Entrepreneurs and Entrepreneurship Defined

An entrepreneur is an individual who starts and runs a business with limited resources and planning, and is responsible
for all the risks and rewards of his or her business venture. The business idea usually encompasses a new product or
service rather than an existing business model.

Such entrepreneurial ventures target high returns with an equally high level of uncertainty. The entrepreneur is willing to
risk his or her financial security and career, spending time as well as capital on an uncertain venture, arranging for the
necessary capital, raw materials, manufacturing locations and skilled employees. Marketing, sales and distribution are other
important aspects which are controlled by the entrepreneur.

Even if some of these functions are outsourced, the risk is still carried by the entrepreneur. This makes entrepreneurship
different from inheriting and/or running an existing business, working for a startup or entrepreneur for a salary, being a
commissioned agent, or selling already available goods or services as a franchisee or dealership.

Startup Entrepreneurship

Startup entrepreneurship is all about overcoming challenges and solving problems.

Startup businesses operate with limited resources and capacity. At the Institute for Entrepreneurship, we teach students by
immersing them in experiences like this to better understand how to add
value and make a difference in those communities.

Whether you start a new venture, you constantly seek opportunities, or you want to add value in a fast-paced high impact
environment, the Page Center for Entrepreneurship works to build and train
the growing startup workforce.

Startup

What Is a Startup?

A startup is a company that is in the first stage of its operations. These companies are often initially bankrolled by their
entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a
demand.

Understanding Startups

In the late 1990s, the most common type of startup company was a dotcom. Venture capital was extremely easy to obtain
during that time due to a frenzy among investors to speculate on the emergence of these new types of businesses.

[Fast Fact: Startups are often initially bankrolled by their entrepreneurial founders.]

Unfortunately, most of these Internet startups eventually went bust due to major oversights in their underlying business
plans, such as a lack of sustainable revenue. However, there were a handful of Internet startups that did survive when the
dotcom bubble burst. Internet bookseller Amazon.com and internet auction portal eBay are examples of such companies.
Other household names that came later are Facebook, Airbnb, Uber, SpaceX, and Ant Financial.

Startups need to invest time and money into research. Market research helps determine the demand for a product or
service. A startup requires a comprehensive business plan outlining mission statement, future visions, and goals as well as
management and marketing strategies.
Special Considerations

Location

Startups must decide whether their business is conducted online, in an office/home office or store; this depends on the
product or service being offered. For example, a technology startup selling virtual reality hardware may need a physical
storefront to give customers a face-to-face demonstration of the product's complex features.

Legal Structure

Startups need to consider what legal structure best fits their entity. A sole proprietorship is suited for a founder who is also
the key employee of a business. Partnerships are a viable legal structure for businesses that consist of several people who
have joint ownership; they are typically straightforward to establish. Personal liability can be reduced by registering a
startup as a limited liability company.

Funding

Crowdfunding allows people who believe in a startup to contribute money via a crowdfunding platform. Startups often raise
funds using venture capitalists. This is a group of professional investors that specialize in funding startups. Silicon Valley in
California is known for its strong venture capitalist community and is a popular destination for startups, but is widely
considered the most demanding arena because of this.

A startup may be funded using credit.

Startups may use a small business loan to commence operations. Banks typically have several specialized options available
for small businesses; a microloan is a low interest, short-term product tailored for startups. To qualify, a detailed business
plan is often required. A startup may be funded using credit. A flawless credit history may allow for a line of credit to fund a
startup. This option carries the most risk, particularly if the startup is unsuccessful.

KEY TAKEAWAYS

 A startup is often financed by the founders until the business gets off the ground, and the startup attracts outside
investment.
 There are many different ways to fund startups.
 A startup is simply a business in the initial business stage.

KINDS OF START UP IDEAS

Innovative Business Ideas

These are ideas for new kinds of websites and mobile apps. It could also be new kinds of gadgets, smart phones, tablets, or
other electronic devices.

The great thing about these kinds of ideas is that they lead the way for everyone else. They create whole new markets and for a
short time get a lead over other kinds of businesses. They tend to also have potential to grow rapidly, and for that reason, are
attractive investments for venture capital and seed investors.
The problem with innovative businesses is that precisely because they are new, and their products are also new, no one
really knows what the demand for them will be, and how well they will ultimately grow, or whether they will not find market
acceptance.

Figuring out how to get the market to accept their products, and how to market and grow their business is up to the
founders of companies with innovative products. So while innovating is exciting, it adds a whole layer of risk that customers
may not ultimately be interested in their products. Other kinds of companies never have to face this particular risk. Let's
consider some types of business ideas that do not have that kind of a market adoption risk.

Commoditized Business Ideas

There are many types of businesses which have been around for a long time that do not have to innovate, and can still be
great businesses. Just think about the different businesses in any city. Every city needs restaurants, cleaners, dentists,
mechanics, people to fix homes, etc. The list goes on. The core differences between these types of businesses and
innovative businesses are that these tend to be service-based business with a local focus. For that reason these have less
potential to become multi-billion dollar businesses. Additionally, they do not grow as quickly.

But the great thing is that there is no risk of demand. There is definitely demand for these kinds of businesses as long as the
entrepreneur can provide the service with a high-enough degree of quality.

IMPORTANT NOTE: If you are considering starting such a business, since it is commoditized and has been done successfully
many times in the past, there should be almost no part of it that you are not sure of once you start. There is knowledge out
there for how to start it, promote it, run it, how much money is needed and how to spend that money wisely, etc. So your
challenge becomes simply to find and learn this information. Having mentors who have created such a business before is a
really great option if you can get it. In fact, one of the most common business idea mistakes is to go into a business without
having fully researched how to do it right when that information is readily available.

Hybrid Businesses

What we refer to in this article as hybrid business ideas are the kinds of ideas which borrow a little bit from both, the
commoditized types of ideas and the innovative. Here are some examples.

- Restaurants that serve fusion cuisine. They are traditional types of businesses, but with a new twist on their main product
which is the food.

- Websites to find school tutors. These kinds of sites take a local service that has been around for a long time, and make it
easier to find tutors.

Summing Up On Different Types Of Business Ideas

As you see, no idea is perfect. You have to choose between the extra costs and slow growth of traditional types of
businesses. Or you have to accept the higher risk of failure for technology
based businesses. Of course, the traditional business ideas give you the
 experience of many others to draw upon, and the technology based
businesses give you potential for high growth. But they are not without
their difficulties. And no matter what kind of a business idea you eventually
choose, over a long time, you will have to work incredibly hard to make that
business a success. So make sure the idea you choose is really the right one
for you. And as always, we wish you the best of luck with your business.

SOURCES OF START UP IDEAS

Business ideas are thoughts that when implemented can lead to income generalization. Entrepreneurs must first come up
with ideas from different sources that should lead them to starting a well
planned business.

Here are some of the sources of business ideas

a) Surveys.

Business ideas can be generated from market surveys indicating or showing which sector is viable or possibly void of
products. People can check the market to come out with appropriate
conclusions on which sectors are not flooded or occupied.

b) Training.

Business ideas can be acquired through training individuals where they are equipped with necessary skills and knowledge
from schools and such other institutions of training.

c) Experience.

An idea can also be generated from experience. Experience in itself comes from constant touch on a particular aspect. For
instance, an individual might have an experience in accounting through his
or her occasional involvement with accounting issues.

d) Hobbies.

Hobbies are what one is fond of doing most of his or her time. At least each and every one finds something interesting and
comfortable doing every time. Well, that might be a source of a business
idea.

e) Talents.

A business idea can also come from individual talents. You are best in what you are talented in and this might form a good
base for starting a business if you spot an idea in that area. For instance, if
you are talented to play football, you might spot an idea in supplying
football kits to customers in the market.
f) Strengths of an individual.

An individual's strength can also serve as a source of idea which is tuned to an idea for carrying out business. For instance, if
you have a particular strength in helping out clients through consultations,
that could form a base to start a business.

g) Market gaps (niche)

Spotting a gap in the market can also form an idea. A market gap in this

case is used to mean some important area that is not occupied. Sometimes, a particular area in the market may be empty
with nobody really providing some goods or services needed by customers.
This is what can be formed to an idea.

h) Events.

A business can also be generated through attending events in which new ideas are exchanged. For instance, an event that is
scheduled in some other place can be very good opportunity to find out
what is missing in that particular place and by providing such products, you
satisfy customers’ needs which is one of the reasons of doing business.

i) Media.

An idea can also come from the media. Reading magazines, newspapers and such published materials that contain business
related issues can help one generate an idea. An idea can still come from
the other media sources like television stations and radios. Discussions
related to business topics can be very useful in generation of an idea.

j) Shows and exhibition.

An idea can also be extracted from shows and exhibitions. By seeing what other people presents in the shows and
exhibitions, an individual can come up with an idea of providing something
like what he or she has seen others do.

k) Recognizing needs.

An idea can also be generated from recognition of what customers need in the market. If for instance customers are
frequently demanding maize flour instead of maize itself, one can come in
to provide the maize flour demanded by customers.
l) Merging existing businesses.

Business people can also come up together to merge their business as a new development towards achieving or getting
more customers or for provision of better services to customers.

m) Listening to what people say.

A business idea can also be generated through listening from other people's thoughts. This is more so important when you
socialize with great minds or such people who have tried out businesses or
those who actually are in businesses.

IDENTIFYING AND EVALUATING INVESTMENT OPPORTUNITIES

10 Funding Options To Raise Startup Capital For Your Business

Most business startups usually begin with high hopes and investor confidence. However, a few circumstances can either
make or mar any business startup.

A comprehensive research conducted by experts has shown that business startups within the first year often capitulate due
to a myriad of reasons.

The salient requirement for any business to prosper is nothing short of capital. This is because capital is the basic ingredient
for any business to thrive. Without adequate finance, business startups
tend to crumble, and this malignant obstacle often causes infant business
startup owners to seek financial backing for their startups.

After you must have conducted the right market data analysis research for your startup, obtaining the required funding for
your business is entirely up to you.

Here are a few tips on the procedure you can adopt, in order to source for the required funding for your startup.

1. Bootstrapping your business

In order to succeed in your first time out in your business startup, you must ensure that you have some saved up funds you
can easily access or funds you can obtain from friends or family.

The process of utilizing personal saved up funds or funding from friends and family is known as bootstrapping or self
-funding.

Obtaining funding from family and friends is a unique way to kick off your startup. Friends and family are usually flexible
when it comes to servicing your loan debt much more than other external
sources.

So, if you approach the right friend or family member that supports your idea, you can get some, if not all the funds you
require to start up your business.
Pros

- Funds can easily be accessed

- Little or no bureaucratic obstacles

- Flexible interest rates

Cons

- Bootstrapping doesn't work for large businesses; it only works for small-scale enterprises

2. Crowdfunding

Modern technology has made it easier for people to share their problems on an interactive social platform. Crowdfunding
platforms are basically set up for individuals to pitch their business ideas or
challenges to a community of investors or people willing to support their
ideas or cause.

How it basically works is that an individual makes a business pitch on the crowdfunding platform, he shares his business
model and it's potential for growth. If his idea is bought by the crowd
funders on the platform, they'll make a pledge to support his business
model publicly and donate funds respectively.

Pros

- Crowdfunding essentially creates public interest for your business, thus running some free marketing and providing finance
for your business at the same time

- Crowdfunding eliminates the intricacies involved in placing your business in the hands of an investor or a broker and wields
that power to simpletons on the crowdfunding platform

- Has a potential to attract venture-capital investment as the business progresses.

Cons

- The heavy competition inherent in crowdfunding platforms can prove to be difficult if someone or people are pitching the
same business idea as yours.

- If your business pitch isn't as solid as your competition, then there is a probability that your business idea will be
overlooked or rejected

3. Seek Angel Investment for Your Startup

You might be curious if there is such a thing as Angel investment or Angel investor? Yes, there is. Angel investors are
basically people with a huge amount of capital and are willing to invest it on
over the edge business ideas.

Angel investors sometimes come together in groups to scrutinize business proposals, in order to select the perfect candidate
to invest in.

Pros
- Angel investors offer mentorship alongside capital for startups

- Angel investors are willing to take risks on business idea as they anticipate heavy return on investment from your startup

Cons

- Angel investors provide lower investment capital to business ideas compared to venture capitalists.

4. Seek Venture Capital for your Startup

Venture capitals funds are managed by professionals that have a keen eye for seeking out companies with great prospects.

Their modus operandi involves them investing in a solid business rather than an equity. Once there is an IPO or acquisition
of the business they are partnered with, they then pull out and seek other
investments.

Pros

-Venture Capitals effectively monitor the progress of a company they have invested in, thus ensuring the sustainability and
growth of their investment.

- The mentorship and expertise venture capitals bring to the table can also sustain a business or company effectively

- Companies with astronomical growth rates such as Uber, Flipkart have a pre-designed exit strategy that enables them to
reap huge profits that they can, in turn, re-invest in the growth of their
company.

Cons

- Venture capitals will remain loyal to your business till they have recovered their capital and profits. This usually occurs
during a slim three to five-year timeframe

- You tend to lose control of your business since you're giving up a large part of it to venture capital investors

- Venture capital investors seek bigger companies with proven levels of stability and identifiable workforce. This could prove
to be an obstacle for you because business startups don't usually have this
level of stability.

5. Seeking Funds from Business Incubators and Accelerators

Businesses that are just starting out can access funds provided by business incubators and accelerators.

The programs offered by them can be found in major cities across the globes.

Slight differences separate the terms "business incubators and accelerator".

Core Difference

Business incubators basically nurture business while accelerators fast-track businesses.

Pros
- Business owners receive mentorship from their investors

- Connections can be made with other startups

Cons

- During its 4-8 month lifespan, if commitment is lacking, the startup might spiral in a downward direction

6. Source Funds by winning contests

Another amazing way to source for funds is through engaging in competitions or contests that requires entrepreneurs to
showcase or pitch their business module against other competitors vying
for the same funding for their businesses.

As a contestant, you are required to present a comprehensive and detailed business plan if you are looking to win over
investor confidence.

Pros

- In the process of participating in these contests, media coverage will be allotted to your startup, thus giving you the much-
needed publicity for your business startup.

Cons

- Losing contests or competitions can demoralize the faint hearted, thus causing them to abandon their plans of starting up
their business.

7. Raise Money through Bank Loan

Banking institutions provide financial backing on loans to individuals who approach them with a solid business plan. The
business plan must be well structured to convey the modus operandi, profit
forecast and estimated time of maturity.

The financial provision of banks is in two forms, they are working capital loan and funding.

Working Capital Loan

This loan is designed to traverse one full cycle of revenue generation. Stocks and debtors usually have leverage on the limit.

Funding

This process involves providing the business plan and concise information of the valuation, alongside the project report on
which the loan was sanctioned.

Pros

- Large capital can be accessed by entrepreneurs

- Capital provided can fast-track the process of income generation

Cons

- High risk of Collateral loss, since it is an important requirement for loan grants

8. Acquire Loans from Microfinance Providers or NBFCs

Microfinance was set up to give access to capital to small-scale entrepreneurs that lack access to conventional banking
capital or loans. Individuals with poor credit ratings see microfinance
institutions as a respite whenever they are out of favor by conventional
banks.

Non-Banking Financial Corporations (NBFCs) give out loans to individuals who seek loans, without necessarily imposing any
legality like conventional banks and credit repair services do.

9. Government Programs that Offer Startup Capital

Government programs that offer startup capital are an excellent way to source funding for your business. You are required
to submit a plan that can be accepted by the grant committee. Once your
plan has been scrutinized and approved, you will be provided with the
funds to start up your business.

Pros

- Funding from government is usually substantial in size, thus providing you with surplus capital to manage your startup

Cons

- The process of scrutiny, approval and eventual release of funds may take a lot of time due to government bureaucracy

10. Other Ways you can Raise Money for your Startup

Product Pre-Sale: An amazing way of raising funds for your business is through product pre-sale before launching your
products officially. This builds consumer confidence in your brand and
allows you to size up the demand for your product before its official launch.

Companies like Apple and Samsung adopt this procedure, allowing consumers to make pre-purchases before the official
release of their products.

Selling Assets: Doing away with assets in your possession that have high financial value, can effectively serve as an
immediate source of funding for your startup

Credit Cards: Business credit cards are an instant source of funding. New businesses that incur heavy expenditure can utilize
credit cards as long as they fulfill the minimum payment requirement.

Conclusion:Employing the tactics in this guide can greatly increase the chance of survival of your startup. Bootstrapping
among other funding sources outlined in this guide is the best way to kick
off your business campaign.

However, to truly stay competitive in the market, you must always interchange your funding sources. This provides you with
some level of flexibility and over-dependence on one source of funding.

REFINING A START UP IDEAS

How to Refine a Startup Idea in a Business

Ideas are a dime a dozen--or so the saying goes. Lots of ideas never make it from the inception stage to implementation.
Sometimes it's a matter of loss of interest, lack of knowledge or just plain
laziness. Sometimes the idea sounds good on paper, but it's not feasible in
reality based on the resources available, including time, money and
manpower. Developing a business plan takes the idea from startup to
business.

1. Check the competition. No competition is not necessarily a positive sign. It may mean there is no market for the product.
Search the Internet for competing products or services, and make a list of the companies offering the product and price
points. Amazon, eBay and GoogleTrends are places to research.

2. Determine what need your idea fills with the customer. Many entrepreneurs look at the attributes of their product when
they should focus on the benefits. For example, your widget may be twice as fast as other widgets. That's an attribute. The
buyer doesn't care about that. What they do care about is how much time they'll save using your widget. That's a benefit.

3. Project the costs and time required to get your idea transformed into a prototype product or service. Compare that cost
with what you can realistically afford to devote to the idea.

4. Define the market as specifically as possible. For example, you've come up with an idea for a weight loss program. You
may think that everyone who is overweight constitutes the market. That is much too broad. A better approach would be to
narrow the market to women who want to lose weight after pregnancy.

5. Decide how you'll reach the market. "Build it and they will come" only works in the movies. If no one knows about the
product, no one will buy it. Reaching the market can be accomplished by advertising, word of mouth, blogging and publicity.
All cost either time or money, sometimes both.

6. Complete a profit and loss projection, including development costs. Figure out how long will it take to reach breakeven,
how much money you will need to invest until the business is profitable and where the investment capital will come from.

Things Needed

 Calculator
 Spreadsheet
 Notebook

Tip: If the amount of investment is beyond your capability, or the business takes too long to reach a profit, you might be
better off abandoning this idea and focusing your efforts on another one that can be realistically implemented with the
resources you have.

Business ideas are great. They make us feel like we are on to something. Something big.

Our adrenaline spikes and we want to get started right away.

But this is not always the smartest thing to do.

Usually it is best to take a step back before we go all in.

Here is how you can refine and test your idea to make sure you can actually build a business out of it:

1. Get so clear on your business idea that you can describe it in one single sentence:

You can use this template: (“My company, _(insert name of company)_, is developing _(a defined offering)_ to help _(a
defined audience)_ _(solve a problem)_ with _(secret sauce)_”).

This exercise helps you to get really, really specific and forces you to clearly articulate how you are delivering value to a
specific group of people.

2. Go out and share it with as many people as you can

Though this might sound counter-intuitive at first (people could steal your idea!!), it is one of the best strategies to get direct
feedback and refine your idea. Talk to as many different people as possible.
Take a good look at the people that love the idea vs. the ones that think it is
stupid — this can be a great indicator for refining your target audience.
Listen closely to the objections (for example: “This is a great idea. But have
you thought about…?”) and use them to refine your business model.
Talking to people and getting good feedback also fuels your motivation to
start executing. Just make sure you get the person’s unfiltered and
uninfluenced opinion and listen attentively without interrupting — this will
help you get the most value out of this exercise.

3. Survey your Target Market

Set up a simple questionnaire to get a better understanding of your target customers. You can use an online tool like Survey
Monkey or even just work with Google Forms.

Touch on the following aspects in your questionnaire:

Need: Are they aware of the problem you are solving and do they see your product/service as something they need?

Existing products or services that they are using (+ what they like and don’t like about them)

Willingness to Pay

What product features and characteristics are important for them

Where they usually go to buy products and services like yours (e.g. online store, their doctor etc.)

Any other things you need to know about your customers, as long as you keep it sweet and simple

4. Make mind maps to explore every aspect of the idea

Pick different starting points and brainstorm everything that comes to your mind about your idea, your target customer and
the industry in a structured way. This is an explorative exercise — so think
outside the box and jot down you ideas unfiltered! Doing this will make it a
lot easier for you to think through every aspect of your business plan (see
point 4).

Here are some examples:

Make a mind map of the target customer (e.g. Millennials working in corporate jobs): What are their challenges and
struggles? How do they spend their days? Which tools and devices are they
using? Which platforms do they spend time on?

Make a mind map of the broad idea: What are existing solutions in the market? What is your USP? How does the product
work? What are the major benefits? What are the product features? What
are ways to monetise your idea? Who could be interested in the idea
(customers, partners, investors)?

Make a mind map of the industry: Who are the players in the market? How are they connected? What are the products that
are sold? Who is buying these products? How does the value chain look
like?

5. Create your Business Plan/Pitch Deck

Some people might not agree with me on this one. But I believe this step is a very crucial one in the early stages of a
business. Your business plan does not need to be a fancy 100-page
document. It can literally be a 2-page Google Sheet or a 7-slide PowerPoint
presentation answering the following questions:

What is the problem you are solving?

What is your solution (describe your product or service)?

How will you make money (the business model)?

What is the market size (calculated by looking at your target group and how much they are spending on products like
yours)?

How does the competitive landscape looks like (who else is doing it)?

Why is your solution/product/service better (do you have superior technology/expertise or is it cheaper/better/faster/etc.)?

What is your go-to-market plan (how will you acquire customers)?

Rough Roadmap or Project Plan: Which milestones need to be reached in the next 6–12 months to make this idea happen?

If you don’t have a valid business idea, you will really struggle to set up a proper business plan and might need to go back to
the drawing board.

Some examples:

You realise your product/service is not actually solving a problem (it can still be a valid business idea, but you need to
understand that you are building a luxury product/service)

You realise that it there is actually major flaws in how the product/technology works and need to think it through

You realise that the idea is great but can’t actually be build into a profitable business due its economics

6. Get expert feedback on your business plan

Make sure your business plan or pitch deck is short but comprehensive, to the point and easy to understand. Then, get
feedback from experts. After you have talked to ANYONE and EVERYONE in
point 2 and refined your idea, you are ready to seek qualitative feedback
from people that know what they are talking about.

This could be:

Industry Experts

Successful Entrepreneurs

Investors

Coaches and Consultants with industry or entrepreneurship focus

Highly targeted potential customers

7. Test your Prototype with a select group of people

Develop a first, basic version of your product or service. This is your MVP (Minimum Viable Product). Depending on the
complexity of your product this could mean you are manually simulating a
process that technology will do later on. If it is a food product, you can get
people to try the first recipe. If it is a service like consulting or coaching, do
practice sessions for free. Basically, think of the simplest version of your
product and service that possesses its core features and starting getting real
feedback from potential customers. This process is integral to refine your
Product-Market Fit. Furthermore, it allows you to build up a small group of
supporters than can help push your business once its launched.

Alternatively, you can build a landing page or list your product on a crowd-funding website to collect pre-orders that will

help you proof demand and fund your product development.

TAKE-AWAY

Don’t just develop a product and throw it on the market. Use a mix of open idea exploration, structured documentation,

market research and real feedback from potential customers to polish your idea, refine your business model and adapt your

product based on the wants and needs of the customer.