What type of company will my product take me to? How will my day to day be? How much risk am I willing to take? What moves me and leads me to overcome obstacles? Questions that the entrepreneur must answer before embarking on the adventure of creating his own business.
The II call for the entrepreneurship contest at Leganés Tecnológico (Carlos III University of Madrid) has already begun. As one of the winners in the first call, some participants have sent me some of the most frequent questions before embarking on this adventure. What kind of product? What type of company to create? What has motivated you? I think there are as many responses as there are participants and I would like to share with you some tips through this article to help define your vision of the business.
Before launching a business, as an entrepreneur you should first know yourself very well. The work that you will develop day by day is closely related to your personal motivation. As the founder of the company you will have to assume leadership and, depending on your ability to align business objectives with your personal goals, you will overcome all obstacles.
In the motivations as in the tastes, there is nothing written. Need for success, achieve a certain lifestyle, gain respect or admiration, create an innovative product, create an organization that will outlive you, contribute to your community, develop your talent, or enjoy the freedom to do what you really want. Whatever your motivation, you will have to make a decision about the type of company you want to carry out. If we group them into two types, the companies will be more focused on lifestyle businesses ("life style") or businesses with great potential ("Joint Ventures").
"Lifestyle" businesses include consulting, local restaurants, laundries, clothing stores, computer stores, hair salons. They usually have a local scope, the annual sales are not large, and they can have an income level similar to that of working as an employee. The legal entity is usually single owner, self-employed, and limited liability companies. As an advantage, the control of the company remains in the hands of its founder and he can continue doing what he likes without incurring many risks. They offer great flexibility and have a positive cash flow right from the start. Against them they have the difficulty of hiring professionals with high salaries and of not obtaining large profits.
On the other hand, "High potential" businesses either develop a product with international projection, taking advantage of technological advances or changes in the environment, or venture capital alliances are created in the face of a high profit opportunity. Among the advantages are the possibility of attracting external financing and forming a great team with which to work for the success of the business. Against them they have the loss of control of their founder as investors and other partners participate in the shareholding, and more time to obtain a positive cash flow.
With the advent of the Internet, new opportunities are appearing that could focus lifestyle businesses towards high-potential models such as Amazon or E-Bay. Take advantage of a market niche and with a good positioning, thanks to new technologies, we can project our products internationally. This will change the vision of the business, and therefore new challenges and skills will appear to take into account.
The following table shows the most significant differences between lifestyle and high potential businesses.
If as an entrepreneur, the business idea and its execution do not satisfy you personally, or if to achieve your personal goals involves taking too many risks and making more sacrifices than you expect, you probably have little chance of success from the beginning. "The business will have little value if you are not happy, make sure you have fun."
Encourage all those who want to start, write carefully what your personal goals are and analyze the reasons why you want to start your own business. Assess the opportunity cost and risks you can take at this point in your life and go for it!
