The Young Person's Guide To Entrepreneurship- Part 1



From Idea To Creation: How To Develop A Start-Up Business As a Young Person


Do you have a great idea that you’d like to turn into reality? Maybe making small gifts and selling products? or developing a service to support the needs of your local town? If you’ve ever had these thoughts, you might want to explore entrepreneurship.


Whether as a form of alternative self-employment or as a side hustle to support your main income, entrepreneurship comes in many forms. But, today we’re going to break down the beginning steps needed to launch a small business and open the door to the world of entrepreneurship.


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What Is Entrepreneurship?


First, let's start off by talking about entrepreneurship. Since entrepreneurship comes in many forms, it's important to understand the basic theory which underpins this career path.


The word entrepreneur derives from the French and loosely translates to “Gap-taker” in that someone finds a gap in the market and develops a business to sell services or products which fill that gap in the market.


However, in an academic sense, there is no clear definition for entrepreneur or what it means to engage in entrepreneurship. Some see this as two paths, being individual entrepreneurship and corporate entrepreneurship… basically, the difference between owning a small business and owning a business that employs two or more people.


Although, in its most basic sense entrepreneur means “the founder of a new business, or a person who started a new business where there was none before" (Barton Cunningham et al, 1991).


However, this can also be associated with innovation, in inventing something new and exploiting that invention’s value for monetary gains as compensation for your time and effort in the creation process.


Furthermore, entrepreneurship can be thought of more broadly in the sense of finding an opportunity and developing a strategy to deliver a product from that opportunity.


For example, you may find that your friends and family really enjoy hand-made, ethical products as a way to support the environment and aid in a form of environmental activism. Therefore, there is a gap in the market to produce these products and a clear target market that would purchase them.


As well as this, entrepreneurship can be associated with problem-solving, in that you find there is an issue that needs fixing and you develop a service to fix that specific issue.


For example, you may notice that your friends and family struggle with developing relationships in a post-Covid-19 environment, so developing a service where people can meet in a safe space solves that problem.


Overall, it's important to remember that there is no right or wrong way to engage with an entrepreneurial practice, it is essentially a trial and error activity of figuring out what works for your customers and what does not work for your customers and building an infrastructure around this to sell a product or provide a service.


The most important element is focusing on your customers as they are the key element to a successful business.


It's also interesting to note that because of this lack of transparency in defining an entrepreneur, as a young person of today's generation, you may be engaging in an entrepreneurial practice and not realizing it.


This makes young people the perfect candidates for entrepreneurship.


“The face of the world economy has shifted, and young people today are well suited for entrepreneurial activity” (Dollinger, 2008)

This is because (1) young people are more well versed in technology (2) the internet has made business more accessible to everyone and (3) young people have an inherent ability to think independently and are well suited to a self-employed business mindset.


However, even though there is no straight path into entrepreneurship, many find it hard to begin developing a business and may not understand this career path as it isn't taught in schools.


So, If you're a young entrepreneur or interesting in becoming one, I want to offer a starting point to think about when developing your business idea, and this all begins with market research.


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Conducting Market Research


Once you have found a gap in the market, identified a problem that needs solving, or simply come up with an idea you think absolutely must exist in the world, it's important to conduct research on that idea.


This is so you can understand the full breadth of that idea and how to change from your theory to a practical, real-world business.


Market research is also important because it allows you to test your product or service before fully launching so you can find flaws and risks associated with your business and develop methods of mitigating these risks to manage the business in a more linear and successful manner.


It also allows you to determine who your target market (customers) are and how you will reach them with your product or service.


Lastly, market research can show you the current state and health of the specific industry you are joining, which helps you to find where and how you can place your business in the existing market.


Market Research can be conducted in several ways and it's critical you understand these research methods to produce data and insights which are fair and unbiased. Unfair and biased data can dramatically harm your business as it produces inaccurate results which can taint your strategies and methods of running your business.

First is surveys, surveys are great in producing demographic data on your customers. This includes their name, age, gender, location, and income, as well as a few other things which then helps you to be able to describe EXACTLY who your product or service is for.


Instead of using a scatter-gun approach and targeting everybody which leads to wasting time, money, and resources.


Next is interviews. Interviews allow you to go much deeper with your research and allow you to engage in a 1-2-1 conversation with your customers.


Here you can find psychographic data which includes things such as your customer's activities, interests, and opinions. This allows you to make more informed business decisions as to how you will market and promote your product or service towards your audience.


For example, if you find that your customers really like anime, you could create a product that uses anime styles to further engage with your audience and develop a closer relationship with them.


Another research method is focus groups. Focus groups allow you to capture psychographic data on a much larger scale as you are engaging with a group of your customers instead of just one.


This is great for engaging in debates between your customers to find out where the differences in their activities, interests, and opinions are which can further help you to make more informed business decisions.


However, these research methods are all 1st hand research methods and require you to undertake research activities yourself. As well as this, there is another method called 2nd hand research.


This research method is all about collecting research materials that already exist outside of your business and includes things such as academic articles, books, trade magazines, and industry reports. This helps you to find out the state of your industry such as how much market share other companies have in your industry.


For example, if your business idea is to develop a made-hand e-commerce shop, selling your products from your website, it is key to know that Etsy (one of the worlds largest e-commerce shops specializing in hand-made goods) generated 75.5 percent of its revenues through its marketplace segment.” (Statista, 2022) and that they will be a direct competitor to your shop.


Although, it's important to use the word ‘competitor’ lightly as this can often insinuate that you need to ‘beat’ Etsy to have a successful business.


You don’t, but understanding who plays a role in your industry can be helpful in learning how you will play a role in your industry and you can look to these ‘competitors’ for inspiration on how to manage your business, such as emulating the business model of Etsy and re-configuring it to better fit your business.


That's the basics of market research, there are other methods that you can use to conduct market research, such as practice by research, but these are the main pillars you can use to develop a business idea and begin finding out how you can find your place in the market.


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Writing A Business Plan


Once you’ve conducted your market research, it's time to start thinking about writing a business plan. Some consider this a tedious task but it is an important one as it allows you to place all of your ideas into one document and meticulously see how your business is going to operate.


The beginnings of any great business plan starts with an executive summary. A 2-3 sentence paragraph with details of the 5 W's of your business, Who, What, When, Where, and Why.


The most important of these 5 W’s being the ‘why’, why did you start your business, and what makes you unique as opposed to someone else running a similar business. This then ties into your USP (Unique Selling Point) and will make you stand out from other businesses in your market.


Then it's onto the elevator pitch. This is similar to the executive summary, but the aim is to describe your business in 30 seconds and sell your idea to someone, convincing them your business is a great idea!


For example, if you ran into Bill Gates in an elevator and he was getting out on the next floor, what would you say to him to get him interested in your business? This is why it is called an elevator pitch.


How do you convince someone to become interested in your business in less than 30 seconds?

Next is your vision, mission, and value and it's important for developing the growth of the business. The vision can often be hard as it requires you to think into the future and ask yourself “Where would I like to have this business in 10 years' time?”


Many people say “I'd like to be doing more of what I'm doing now” but you need to think more ambitious than that. What do you want to achieve with your business? And what impact on the world do you want your business to have?


In terms of the mission, these are the more tangible goals you would like to achieve, such as “selling 1000 products to my customers in the 1st year of launch” or “my mission is to help people overcome social anxiety after Covid-19.” Think about the effect you want to have on your customers and how you can improve their lives with your product or service.


Then is your value and this is the value that you bring to your customers. For example, you could bring customers the value of environmentalism or increased confidence. This is all about what your customer gains by making a purchase with you and why it's worth charging customers for your product or service.


Now it's time to list all of your products and/or services you offer. Break down your products and/or services by providing a description of what it is you're selling, so your customers understand this too. You can also say what's included and what your rates are for the individual product and/or service.


This allows you to build a bank of knowledge on your product and/or service so that when someone approaches you for a purchase, you know exactly what it is you're selling and can explain it to them in a clear and concise manner.


Once you’ve written your business plan you'll have a much better understanding of the overall operations of your business.


There are more elements to a business plan, but I’ll cover them in part II when we talk about running and managing your business. For now, this provides a good foundation on which to move forward with your business and get you started with your SME (Small/Medium Enterprise).


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Writing A Marketing Plan


Next, it's about developing a marketing plan for your business using the data you gained in your market research.


Many young entrepreneurs miss this step as they are eager to launch their business but it's an important step in the business process because if you don’t know how you’re going to market your product or service, then how are you going to find customers to make a sale?


The foundations of any marketing plan is to find out who your target market is and more importantly who your target market isn't!


This is because quite often with small businesses, you have a limited marketing budget to spend on marketing materials and you don't want to waste time, money, and resources. The key to any successful business is managing time, money, and resources.


As well as this, if you don't have a marketing budget and are going to engage in what's called “guerrilla marketing'' which means using any means necessary without money to market your business, it is critical to understand who your target market is and how to reach them.


You can start this process by drawing upon your market research. In your surveys, interviews, and focus groups who were the people who would be your ideal customer?


For example, if you found that people like hand-made bracelets, you would make hand-made bracelets and target that demographic of people.


However, if you found that a different demographic of people didn't like hand-made bracelets, you wouldn't bother targeting them with your product or service as it would be a waste of time.


From this, It's good practice to develop a strategy to reach your target market. Do they spend time on social media? Then it's a good idea to set up a social media account.


Which social media do they spend the most time on? It is Instagram then setting up an Instagram account (which you can now sell products from directly) is a good idea to reach your target market.


Alternatively, if you target a market like spending time at local bars, restaurants, and events, it's a good idea to put posters up in these places and attend events such as local markets to sell your products there… sometimes it can be a combination of both!


It's also important to set goals in each marketing campaign. For example, if you are launching your business for the first time, the main goal will be to raise awareness of your business and you could measure this by how many followers you gained or how many comments you had on your posts.


As well as this, you can measure how many people came to your stall at an event and how many people made a purchase as to how many people did not.


From this, you can evaluate the success of your marketing plan by seeing whether or not you achieved X amount of followers or sold, X amount of products.


This forms the basics of marketing a small business. It's important to remember who your customers are as this will change over time.


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Conclusion


Starting a business isn't easy, it requires a lot of upfront work and the development of key infrastructure to support your business.


However, these points will help you form the foundation for starting a small business in Cumbria (or anywhere in the world for that matter) and hopefully, it's given you some tips on where, to begin with, your business idea.


If it has, we would love to learn more about it! So comment down below with your business idea and how it's going!



In part II we’ll be talking more about launching your business with branding, website development, and funding.


If you would like any more advice on starting a business, let us know in the comments also and we’ll cover it in another article.



Sources:


- Joshua R F Murphy: https://joshuarfmurphy.com/ Having launched several businesses and engaging in an enterprise placement year where I won quarter-finalist in the Santander Young Entrepreneur Awards, I have gained a deep knowledge of business development and entrepreneurship and now manage my own music management business “Joshua R F Murphy”

- Defining Entrepreneurship: https://www.researchgate.net/profile/J-Cunningham-3/publication/270820230_Defining_Entreprenurship/links/587e57c708aed3826af45ded/Defining-Entreprenurship.pdf

- Entrepreneurship, strategies, and resources: http://155.0.32.9:8080/jspui/bitstream/123456789/169/1/Entrepreneurship-Strategies%20%26%20Resources.pdf

- Distribution of Etsy Inc.'s annual revenue from 2012 to 2020, by segment: https://www.statista.com/statistics/409391/etsy-revenue-segment-distribution/

 

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