low business IQ!
A common trend among small business owners is thinking that all it takes to successfully run a business is technical skill plus some common sense. After all, business is all about selling your stuff to customers, so what’s the big deal? With their technical skills, entrepreneurs create products/services that they sell to customers using their common sense. Before long, they start wondering why things are not as rosy as they had imagined.
It’s not because your product/service is bad; it’s because you lack fundamental business skills. The best product/service mindset is how many entrepreneurs get into business. It’s not just about the quality of your idea; it’s more about the quality of your execution. Execution is how you intend to turn your idea into reality. It’s the measure of your capability to make your idea happen. It’s far more important than your idea and here’s why.
Business is not common sense!
Being an entrepreneur is not a job that you only require a specific skill and some common sense to do. Being an entrepreneur is a burden that goes beyond specific job functions or descriptions. So a good way to fail in business very gallantly is to rely on your technical skills and common sense alone.
As an entrepreneur your task is to build a business and not to do business. It is a task that demands more than one skill. Because you are building it, and not doing it like a job would imply, you are never going to succeed relying on one skill alone!
That you are a great accountant doesn’t mean you will build a great accounting firm. The technical skill of accounting is only one aspect of building a business known as product development or product knowledge. In other words, it means you are good at doing accounting, no more, no less.
It doesn’t mean you are a good marketer. It doesn’t mean you are a good manager. It doesn’t mean you are a good entrepreneur. It doesn’t mean you are good with people –leadership. It doesn’t mean you are good at selling. It doesn’t mean you good at strategy. All of these and many more are what building a business entails. And your success is determined by how skillful you are in more than one area of business. How skillful you are in the fundamental principles of business. Without them, everything about your great product/service is trash.
The first fundamental business skill you need as an entrepreneur to build a successful business is entrepreneurship.
Entrepreneurship is your number one business skill
How good are you at thinking up ideas and turning them into viable business opportunities?
Entrepreneurship is the first business skill you need to develop. It is not starting your own business as many often misinterpret. It is about taking an idea and turning it into a product/service and successfully building a business around that idea. The skill of entrepreneurship is the skill of making an idea a reality profitably.
So one good way to know whether you are a good entrepreneur is to ask yourself how many ideas have you turned into a product/service that people paid for?
A good entrepreneur is not judged by how many ideas they have, but by how many they have successfully launched into the market and profited from. Your ideas are not what people pay for, they pay for solutions to problems they have. You need to take your idea and turn it into something people want to pay for. That’s what it means to be an entrepreneur.
To develop your entrepreneurship skill, master the following:
1. Creativity:
Entrepreneurs are the ideas people and the ability to think up ideas is creativity. To be creative, you must be able to see something new from something old. Creativity is the use of your imagination to make things that didn’t exist before happen. It’s more of a habit than a skill; the habit of thinking up something new and making new things. It becomes a skill through constant practice. Your creativity is expressed through creation. If you are not thinking up stuff and making stuff, then you are not creative!
The best place to start is to cultivate the habit of inventing play. What does this mean? Look at your immediate surrounding and think up different ways of doing things and giving it a shot. The objective is to train your mind’s eye to always seek out an alternative approach to solving existing problems. Creativity is simply thinking about “what could be” rather than focusing on “what is”. It is the search for a better alternative other than what is available. As an entrepreneur you should always be looking for new ways to do old things.
A quick word of caution here, creativity does not absolutely mean originality. Meaning, it doesn’t have to be your idea, it can be a borrowed idea from others. The creativity is in your ability to successfully integrate the idea into what you are doing. The source of your idea doesn’t matter, what matters is the unique changes it brings into the prevailing situation. So keep your eyes open for ideas worth borrowing around you and don’t be afraid of making mistakes trying your hands on these new ideas!
2. Strategic planning:
This is the ability to see the end from the beginning or begin with the end in mind. Strategic planning is how you define your goals, clarify the required process, estimate the needed resources and integrate all the different aspects into one overall blueprint. It is about defining and taking meaningful actions.
In other words, strategic planning is about putting your best foot forward. It’s knowing that there are two possible outcomes from every action; success or failure, then taking only calculated actions that minimize failure and maximize success. This is the difference between movement and progress. One is action [movement] and the other is meaningful action [progress].
As an entrepreneur, you have unlimited ideas but have limited resources to execute them. So you cannot afford to lash out frantically pursuing all your ideas all at once. You need to be strategic with the use of your limited resources to ensure they are being expended on your most viable ideas per time.
3. Market research:
The patience to understand the audience you are trying to reach. Many entrepreneurs can’t clearly identify who their market is and what their needs are. Market research is about getting intimate with the target market you want to sell to. It involves understanding who they are, where they are, what they like and don’t like, how they think, why they buy, what they do, how much they earn, and every fact about them.
These facts are broadly classified into two:
Demography: all physical attributes of your target customers (age, sex, income, location, religion, marital status, education, association, etc).
Psychography: all emotional attributes of your target customers (interests, fears, dreams, values, desires, wants, etc).
4. Competitive analysis:
This is the patience to understand your competition. Market research is about target customers, competitive analysis is about your industry, niche or competition. These are other businesses targeting the same market as you and selling them similar things as you. You need to get intimate with them from far. You need to understand their strengths and their weaknesses and come up with ideas on how to differentiate yourself from them. No one is going to buy from a copycat, so competitive analysis is how you stand out in the market.
5. Value creation/product development:
The very essence of entrepreneurship is the creation of solutions in the form of products and services to the problems plaguing humanity. So your skill set as an entrepreneur will be incomplete without an ability to create value –products/services. The ultimate test of your entrepreneurial skills is your ability to identify people’s needs and create products/services that meet those needs.
Your success is largely dependent on how well you can meet these needs better than others. To sharpen this skill, focus on the customer. Make the customer the centre of all you do as an entrepreneur. Your business exists to serve the customer, the moment you lose sight of this fact, the less capable you will be in creating value –products/services.
6. Effective bommunication: written and oral:
Since entrepreneurs are the ideas people, most of what will make you or break you is the quality of your ideas and how well you communicate them to the world. Your ability to effectively communicate your ideas will determine whether the world will accept or reject you. Why is this skill so important? Because being an entrepreneur begins with your idea for a product/service and in most cases, you will require the help of others to make your idea a reality.
The survival of your idea is dependent on whether you get the support of these people or not. At every time in your entrepreneurial journey, you will be asked over and over again to explain your idea, whether it be to a panel of investors, a strategic partner, a possible buyer or even your employees. If you can’t win them over with your words, then you’ve lost out before you even began. Effective communication skills include listening, copywriting, public speaking, presentation skills etc.
7. Strategic alliance: networking/collaboration:
You must be able to enlist the help of others much smarter than you. Most of these people you might not be able to pay as full time workers, but this doesn’t hinder your working with them. This is where your networking skills come in handy. Collaborating with these smart people will enable you get more done with less.
As an entrepreneur, you cannot accomplish much alone. So it’s very important you seek out early in your journey those who will complement your skill set. These are people I refer to as vision partners –you are passionate about the same cause. Collaborating with them will greatly impact your wealth of information and experience.
