While there are many overlaps between being a business owner and an entrepreneur, there are also many differences. One of which you always hear me talk about is the goal of each. The goal of being in business is to turn a profit, and the goal of an entrepreneur is to create value. To define this further, I am not saying business owners do not create value for their customers but their goal is to identify a need or want and fill it, and for that they are compensated. The better they are at their trade, the more they get paid, the more successful their business gets. As an entrepreneur, however, the rules are very different because in most cases, the tasks we undertake do not already have answers and therefore filling that need or want that someone else has is usually a product or service that you have to create from scratch.
The worst part in this equation is that in most cases, the person you are trying to help by creating the product for doesn’t even know they need such a product, as we have come to do just fine without it. It’s quite a complex journey.
While people have said I have been an entrepreneur since the birth of my first business, I often correct them and let them know that I have been in business for over a decade but an entrepreneur only for a few years. Throughout that decade owning multiple businesses has prepared me for the journey of being an entrepreneur quite well, as without it, I would have probably not been able to withstand the emotional roller coaster entrepreneurship really is.
This leads me to the reason why I recommend to anyone wanting to become a real entrepreneur to start a business first, as it is much easier.
There is nothing easy about owning a business, I simply said it is easier than being an entrepreneur and in my eyes a very important step to take before jumping into entrepreneurship. If you have read Third Circle Theory and understand the importance of mastering each circle before moving forward, owning a business is part of the second circle as the people you serve at your business are all part of a society, that same society you co-exist in.
In order to introduce the world you live in your vision, creation, and view of “what could be”, you must be able to convince them to trust you in regards to “what currently is” which is why I always recommend anyone to start a business first.
Here are a few things you must learn before you undertake entrepreneurship, so that you increase your chances of success by 1000%.
Most entrepreneurs don’t actually understand the financials behind a business. While everyone has a great idea and product to share with the world, many people don’t understand the true cost of doing business or acquiring a client. This is where having previously owned a business and dealt with P&L logistics as well as small business marketing can be effective. The overlap between entrepreneurship and business occurs at the time the product comes to life, then the business side must kick in and sell and market the product to the masses. Remember that there is a revenue model, hard cost, and opportunity cost to everything you do, even when you have a free service or product.
Selling is what every business owner does everyday, but very few entrepreneurs do before actually being in a position where they are forced to sell. No matter how amazing your idea, people still have to buy into it by trying it and therefore you must sell them on it, even when its free. Being a business owner helps you understand how consumers make business decisions and even how to ensure they make a purchase from you. It also teaches you so much about how to deal with good or bad weeks when it comes to results. Understanding your customers as well as yourself before you put all your heart and soul into something is very helpful and may even help you during the creation process.
Business is logical, while entrepreneurship is so much more emotional. Being able to see, forecast, and understand the market you play in is key to success in either one. Many entrepreneurs think they are god’s gift to the world which is why they had this great idea, but business owners often spend their time focused on understanding competitors, who and where their clients are, and what their strategy will be. Many entrepreneurs, on the other hand, believe in the old saying “if you build it they will come” which unfortunately doesn’t work as well when 10,000 people are building things at the same time, and no one know you built “it”, whatever “it” is.
Working for others before owning a business allows you to understand the logistics of how a company functions based on someone else having built it. You are able to do so in safety knowing that you will get paid in good and bad time. When transitioning from working from others to owning a business, you gain a set of critical skills that are imperative to your success in the long term: the ability to stay consistent without supervision, the ability to manage the mental stress of the ups and downs, and finally managing the feeling of having your ass against the wall all the time.
It is only natural that if you do well and manage these components, you’re able to transition into entrepreneurship with a more logical approach coupled with you new found passion, which then is the recipe for an explosive start up with a 1000% higher chance of success.