Entrepreneurship: 5 keys for turning your idea into a business
Entrepreneurship is often associated with expressions like “no risk, no reward”, as if it were just for adrenaline lovers, and although it is very difficult to guarantee success, it is also very difficult to guarantee failure.
In Spain, entrepreneurial activities have already returned to their pre-pandemic levels. This is according to a new report on innovative entrepreneurship, GEM España 2022-2023, published in collaboration with the MAPFRE Sustainable Finance Observatory. This report also says that 6% of all adults in Spain have started a business within the last three and a half years, while 9.4% are hoping to start one within the next few years.
Every new enterprise starts with a unique business idea, and along with a strong value proposition and purpose, this is what will allow it to come to life. We can’t tell you what your reasons should be for deciding to start your own company, but we can offer you some advice to help make your road to success as smooth as possible.
Analyze the market, and when you’re finished, analyze it again
Every business needs customers, but every business has competitors too. The viability of your project will depend upon the economic, social, political, cultural, and geographic context in which you are planning to launch your enterprise, and in most cases, these factors will also help determine the best type of business model and strategy to follow. You need to have a detailed understanding of your industry, while also taking into account aspects such as whether the market is already saturated with your product or service, whether someone else has already tried your idea without success, whether your business will be too small to lead a disruption, whether there are laws in place that could limit your ability to innovate, etc. There are two good tools available for this purpose: the PESTEL analysis (for analyzing Political, Economic, Social, Technological, Ecological, and Legal factors), and Porter’s Five Forces (these measure a company’s potential based on the power of its customers, its power to negotiate with providers, the threat of new competitors entering the market, the threat of substitute products, and the nature of the rivalry among existing competitors).
Always have a solid business plan
We all know that if we can dream, we can do it. However, you still need to start off with a solid foundation. Your financial plan will change, and so will your sales plan and marketing strategy, but your business plan has to remain consistent. In the beginning, your business plan will be the only tangible element of your company, so it represents the minimum unit of life for your project. This is why it must include all of the essential information for getting started, and it should also address all of the concerns that any of your stakeholders may have. Although a business plan can be designed to be more bold or more conservative, one of the most important points to remember is the need for consistency. Understanding the main financial concepts is essential for creating a good business plan, and you will also need to have a holistic vision of business management and leadership. Investing in education and training, and surrounding yourself with professionals who can complement your own strengths and weaknesses, are also essential for entrepreneurial success.
Prototype whenever you can
We’ve already emphasized the importance of analyzing your market, but it is equally important to analyze how your idea will interact with it. Regardless of whether your plan is focused on a product or service, you should always try to create a prototype for your idea. Creating a minimum viable product that you are hoping to launch on the market is an excellent way to reduce your risks, even if this just means a cardboard model, a very simple website, or a basic sketch. Putting together a focus group, even one just consisting of family and friends, is also a good way to analyze the initial point of contact that potential users will have with your product.
Not all money is good
When starting out as an entrepreneur, one of the first objectives is typically to reach your “break-even” point as soon as possible. This is the critical moment when your business stops generating losses, because a balance has been achieved between revenue and expenses. The desire to arrive at this point leads many startups to prioritize revenue, but the problem with this is that it can distract you from remaining focused on your mission, your vision, and in the end, your values. And when it comes to money, there is more to talk about than just income. There’s also the allocation of share capital and assets. In the business world, choosing your traveling companions wisely is as important as in other areas of life, and we all know that some combinations are just not compatible. Getting involved with investors who do not share your culture and purpose can be synonymous with failure. You also have to be careful about the money you take from your customers: never compromise the integrity of your product just because somebody is willing to pay for something. If your idea is good, the right customers will arrive soon enough. Nobody said it would be easy, so be persistent, and surround yourself with people who also believe in your idea. At the end of the day, this is what will come to define your company, not just its bottom line.
Sustainability today, ongoing success tomorrow
If a company fails to put sustainability at the center of its business model, whether this means social, environmental, or financial sustainability, it may become impossible to remain profitable over time. Corporate social responsibility is something that must be achieved from the inside out, not the outside in. There are many ways to play an active role, especially by making a real commitment to the aspects that have the most direct connection to your business model. One good way to determine the type of impacts a project will have, or areas where you may have leadership potential, is by incorporating the Sustainable Development Goals, which provide the main guidelines for companies, organizations, and individuals to make effective contributions.
Since 2018, the Insur_Space program developed by MAPFRE Open Innovation has been providing assistance to innovative business projects and startups, so that the contributions they want to make to economic and social progress can become a reality. And at MAPFRE, we also believe that talent has no age. This is why we have created our Senior Entrepreneurship Guide as part of our Ageingnomics initiative, while also dedicating our resources to encouraging entrepreneurship for all generations.