Vision and creativity are two traits that new entrepreneurs typically believe they must hold in order to succeed. However, many of today’s best ideas were not born with complex systems, algorithms, or even change the way we do business; they were born with a simplistic approach of making something old simply great again.
When we met many of the Secret Academy members at our monthly meetup, many of them were aspiring entrepreneurs working on their first ventures and ideas. The most common theme of what they were struggling with was not the hard work, dedication, or lack of resources. To my surprise, it was that all of them (on their first ventures), were choosing projects that were highly complicated or very capital intensive.
While solving the world’s most complex problems is a task that someone needs to take on, it typically is not the best task to take on as your first project. Many entrepreneurs today look at their first venture as their big project, when in reality entrepreneurship is all about evolution, perspective, and adaptability.
Therefore, logically taking on tasks that require you to have mastered these three things very early on is probably setting you up for failure or a long never-ending journey. Instead, new entrepreneurs should keep the following three rules in mind before jumping into the game, and trying to change how humanity thinks or acts.
1. Your first project is typically a stepping stone.
As I describe in Third Circle Theory, the evolution of the mind encompasses entrepreneurship in due time, as it learns to become resourceful, rather than require resources. This process typically takes time which is why people who take on too much at once often either never really gain traction or give up, as they are faced with too many obstacles.
A company like Ferrari which was founded on heritage, history, and with decades of testing, is not a company you can reproduce in three years with a limited budget. The same can be said for incredible brands that many aspire to work against or go into competition with.
When you’re bootstrapped for cash or are still getting to know yourself, the best way to venture into entrepreneurship is to start with projects that require little capital and expose you to different aspects of a business. Gaining clients, sales, service, engineering, design and some of these kinds of small components are what make up a successful venture.
While some might say, “Well you yourself have taken on the education system as your first entrepreneurial venture, and succeeded in creating a new brand (Secret Entourage), that not only competes with the big leagues but also generates more revenue than most.” But the answer is simple, despite SE being my first entrepreneurial venture, I was also a business owner with 7 and 8 figure businesses. I had also held a successful 10-year career in corporate America in a very high-level leadership position. My stepping stones were a total of 20 years of learning.
2. Simplicity trumps ideology.
Business is not about creating solutions to complex problems but rather taking complex solutions to existing problems and simplifying them. Regardless of whether you simply add a red sole to a shoe that changes its perceived value, or that you help integrate an easier way to post and sell on Instagram, the goal in business is to focus on the simple aspect of making small changes that lead to big results.
Creating more work for yourself or trying to venture into complex problem solving without adequate experience can often lead you to fail early on. The concept here is simply to feed your brain a series of small victories that lead to your confidence rising with each one. This then allows for you not only to take on larger problems, but to stick around when it matters most when things get tough.
There are enough complicated solutions that can be simplified, so picking a complex problem to create a simple solution for in your first entrepreneurial venture is a very tall order – one that is giving a 80% higher chance of failure. Knowing that 99% of new ventures and businesses fail in the first three years, I would want to position myself for success right from the start.
3. Trade equity you don’t have for sweat equity.
Instead of looking for businesses that require high levels of capital in order to succeed or be competitive, most of your first ventures should be focused on the sweat equity approach instead. Instead of seeking a large investment, find businesses where the time you put in will be traded for revenue you generate. The reason I say this is because you need to learn the habit of hard work and commitment.
There is no better way to find this out yourself than when faced with this challenge early on – especially because losing means you only lost time rather than someone else’s money. Since failure will occur no matter how talented or passionate you are, it is important to not allow failures to leave you in a worse place than you were before.
A clear explanation of this is to imagine yourself working 80 hours a week, only to fail six months later. Your biggest loss was your time and effort, but now imagine yourself failing at a different business that required you to take $200K from investors. You now have a tarnished reputation, $200K in negative debt, and a much harder road to recovery. The goal is to put yourself at stake just enough, but not so much that you bite off more than you can chew on your first venture and while you get to know yourself better.
At the end of the day, keep in mind that while many of your favorite and most recognized entrepreneurs are well-known for their most successful, biggest, and baddest ventures – nine out of ten times those ventures were rarely the first ones they started. Many of them tried and failed as well as tried and succeeded at many things, before taking on some of these massive projects that changed the way we live, think and interact in an ever-evolving society. Create better solutions first, before trying to fix real problems.