Entrepreneurial Mindset: How to Think Like an Entrepreneur
Do you know having an entrepreneurial mindset is the key to starting and running a successful business?
In today’s time, starting a company or having a side business to earn some extra income has become even more important. Not only because people are less satisfied with their jobs, but also to create a safety net in case things don’t go as planned.
The irony is that, while many people are attracted to entrepreneurship and starting a company, it is only the select few who succeed.
According to a research,
- 20% of small businesses fail in the first year
- 30% of businesses fail in their second year
- 50% of businesses do not get past half a decade
- 70% fail after their 10th year
The question is, what is special about the mindset of people who run successful businesses and how to become like them?
So, if you want to be an entrepreneur and want to learn these traits to succeed, this is the right article for you.
What is an Entrepreneurial Mindset?
Entrepreneurial mindset is the combination of beliefs, focus and attitude that collectively constitute a way of thinking, reacting and feeling in an entrepreneurial way.
Let us take a look at each of these traits individually.
Vision and Focus
In order to achieve something big, you need to set your eyes on a particular goal and then put all your energy into achieving it.
An entrepreneur is focused on achieving his vision and does not easily get distracted along the way.
This has two parts.
- Focus on the Key Problem to Solve: Businesses exist to add value to the lives of their customers and the key behind adding value lies in understanding the problems that customers have. 42% of businesses that failed said that their business had no market need. The company, Patient Communicator, realized that doctors simply wanted more patients and not necessarily an efficient CRM system, which the company was marketing. This makes the focus on customer problems one of the most important aspects of an entrepreneurial mindset.
- Focus on the Goal: This could be starting a successful blogging business or any other online business..
Belief and Confidence
In an entrepreneur’s mind there is no room for doubt and even if any uncertainty creates some sort of ambiguity it doesn’t affect their belief in their own ability.
They believe in their products and services and that they are on a path to solve a real problem for their target customers.
When Steve Jobs rejoined Apple in 1997, the company was close to bankruptcy. But the belief, confidence and skill of Steve Jobs turned around the fortunes of the firm, launching iPod in 2001 and iPhone in 2007.
Attitude refers to how you mind works and how you handle difficult situations.
- Accepting Uncertainty: Entrepreneurship involves chartering new territories which essentially brings with it various kinds of uncertainty. An entrepreneur is comfortable dealing with ambiguity on a daily basis and it doesn’t deviate them from their chosen course.
- Resilience and Persistence: The next logical problem that follows ambiguity is that certain times there will be failures and things will not go according to the business plan. In the light of such situations, the entrepreneur perseveres. They try harder and come back stronger, but they don’t give up.
- Adaptability: Plans may not be fool proof right from the beginning and a business model may have to go through several iterations before it becomes successful. Adaptability helps the entrepreneur to be nimble enough to adjust to new learnings and changing environments.
- Curious and Creative: The key to solving the right customer problems begins with asking the right questions. The innate curiosity of the entrepreneur enables them to ask the right kind of questions. This sets their creative minds on the path to solve problems in an innovative fashion.
- Bias for Action: An entrepreneurial attitude is biased towards taking action and driving results. An entrepreneur doesn’t just ideate, but is ever ready to get hands dirty and implement the business idea to achieve the required goal.
- Positivity: Optimism is an important trait in any entrepreneur, not just to keep themselves or their team motivated, but to form a great culture to run the company.
It doesn’t mean that you simply ignore any problem that comes your way and declare everything is good.
It means that you are clearly aware of the risks and problems. But still focus your energies on using them to your advantage or taking the right decisions.
At this stage, you may be wondering whether it is possible for you to learn these entrepreneur traits.
The good news is that you can train yourself and develop an entrepreneurial mindset.
Let’s dive in.
How to Develop an Entrepreneurial Mindset?
|How to Develop
|Focus and Vision
|Imagine and visualize the big picture, create SMART goals
|Clearly understand and evaluate risk return trade-off, probabilistic thinking
|Resilience and Perseverance
|Don’t be ashamed of your failures, talk to people you trust
|Know when to change, look for consistent feedback, analysis from multiple data sources
|Curiosity and Creativity
|Ask why and why not, Use observation and combinatorics thinking
|Bias for Action and Decisiveness
|Develop MECE thinking and become data oriented
|Focus on things you can control
Maintain Laser Focus with SMART Goals
To develop your focus and vision, the first thing to do is to create goals which you believe are achievable and manageable given your current circumstances.
A good goal is specific, measurable, achievable, relevant and time bound.
Take a look at these two statements:
“I will create many regular articles on my blog in the coming few months.”
“I will publish 100 articles on my blog, of 1,000 words each, in the next 6 months.”
The goal, as stated in the second example, is measurable, achievable and relevant for the success of your online business. It is easier to track progress when your goal is very specific.
Evaluate Risk Return Trade-off To Deal With Ambiguity
Decision making amidst ambiguity means letting go of some alternatives in favor of others.
One good way to become comfortable with uncertainty is to clearly quantify risks and opportunity costs. This will help you make decisions to maximize gain and minimize risks.
Risk return trade-off is generally involved in taking decisions when there are many alternatives available.
Return can be measured by the amount of output you can make by investing a certain input and risk by understanding the downsides.
For example, say you have $200 and you are thinking about investing them.
You have five options and the following information:
- Invest in stocks and equity. (On average, you can expect to earn 10% in one year with a probability of 80% and 20% chance that nothing happens)
- Hire a writer to write 2x articles for your blogging business. Each article on average will give you a return of $300 in one year, but one out of every two articles fails to generate any money.
- Invest in a Fixed Deposit in a bank, which gives you 5% a year. Return in this case is almost guaranteed as the bank is stable.
- Add an additional feature to your software product. You can expect an additional revenue of $1,200 by paying $200 to the developer but customers are ready to pay only in 20% of cases.
- Invest $200 in advertising. Each dollar spent in advertising brings you $2 in profits, with a probability of success as 50%.
Now evaluate your expected gain (Probability * Return * Amount Invested)
|Probability of Success
Your risks can be quantified as the probability of success and return is the amount you can earn.
Clearly, you will earn the maximum amount in option 2. But the risk of failure is also high.
Now you need to take a call according to your risk appetite. In absolute terms, going with option two makes sense due to maximum expected gain.
Opportunity cost can be measured as the expected return of the next best option you had. So if you go with option two, you choose to forgo a chance to invest that amount in developing the software feature.
You can use this framework to help you make more data-driven decisions.
Talk to People you Trust to Stay Strong in Adversity
Never hide in a shell if you are hit by a failure. Always keep an inner circle of people you trust. This could include your friends, family, mentor or teacher. Basically anyone who is close to you.
Look at failure as a learning opportunity, and then change your approach if required and move on.
Know When to Change Course to Avoid Failure
It is important to understand when something is not likely to work out.
Some of the indicators are:
- When the opportunity cost of slogging on is much greater than the reward
- When the only thing making you stick is the pride of proving something at the cost of everything else that is important to you
- When consistent unbiased feedback points in some other direction
- When your future self will have more relief than regret by giving up
- When the scenario since your resolve to now has completely changed and new information has led to changed probabilities
For example, say you have been working on your blogging business for a few years. Even after making so many changes and putting in a lot of effort, the traffic remains low.
Your friends have told you it wouldn’t work. Your research also tells you that the number of people searching online for the topics you write for is reducing day on day. Now, a new opportunity has arrived for you to do freelance writing for a much better return.
It may be time to change course as the demand for your product (content in this case) is reducing. Consistent feedback is telling you that the blog isn’t working and the opportunity cost is now higher than the expected return of your current project.
Challenge Conventional Thinking and Think in Terms of Combinatorics Thinking
There are things around us that haven’t changed since a long time. To generate ideas, you can begin by asking two questions about the regular things of life:
Why is something done a particular way?
Why not in some other way?
You can also try applying solutions or ideas from seemingly unrelated fields and exploring if some of them are applicable to solve a problem in another domain.
For example, take the concept of sharing economy, which basically means renting more than owning, so that the usage can be maximized.
Someone who owned a car could enjoy his regular life, while at the same time put it on Uber and drive for some extra cash. The same concept applied to houses gave birth to Airbnb.
In this way, you can come up with several business ideas by applying concepts from one domain to another.
Develop MECE (Mutually Collective and Collectively Exhaustive) Thinking to Get to the Root Cause Fast
MECE thinking entails breaking down problems in such a way that the constituent parts are independent of each other and together cover the whole scenario.
For example, to calculate sales you can break revenue into number of customers multiplied by purchase per customer.
Further, you can break purchase per customer into the number of items multiplied by price per item.
Take the example of a restaurant which is suffering from the problem of profitability. You can break down the problem into an issue tree in the following way.
Now you can simply explore the feasibility of all options and work on the most impactful driving factor.
By thinking in a MECE way at every step, you can understand how to achieve a certain objective or solve a certain problem. It also instills confidence as it ensures all possible scenarios are considered.
Focus on Things You Can Control
We can control our choices but not necessarily outcomes in all cases. To develop positivity, always focus on things that you can control and influence and try to take the outcomes as a learning opportunity of what works and what doesn’t.
For example, if you think you have become overweight, focus not on the issue, but on what you can control that can affect the issue. Taking a good diet and exercising are things in your control. So, focus on doing that instead of fretting over your weight.
Practice these basic exercises in your everyday routines and you can certainly find yourself inching closer to an entrepreneur mindset. This is the basic state of mind that will help you set the foundation of achieving your dream.
14 Secrets to the Entrepreneur Mindset to Build a Successful Online Business
Every Big Vision Starts With Baby Steps
Everything starts with a vision. This vision is then further broken down into strategy and subsequent tactics or smaller steps that will help you achieve your business goals.
Create a Motivating Vision
Vision is your imagined state of the future. It is an image of your business 5, 10 or 15 years down the line. It is the essence of your big dream.
For example, take Microsoft when it began – the vision was “A computer on every desk and in every home”. And they made it and so can you! So don’t get bogged down by a big audacious goal.
In Computer Sciences, one of the principles to write a daunting algorithm is to break it down into small meaningful parts and then put all the parts together. Divide and Conquer!
The same is applicable in this scenario.
Here is a framework you can use when you are starting a business.
The top part of your pyramid is the vision, which as we discussed is the targeted state of your business. This part deals with the “Why” of your business.
Some examples of great vision statements:
- Tesla: To accelerate the world’s transition to sustainable energy.
- Nike: Bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete.
Craft Your Strategy to Achieve Your Vision
You need to come up with a strategy that will help you achieve the desired state of the future. This part begins with research.
First think about your customers, then your competitors
You need to research your prospective customers, competitors and market.
The question is, how will you get your customers and defeat your competition.
Hence, this part answers the “How” of your business.
If you want to sell a product online, one great but still underutilized way to research both your customers and competitors is on Amazon.com. There is a wealth of useful knowledge in the reviews section of the products.
The number of reviews tells how well a product sells and how many customers have used it. The text in the reviews and keywords can tell you the pain points as well as the features that customers liked.
For instance, say you decide on selling wireless headphones online. Simply search for the keyword on Amazon and go through the top products and their reviews.
This will tell you the top features and the competitor’s ratings. Simple, yet effective.
If you decide to start a blogging business, you need to understand what keywords your customers generally search for and answer the most pressing questions related to those keywords.
For this Google Keyword Planner is a great starting point. You can simply search for keywords you are planning to write content about.
Next is competition. You need to find out who your competitors are and figure out their strategy and then beat it or learn from it.
To get information about any online business, its sources of traffic and user statistics, one great resource you can use is SimilarWeb. This website can give you a lot of data regarding various online websites.
For example, if you want to know what sources Amazon gets its traffic from, you can simply search it on similarweb.
Step-by-Step Tactics to Execute Your Strategy
Next is the execution part of the story. Remember, Divide and Conquer!
Small steps done consistently, adjusted with continuous learning, would definitely lead to success.
A good practice is to create milestones.
For example, say you have an e-commerce based gifting business.
If your goal at the end of the year is to do $200,000 in revenue. You can set milestones like:
- $10,000 in the first month
- $50,000 in 3 months
- $100,000 in 6 months
- $200,000 in a year
After setting the milestones, you need to devise tactics to achieve these milestones.
Ask this question, “What needs to be done in order to do $10,000 in the first month?”
The conversion rate for gifting e-commerce is around 5%. So, if an average gift is priced at $100 and you need to do $10,000 in a month, you would need 100 customers.
Since the conversion rate is 5%, you need 2,000 prospects to visit your platform.
Now with this construct you can design your marketing efforts with expected traffic.
For instance, if every dollar spent on advertising gets you 10 visitors to your website, to get 2,000 visitors you need to spend $200 on advertising.
You can repeat the exercise for other milestones to achieve your goal eventually.
This is just the basic skeleton of how big goals are broken down into plans and then achieved by corresponding actions. It’s time to dive a little deeper into some of the points we touched upon vaguely and how real entrepreneurs approach these steps.
Focus on Delivering Value (Problem First, Solution Second)
More often than not people start with a product in mind and then think about who they can sell it to. While sometimes this approach may give results, it is not a fool proof way of thinking about things.
What most successful entrepreneurs know is that it is not the product that is the most important part, but the customer, the problem you are trying to solve for them.
It is about the value that you can bring to their lives.
In fact, customers value the experience much more than the product itself.
Time and again successful entrepreneurs have realized the importance of the fact that how important it is for a business to have a clear and succinctly written “value proposition” for the customers it is trying to target.
Customer Segments Help You Better Serve Your Customers
What you need to do is divide your customers into different groups or customer segments. The benefit of doing this exercise is that each of these segments could have different needs and pain points.
And with your product or service you are solving a problem for them. Now you can design your product or service according to the needs of your target segment.
Since you are solely focusing on the needs of this specific target customer segment you are more likely to satisfy them. And that is how you can make the customers switch from the current solutions they are using, to your new solution.
All you need to do is be so customer-centric that you drive the best value for your target segment and they don’t even think about going to your competitor or using any substitute.
Let us take an example of a blogging business that publishes content related to cooking. Basically, it publishes recipes for the most common dishes with healthy ingredients.
A segmentation variable could range from simple metrics like demographics, and geography to slightly more nuanced factors like lifestyle or usage patterns.
In this case, let us say we want to segment based on age and gender. One great way to see which segments are most relevant, is through the tool Search Engine User Demographics Tool.
For instance, if you want to see the distribution of users by age and gender searching for the keyword “Health”.
Serve a Hyper-Specific Customer Segment
You can choose one or more customer segments to focus on. In the beginning, it is best to meet the needs of a few segments well rather than trying to do everything for everybody.
Clearly, we might see the best value for people who cook themselves and are concerned about their calories in the age bracket of 25-34.
Typically you would want to consider some factors before choosing your target customer segment.
Important factors for choosing a target customer segment…
- High Audience Revenue Potential: If you are a startup pitching to investors, one important question they will ask you is the market size of the problem you are trying to solve. This is an important factor as it gives an idea of the total demand and market size.
- Expected growth rate over time: There are two ways in which a company or business grows. First, by winning the market share from competitors and second through the natural growth rate of the entire industry. Hence, it is important that your target segment is a growing one so that there is enough money to be made for everyone.
- Customer Loyalty: You need to reduce the switching cost for your customer. If brand loyalty for a competitor brand is high, it will be difficult for you to get the customers to switch to your new product.
- Attainable Market Share: Some new businesses require more capital than others. For example, you may need much more investment for starting an eCommerce business than a blogging business. A lack of resources may not give you enough room to play with marketing to attain the objective market share.
- Market Profitability: This will give you an idea of how much profitability to expect if you choose to enter a market with your startup.
The exercise is important as each of the customer segments can have different needs and the value that your business can offer will differ accordingly.
Value proposition is a simple statement that explains the value you add to the customer.
A good value proposition for our example is:
“We help stay-at-home moms lose 14 pounds of fat in 45 days without having a jojo-effect”
While there might be other values that the business would be adding to customers and they should be highlighted as well, there should always be a simple and succinct statement that clearly explains what you bring to your customer.
An important question here is whether your value proposition is supported by the evidence of demand.
Sometimes, your idea of the customer may not be the actual reality. So you should put in some effort to actually ascertain that there actually is demand for your product or service.
Estimating Demand by Keyword Search
You may want to explore tools that can help you determine how many people are actually searching for keywords that match your business. Or how many visits similar blogs garner day by day.
You can use semrush.com to help you accomplish this.
The exercise will give you an idea of the market size or demand for what you are offering.
The important thing is to get started and get your hands dirty.
You may not have answers to a lot of questions at the beginning stage of your business and many things will come along the way. You may have to adjust a lot of things, experiment and fail, and then eventually succeed.
To summarize, here is a quick checklist you can refer to validate your value proposition:
- Are the benefits explicit and clearly stated?
- Is the target customer segment clearly identified?
- Is the value proposition clear and simple?
- Is the value proposition supported by evidence of demand?
- Is the value proposition viable in light of competition?
Be Customer Obsessed
Customer Obsession means centering everything in your organization around the customer and focusing on improving customer experience in every way. It is not about just serving customers but building long lasting relationships with them.
Such customers then become advocates, spread positive word of mouth, and keep coming back for more business. Even big companies are realizing the importance of customer obsession and experience.
Therefore, If you are an entrepreneur or are thinking of starting a company it is imperative that you understand the concept of customer obsession and weave it into the DNA of your new business.
The global giant, Amazon, is probably one of the most customer obsessed companies on the planet. In fact, customer obsession is one of their core guiding principles.
So, in order to really win in the contemporary business scenario you should ideally start all your thinking around the customer and customer service metrics, and then work backwards in your business processes.
While keeping track of competitors is important, the true value lies in understanding the customer and serving them in the best possible way.
There are some key requirements that can help you make your business a customer-centric organization:
- Observe and Research Your Customers
- Creating Effective Customer Journey Maps
- Measure the right KPIs
- Proactively Understand Customer Needs
- Make Customer Obsession a Core Principle
Observe And Research Your Customers
This part of the process begins with analyzing and understanding your customers.
Each customer segment is characterized by different needs and your service must evolve to provide maximum satisfaction to the customer.
One key tool that you can utilize here is tracking the journey of your customer also known as “Customer Journey Mapping”.
Creating Effective Customer Journey Maps
First, understand your buyer personas and create a personality for each kind of buyer segment,
Then map each step and funnel for your customer:
The marketing funnel for your customer has four basic parts:
- Awareness of the customer for your products
- Desire to buy the product/service
- Action (Actually buying)
You can use Google Analytics for tracking your funnel characteristics. It is a great way to track user behavior on your website.
For example, if you run a website for online hotel booking, your funnel may look something like this:
Then you can determine the percentage drop outs at each stage and see if you really have a problem in the journey.
For example, here only 179 customers went ahead and booked the while 1,580 had reached the guest details entering part. You may want to analyze why this drop out is happening and fix the issue.
After this stage follow these four steps to complete your customer journey map:
- Create a detailed list of touch points that the customer has with your business and make the experience great on all fronts
- Always collect feedback and analyze the ‘voice of customer’ for continual improvement
- Identify the issues both reported and unreported by the customer (For unreported you have to be proactively involved with the customer and research)
- Resolve the issues and set a process to prevent them from repeating again
Measuring the right KPIs
What gets measured, gets delivered. KPIs or Key Performance Indicators are the metrics that are important to be measured in order to track progress and help you take the right actions.
The idea is to have these measures centered around customer excellence. For example, if you are in a blogging business then the number of visitors or average time spent on your blog become two of the key metrics for you.
For an eCommerce business, measuring its quality of service, average days from order to delivery or the number of customer returns or complaints, repeat order rate or net promoter score may become the KPIs.
Proactively Understanding Customer Needs
Customer needs and wants are ever changing and it is possible that the assumptions that you build your business on may change from time to time.
Therefore, activities like customer journey mapping or proactively researching changing needs are also important. Your service or business will have to evolve with the customer.
Make Customer Obsession a Core Principle
Some of the departments may be identified as touch points for your customers and some may serve more internal processes.
For example, someone running manufacturing may not directly interact with the customer, it is still very important for every department and employee to understand their role in delighting the customer. So, no matter what the part of the organization every employee needs to think about keeping the customer in mind.
A typical business is sometimes product centric and you can contrast and make the following changes to get to the other side.
- Strategy: A product centric strategy focuses on making a world class product. On the other hand, a customer centric strategy focuses on making a world class customer solution.
- People/Culture: While most people focus on creating new products in a product centric company, a truly customer obsessed company puts its attention on creating new customer solutions.
- Organizational Design: Typically the organization would be divided on the basis of the product being sold in a product centric organization whereas customer segments will decide the basis of organization division in case of a Customer Centric organization.
- Support: For after sales support, the department may be known as “Product Support” or “Customer Success” depending on the orientation of the company between these two.
The key notion is not just naming the departments this way. It is about asking the question:
“What does the customer need?” And then tailor every process, area and department backtracking from the answer.
Have a Plan & Validate Your Key Assumptions Fast Using Experiments
A question that often gets asked from us is how much time we spend planning and strategizing. And how do we know that it will work?
The key thing here is to work out an initial plan and then adjust the key assumptions based on quick experiments. So here is what you can do.
The first step is to develop a Business Model Canvas.
A typical business model canvas consists of 9 building blocks:
- Customer Segments: Customer segments are the group of customers that you are targeting.
- Value Proposition: Value proposition tells you the value that you add to your customers is a simple and summarized way.
- Channels: Channel section consists of all the sources using which you communicate your propositions, sell your product or service or deliver the goods.
- Customer Relationships: This part basically deals with the methods you use to interact with your customers throughout the course of their engagement with you. This could range from how you answer their queries, address their issues and explain your solutions to them.
- Revenue Streams: There are several ways to monetize a business and thus various sources of revenue.
- Key Activities: What key activities must my business do to maintain my level of service and ability to deliver my value proposition? For example, say if you are an Analytics Consulting firm, then you may need to research the latest developments in the field of Analytics’ Technology to deliver the best possible service to your customers.
- Key Resources: Here you enlist the resources that are critical to the success of your company. These could be employees who are the key to your success or digital assets that help you realize your service. For example, for a manufacturing company, it could be the large machines installed in factories that enable specialized production.
- Key Partnerships: There will be a lot of entities outside of your business who will be key in delivering value to your buyers. There will also be parts of your business that may be outsourced. All these entities form your key partners. Suppliers, companies supporting your outsourcing operations, or key vendors all form a part of this box.
- Key Costs: Cost structures differ by business. Some businesses like Telecom may require high fixed infrastructure costs, on the other hand for a blogging business, or developing an online application may have less fixed costs but more variable costs. All this classification and key cost drivers are delineated in this segment.
As an example, check out this filled out business model canvas for an online business.
Don’t worry, it is possible you may not get it right the first and you may have to go with certain iterations before you come up with a fool proof business model canvas.
You can validate the key assumptions for your business by some quick testing methods and experiments.
Spend time interviewing your customers
Your idea of your customer segments and the usability of your value proposition may or may not match with what the customer actually feels.
To reduce risks and validate your assumptions, you can choose to interview in detail some customers that match your target segment.
This way you can eliminate and adjust some ideas which may not be right.
A bunch of research which may give you some key learnings may already be available on the internet or other sources. You may want to talk to some people who have been in a similar business and see if you can derive some learning from there.
Many industry reports are available freely on the internet for you to explore. Entrepreneurs smartly use these resources at their disposal for quick results.
One such great resource you can use is the digital index reports published by Adobe.
Here is an example: Adobe Digital Economy Index 2020
In A/B testing two similar groups are given different versions of the same thing and their results are compared. The version that performs better is then chosen to make the final cut. You can apply the same experiment with some of the key doubts when you just start a new company.
For example, if you want to test which layout of widgets in your mobile application performs better for your engagement metrics (e.g. average time per session), simply show the different versions to different users and measure data.
Apply → Measure → Validate → Improve
The four step process of Apply, Measure, Validate, Improve should become your method of working.
Whatever decisions or assumptions you take, always measure with key metrics the results that they are driving. In case you see something not working out, validate the same with data and simply change the process. The idea is to test assumptions quickly and improve.
Using your initial business canvas model and then applying these four key methods, you will be able to chalk out a good initial plan.
Remember, you may need to revisit these assumptions in the eyes of a dynamic environment, so always be ready to adjust if the situation requires.
Focus on Outcomes, Not Being Busy
Time and again people repeat that working hard will lead to the right results. To be honest working hard is useful but it does not always lead to success. To be a successful entrepreneur you need to focus on outcomes not activity.
Your time is precious and in order to make the best use of your time you need to divert your attention to those activities that would give you the expected outcomes.
Too many times in organizations what gets measured is activity rather than actual outcomes. You talk to some leaders and they will tell you they are always busy or that they have put in a lot of effort.
Even then, sometimes the business output metrics like Revenue/Profitability are actually suffering. It is important that the actual focus is on driving results and not really ‘working a lot’.
In a typical environment, 20% of activity contributes to almost 80% of revenue. The whole point is to identify those activities which actually lead to the best contribution.
This is usually learnt in a step by step manner. To identify these activities you should always measure the results of your action and adjust your next actions accordingly. The key focus point is to be more obsessed with results rather than just actions.
To make sure you are always focused on the right things, you have to be in the outcome focus quadrant. In this quadrant you put your attention to those activities which are actually important for your goals.
For example, consider a tele-sales department. Each salesperson makes phone calls to dozens of people everyday to make a sale.
There are two different employees, the first one makes the maximum number of phone calls in a day but has poor conversion and hence, doesn’t bring in a lot of sales. The second one places almost half the number of calls but gets you double the conversions which translate into sales.
Clearly, the second type of person is what you need. This focus can come in two ways:
- Measuring the Right Metrics: In our example, you would rather measure the total sales or profit brought about by the sales person.
- Designing Incentives aligned with Your Business Goals: Make sure that employee incentives are well aligned with your business goals.
To see what works and what doesn’t, once you have set the key metrics in place. You can follow a 5 step analysis for every activity or input.
- Measure the Input: The number of hours spent on doing a particular activity or the amount of capital invested in a particular area. For example, if you are into marketing you may try different channels to generate a pull for your products. At this step measure how much money and effort has been put in each channel.
- Apply the Process: At this step, you want to wait and see how your inputs are panning out and make sure what you intend to do is happening. In the example of marketing activities, let your ads run for some duration on each of the channels.
- Measure the Output: Each of your ads may have brought in many leads or prospective customers to your website.
- Measure the Outcome: As a result of the first level output, some outcome must have been realized for your business. Each of these prospects would have led to some sales conversions for you bringing in revenue.
- Measure the Impact: This final metric should be directly in line with your goals and vision. It should relate to the value that you are eventually trying to create through your business. So if your goal was to have 10% market share, impact would tell you the increase in market share due to increased revenue. This metric is the key to justify your presence in business, the value you bring to your customers.
Such an analysis will help you quantify the outcome and impact created by each of your inputs or activities and you can then adjust your time according to what led to the maximum impact and keep doing more of that.
Be Confident in You Achieving Success Even Though You Don’t Have All The Answers Yet
Nothing is perfect from the beginning and reaching perfection is a continuous process that happens by learning and putting the learnings into action.
So, if you ever feel things are not going great. Relax! It happens. Think about what you can do to make it better and bit by bit it will start becoming perfect.
There are two ways to stay confident:
Make sure you have covered all aspects about the problems at hand.
To cover all possible scenarios, train yourself to think in mutually exclusive and collectively exhaustive manner.
Ask the right questions
You need to be sure which questions are important when it comes to business problems. There will be ‘good-to-know’ information and there will be ‘actionable’ information.
Make sure that the effort spent in analyzing is devoted to getting actionable insights.
Start Lean and Crappy, Because You’ll Tweak and Optimize Your Business Model Later Anyway
Being an entrepreneur can be risky and dangerous, but we all know it is also the most rewarding career choice.
However, on the way to getting the rewards, you will surely face challenges that you must overcome and during this journey the consistent improvements to build up your business will be critical not only for its success but also for its sustainability.
Instead of having everything perfect from day one, you can start with an MVP (Minimum Viable Product) and keep tweaking it until it becomes perfect.
Can you imagine what some of the most successful startups started off like?
Here is how Airbnb changed itself from 2008 to 2015.
MVP is a version of your product with just enough features to satisfy your early customers and set a base for future customers.
Here are some important points regarding MVP:
- It meets the bare minimum requirement for your customers.
- It is expandable, so that you can tweak and change it easily.
- It is configured to collect feedback so you can improve it later with customer inputs.
However, be careful, MVP doesn’t mean that your product is low on quality. It simply means it has the bare minimum features to deliver your value proposition.
Apart from the product, other things about your business would also need continuous improvement and check. Here are some things you should be aware of.
Keep Check on Finances
At times when you are just starting your business it becomes difficult to keep track of the numbers and financial trends taking place in your business. It is important that you spend the time on tracking the cashflow or hire someone with the skills to do it.
If you don’t know how to create and analyze your financial statements there are many freelancers available online who can help you.
You can try upwork.com or freelancer.com to submit your requirements and hire the best of freelancers to do this job at reasonable prices.
Create habits to protect data. It is crucial to set up automatic backups and maintenance procedures to protect valuable customer or financial information. Dedicate time to ensure your processes are properly maintained.
Integrate business programs that share information. This will save time and reduce errors by automatically updating data in all linked programs.
Sometimes there can be an additional charge associated with integration although most are free. Make sure you understand these associated costs.
Look out for low-budget, high-impact marketing strategies for your small business.
Social media is a powerful tool, in particular, for small businesses. It can help you be very targeted on how you reach your audience and get a high return on investment.
Carefully decide which social media platform you’re going to use and who will manage it. Are you going to do it yourself or delegate to someone else?
Automate employee management
We all know how consuming team management can be. Sometimes overseeing the day to day tasks can bring down your efficiency and keep you from concentrating on productive tasks.
Try and automate some basic recurring tasks that can fee up your time to concentrate on the more crucial ones.
According to a study by Bain & Company, organizations spend about 15% of their time in meetings.
Some of these meetings are no doubt productive but at times you just spend hours discussing topics that lead to nothing.
You might ask, what’s the harm in unproductive meetings. Do you know about $37 billion are wasted every year because of unproductive meetings?
Instead this time can be given back to your employees for individual work that is equally essential for efficiency.
So, if you want to make meetings more productive first understand why they are unproductive in the first place.
What makes meetings unproductive?
How to make meetings more productive?
- Make sure clear agendas are set for the meeting; decisions that can be taken without holding a meeting, by just exchanging some mails, should be done that way.
- Set a time limit for the meeting; if you plan one for thirty minutes, make sure you hard stop at it.
- Automate tasks, integrate softwares and set processes to take a lot of administrative clutter out of your schedule.
By creating these more efficient systems you not only free up your schedule but also your mind and stress and thereby reduce scope for errors.
This is just a beginning, as your business evolves and grows, be aware of how processes can be automated, delegated or simplified.
Also make sure to periodically maintain/check your systems for accuracy.
Protect and Prioritize Your Time
Daily life is full of stressors, infact stress has become the modern way of life; most of us even think it’s the normal way to get things done.
This is true in all workplace scenarios but this truth becomes harsh when starting your own business, as you inevitably have to be a salesman, delivery person, accountant, photocopying guy, administrator, servant leader, and strategic thinker all rolled into one.
So how do we deal with this?
We all know it takes planning and effort for successful management, but what is more important is protecting the planned time.
People who complain that they have no time do not plan, or fail to protect planned time. Mastering this can take some effort and trials before you experience efficiency.
Know what you want to achieve
The first step is to list down all the specific tasks that you want to do. Then categorize them into short term and long term activities along with their due dates This will give a broader picture and help you prioritize.
Prioritize to save time and multitask efficiently
Now that the task list has been divided into short and long term, start categorizing them with the help of 4ds of time management – Drop, Delegate, Delay, Do.
Start with tasks that are small, require immediate attention and complete them.
This will reduce your list for further prioritization.
Drop the tasks that have been in your list forever and you never got to them or the effort required to complete them is too much compared to the value they add.
Delegate the tasks where you think you add little value and which can be done by someone else. Assign such tasks to others and set up calendar reminders to follow up.
Now you’ll be left with tasks that need your effort and time. Start prioritizing these remaining tasks. This will tell you what you can and can’t delay.
Three ways to rank priorities
- Priority Matrix: Assign each task a priority based on the Action-Priority Matrix.
- Most Important Tasks (MITs) Method: If you fail to meet deadlines even after prioritization, use the MIT method. Rather than creating a massive to-do list and getting it all done, just pick a few essential tasks (maybe 3 or 4) and then relentlessly focus on those tasks during the day.
- Pareto Principle: The Pareto Principle states that, for many events, roughly 80% of the effort comes from 20% of the causes. This is also known as the 80/20 rule or the law of the vital few. Identify the work that will bring in the most output / results. Then make this 20% work your priority and benchmark for the day.
Dealing with interruptions
Interruptions are inevitable and can take a toll on your productivity by consuming valuable time that you could have used channeling towards your task.
Interruptions can lead to loss in momentum and increase in frustration as a result of which you might take a lot more time accomplishing a task that originally required.
Try to turn off notifications from emails, voicemails, apps etc.
In case you are still interrupted by someone, quickly listen to them and take a decision on the urgency of request. If it can be done later give them some estimate when you’ll be able to work with them and then get back to your work.
Managing Long Term Priorities
Long term priorities can have a time frame of up to a year and tend to get ignored or postponed because of this reason. You sure don’t want an overloaded task list towards year end.
Get started on your work as soon as you can and track progress at regular intervals. Make sure you give yourself a buffer at the end. Aim to complete a bit early thus giving time for reviews and corrections.
As you practice working with these methods, you’ll find it gets easier and you’ll be able to pick the right method at the right time, accomplishing all that you want!
Love to Make Decisions Fast (and Don’t Try to Be Perfect From Day1)
Studies suggest the average person makes 35,000 decisions per day, making it one decision every two seconds (minus the seven hours you sleep and assuming you don’t make decisions in your sleep!).
That means you make decisions all the time, be it small ones like where to go out for lunch or crucial ones like which vendor to select. But the question is, are you good at it?
Understanding decision making is one of the most important ingredients for success and when it comes to making your most important business decisions, there are a plethora of factors to consider.
Here are a few simple steps that will help you make stronger and quicker decisions in your work life.
Recognizing the issue
Sometimes you are so stressed out that you attack the problem without thinking about the underlying cause and that means you are just trying to solve the problem looking at the tip of the iceberg, sooner or later you’ll sink.
Therefore, it is really important to understand the root cause. Start asking yourself ‘Why?’. Think of several responses to this why, be persistent and you will find the root cause. Once the problem is correctly defined, you’ll have a real shot at solving it.
Ask yourself whether or not you have the information you need and then try to gather all that you can as fast you can.
Try and use data and be smart about it. Ask yourself what data you need and how quickly can you get it at a low cost.
Sometimes in the process of taking that crucial decision you might just tend to confuse/forget the outcome you were targeting.
Have clear goals/vision for the outcome. Write down the goal you aim to achieve with the decision while clearly defining your vision.
Making a choice
Many times a decision can be a straightforward one or a low risk one and you might just want to go with your gut. But at times you might have a high risk decision at hand and want to be a hundred percent sure.
In such cases you can apply this formula – good data plus good information plus good analysis equals a good decision.
It’s said that successful entrepreneurs make quick decisions. As an entrepreneur if you improve the speed of your decision making, you can take advantage of fleeting opportunities that less nimble competitors are unable to act on.
Also understand that a wrong decision can still be corrected but no decision (action) might just bring you to a dead end.
Sometimes a poor execution makes good decisions look bad. It is very important to know how to implement your choice to make it stick.
As an entrepreneur, you have to make a great call and then you have to implement it skillfully.
It is important to evaluate the results of your decision. If successful, celebrate and remember what was all that you did correct in the process. If bad, take your mind off of the outcome and go back and try to understand what could have been done better.
Was the root cause not understood well? Or was it lack of data? Or is it just that you took too long to decide. Make sure you correct it consciously the next time!
Now that you have got an idea of how you can take smart decisions quickly, let’s look at some ways in which you can check if your startup is ready for smart decision making.
To do that, ask yourself the following questions about your business:
- Is there any way in which decision making can be improved in your startup?
- What are the barriers stopping you from making these improvements?
- What types of data can help your startup’s decision making capability?
- What are the areas where data will help decision making?
- How do you compare to your competitors when it comes to automating some parts of decision making?
The answers to these questions will help you understand how prepared your startup is to make those big decisions and win them!
So, to wrap it up, there are three things that you always need to remember to be sure that you make quick and high quality decisions:
Quality over speed
Quick is good but make sure you are not hasty while following the basics discussed above.
Do not try to reinvent the wheel. Time can be saved if you take help of people who have experienced what you are now facing. A good mentor can always help you make that decision quick!
Do not neglect implementation
However great a decision, if not implemented correctly, it can weaken the impact. Think carefully about who you want to include, how you want to position the idea, and how to make sure your audience is ready to embrace this idea. Make revisions if required.
Next time when making a decision, keep the above points in mind and try using them. Do not hasten, with practice decision making skill will come naturally to you as you continue your journey being a successful entrepreneur.
Learn From Your Own and Other People’s Mistakes
If there is one thing that proves that we are all human it’s making mistakes. A study by VitalSmarts showed that 69% of people admit they have made a mistake they consider catastrophic.
Every entrepreneur makes, and will make, mistakes. Mistakes are a part of doing something and the only way to avoid them is to do nothing.
But if as an entrepreneur you’re going to make mistakes, make them as early on as possible to limit their impact on your business. And the least you can do is to learn from them.
Embrace the success cycle – try, fail, learn, succeed.
Most of the time the first three parts, try, fail, learn, sometimes have to be repeated many times to produce one particular success and this is the same for everyone. Successful people in any domain follow the same pattern. Don’t be ashamed if your first product is just good and not great. This is your learning curve.
Keep in mind the following points to turn your mistakes into success:
- Own your mistakes
- Develop a learning mentality
- Use failure to build relationships
- Develop yourself through failures
Don’t Blame Others, But Take Personal Responsibility
Everyone makes mistakes, but not everyone understands why they have to own their mistakes.
Owning your mistakes represents the first step in learning from a setback. It’s about accepting that you are responsible for some or all of the negative outcomes that occurred.
It simply means you understand we are all flawed and make mistakes and that you are ready to push yourself, motivate yourself to strive harder.
It’s easy to blame someone else but understand that this is almost a meaningless excuse. The blame game is never productive. Instead, seek to understand your contribution to the mistake. Admit it to the person or group who might be relevant, if needed offer an explanation.
This way you’ll be sending a message to others that you have integrity and you know how to step up and take responsibility for your actions.
Such behavior will help you build relationships and earn respect.
All you have to do is be ready to smile and learn the next time when your mistake becomes apparent, because you know that for a smart person mistakes are just another excuse for learning.
Surround Yourself With Successful Entrepreneur Peers to Learn From
When you are thinking who to surround yourself with, who can be a part of your entrepreneurship journey, there is one thing that you should always ask yourself –
Who is going to bring out the best in you?
Start networking with established entrepreneurs. Surrounding yourself with people who are on the same path or have had similar journey will allow you to learn more about yourself and will help you grow as a person.
You can learn from the experiences of other entrepreneurs and incorporate some of the learnings into your business. It will also help you explore avenues of collaboration.
Here are four things you can do to network with entrepreneurs:
- To meet other like minded entrepreneurs you can join one of these organizations:
- Be active on Twitter and LinkedIn and don’t be afraid to connect with people you think can add value. Use this five point checklist to connect to entrepreneurs through Linkedin
- Create a complete profile with a relevant and crisp summary
- Search and join relevant groups
- Follow or send a connection request with a clear message of what you are looking for from your connection
- Comment and interact with the posts which are relevant to you and the people you want to connect with
- Don’t be shy to start a conversation regarding a post where you think additional conversation can help you add value to yourself and the other person
- Rent a co-working space. This will help you share a space where you can meet with entrepreneurs running other small businesses regularly.
- Pitching events: There are a lot of meetups or conferences that are scheduled where startups pitch ideas. Make an effort to search for and attend these events. Happening, Aloqa, and GroupMe are great apps that you can use. These will use GPS to identify nearby events where you can meet entrepreneurs.
Manage Your Emotions During the Entrepreneurial Roller Coaster
Life happens fast and things are constantly changing, and if at times you feel it’s too much to manage, that’s ok.
Feeling overwhelmed is a natural part of a healthy life, but what you need to learn is how to manage these emotions, especially when you are leading a business.
Being an entrepreneur is difficult. You have to make tough decisions with imperfect data and limited resources. Also, you won’t be loved by everyone all the time.
But as a leader of the pack you should know that your behavior will directly affect the performance, behavior and results or your employees. One skill that you need to have is the ability to deal with difficult situations.
To do this, you need to work on your emotional quotient (EQ).
Do you know, about 82% of global companies today use EQ tests while hiring executives.
If money is what motivates you, you would be surprised to know that people with high EQ earn $29,000 more than their counterparts annually.
There are some ways in which you can improve your EQ:
- Practice self-awareness
- Develop empathy and understand emotions in others
- Manage your stress
- Respond instead of reacting by understanding your own emotions in times of crisis
However, part of developing your EQ lies in handling situations at work better.
Here is how you can deal better with some of these situations.
Situation 1: Difficult conversations
It is important to develop the ability to have a difficult conversation with emotional intelligence. Such conversations can be challenging because they take courage, or the fear of being judged.
Take time to prepare for a difficult conversation, while always thinking in two lines, courage and empathy.
Situation 2: Difficult people
In a role where you need to influence others over whom you have no authority, it is very important for you to be able to make connect with people. Making trusted connections will help you go a long way in your business.
For this you need not be good friends with everyone but you need to learn to accept people for who they are and grow your own capacity for emotional intelligence. This will help you collaborate even with the most difficult people.
Situation 3: Change and ambiguity
As change happens at an ever increasing pace, your mind which likes to be in control and feel safe will suddenly experience a lot of stress.
And when you don’t feel in control, you can have stress –driven reactions to change and which can lead to uncomfortable emotions.
Learn to find opportunities within the change. This will help you act with greater clarity, creativity and inspiration and feel more grounded even in the middle of chaos.
Situation 4: Emotional triggers
At times during stressful situations your behavior might not be at its best and you might regret this later. To avoid such situations, start to notice thoughts that trigger these emotions and behaviors.
As you start noticing these triggers, you’ll realize you have a greater choice in your behavior. Practice this technique using mind maps and catch these triggering emotions and thoughts before they actually hijack you.
Take effort to practice these as when you lead others, your ability to course correct unwanted behavior makes you stand out as a strong leader.
Be Grateful and Humble of Your Entrepreneurial Achievements
You have every right to be proud of the success that you have achieved. But that does not mean you can be rude or disrespectful of others.
Humility is the first and most important characteristic of an effective entrepreneur.
Do not let success get into your head and start pushing people around. Because when leaders become autocratic, they tend to perpetuate a culture that lacks trust and candor. This will just affect your business.
Keep in mind these four major points:
- Respect for other viewpoints
- Lack of intellectual overconfidence
- Separation of ego and intellect
- Willingness to revise viewpoints
Humble leadership is the new model for leadership, which will help create a culture of collaboration, engagement and trustworthiness in your organization.
It is about building an environment in your organization where your employees can experience safety and joy at the workplace.
Entrepreneurial Mindset FAQ
An entrepreneurial mindset is characterized by specific focus, beliefs and attitudes. It is focused on the goal of adding value to the customer and attaining vision and belief in oneself and products and services. Attitude is constituted by – accepting uncertainty, resilience, creativity and curiosity, adaptability, speed learning and positivity.
An entrepreneurial mindset forms the foundation and guiding principles behind one’s actions. These virtues enable the entrepreneur or the person to achieve their goals and make sure they don’t go astray.
The more developed your entrepreneurial mindset, the higher are your chances for startup success.
An entrepreneurial mindset can be cultivated by specific experiences and exercises. It starts with creating achievable and clear goals.
You should then develop mental models to aid in fast decision making and should learn to adapt fast in order to create an entrepreneurial mindset. Instead of being ashamed of failures, you should own them and use them to adjust your actions in order to achieve your vision.
An employee mostly settles for a job and has limited passion to create some venture of their own. On the other hand an entrepreneur is always keen on finding innovative solutions to problems and creating something of their own.
An entrepreneur and an employee often look at the same situations in different ways and react differently to the same situations. And that’s how their mindset differs.
– While an employee is mostly concerned about the job given to him/her, entrepreneurs always concern themselves with the larger picture and a set goal. This makes the mindset of the entrepreneur have a laser focus.
– Where an employee sees problems, an entrepreneur sees an opportunity. Entrepreneurs don’t complain a lot and simply work on solutions.
– Where an employee sees failures, an entrepreneur sees learning. Entrepreneurs know that they are always learning and failures are just stepping stones in the process.
– Where an employee sees ambiguity, entrepreneurs evaluate risks and make fast decisions. An employee may become worried and confused in the face of uncertainty, on the other hand an entrepreneur understands the risks clearly and makes fast decisions.
The most important distinguishing traits in their mindset is confidence and belief. Where an employee wonders, “Can I do it?”, an Entrepreneur ‘knows’ h(sh)e will do it!
It’s a bit of both. While that there are traits which might come naturally, no one is born with all the things necessary for an entrepreneurial mindset and some are just developed on the way.
The essential thing is self assess yourself and then see where you lack and work on developing that part. Think about the greatest entrepreneurs of our time, like Mark Zuckerberg or Bill Gates, they were born with certain qualities but they did acquire other skills and met people that enabled them to realize their vision.
Another point to support that entrepreneurial mindset can be developed is the role of mentorship. Most entrepreneurs have had some or the other mentor who has helped them along the way. Even Warren Buffett had Benjamin Graham to guide him with the principles that eventually helped him create a large empire.
To conclude, one could be lucky to be born with certain traits of an entrepreneurial mindset but you can surely develop these virtues and traits if you work for it.
Ready to Start Your Entrepreneurial Journey?
If you have reached this far, then you are surely interested and equipped to start your entrepreneurial journey.
One good place to start would be to apply the knowledge you have just gained to start a blogging business. The advantage with a blog is that it is a wonderfully profitable business and you can start it with minimal investment.
Hence, the risks are low and the returns can be high.
In fact, you can easily make $500-$2,000 a month in your first year. Once you build traffic you can get this to more than $100,000. To learn how to pick a blog niche you can visit our article How To Pick A Blog Niche (and 100+ Blog Niche Examples that Work in 2020).
Imagine how great it would be for you to achieve such a feat. It will open a host of opportunities for you to further increase your wealth, give you the lifestyle you always wanted and most important of all, the satisfaction of having created something of value all by yourself.
So what are you waiting for? Start today.