Becoming an entrepreneur can change your life. Whether you want to become your own boss, have a flexible schedule or achieve financial independence, putting your ideas into motion can turn your passion into a profitable business.
The first few steps to running your own business can be challenging. You might have ideas but need more direction or capital to start your venture.
This guide will help you bridge the gap between envisioning how to be an entrepreneur and taking action at the right time. Follow seven steps to build a successful business, learn how to hustle through common challenges, develop key skills and implement concrete strategies for continued success.
What is an entrepreneur?
An entrepreneur turns a day-to-day problem into an opportunity. They face the financial risk of opening a business venture to increase their wealth.
Being an entrepreneur isn’t just about turning a profit and being a business owner. Entrepreneurs seek to impact people’s lives and find problems the market urgently needs to solve.
As a first-time entrepreneur, you’ll wear multiple hats – as many as there are aspects of your business. As your needs change and your business grows, you’ll have to delegate and hire employees to reach the next level.
You could become different types of entrepreneurs according to your goals:
Startup founders: individuals who launch technology companies
Small business owners: those who run businesses with established business models
Social entrepreneurs: people who create organizations to solve social or environmental issues
Serial entrepreneurs: people who have repeatedly started new businesses
Solopreneurs: individuals who run a business on their own
Intrapreneurs: internal employees who focus on innovation and creating new products or services at their company
Note: You don’t need to categorize yourself as one of the above entrepreneurial types but should be willing to pivot your business model when necessary.
Entrepreneurs can evolve and adapt as their ideas and market conditions change. If your business strategy doesn’t produce results, take advantage of emerging trends and adapt your plans to meet customers’ needs.
Entrepreneur vs. freelancer: what’s the difference?
Freelancers work for themselves by offering their time and expertise in niche areas while working on a per-project basis.
While freelancers and entrepreneurs share similarities, such as being self-employed, a few differences exist.
Entrepreneur | Freelancer |
Business model: manages a small business that can operate independently | Business model: runs a business in which they sell their available time and skills |
Growth: aims to scale a business by implementing strategies (e.g., hiring more employees or expanding) to increase revenue | Growth: focuses on building and maintaining a client base |
Risk level: higher financial risk because of potential debt and responsibility for employee salaries | Risk level: moderate financial risk as their income can be inconsistent, but they don’t have to pay back investors or employees |
Monetary potential: can be unlimited based on business growth and market success | Monetary potential: limited by time worked and rates |
Many freelancers transition to entrepreneurship by changing to a more scalable business model. For example, they can use their years of experience and expertise to create digital products like courses or e-books and sell them.
On the other hand, freelancers can scale their solo business into an agency. By hiring and managing other freelancers, they can take on more clients and concentrate on more administrative tasks.
7 steps to become an entrepreneur
Every entrepreneur will tell you a different story about how they achieved success. They’ll talk about how they spotted the right opportunity, pivoted at the right moment or how hard work over the years led to that “overnight success”.
Whatever the story, there are seven specific steps most new entrepreneurs need to create a business. Here’s a comprehensive guide to help you take concrete actions without guessing what comes next.
1. Identify and validate your business idea
A business idea sets the stage for your journey as an entrepreneur. Without it, planning your next steps or setting your goals will be challenging.
Not all ideas need to be unique. However, how you transform an idea into a product or service needs to stand out from your competitors – your unique selling proposition.
How to identify your business idea
The easiest way to generate a business idea is to identify a problem people will pay you to solve. It can be a fix for an everyday issue or a solution for an underserved market.
For example, in 2007, Airbnb founders Brian Chesky and Joe Gebbia noticed that all hotel rooms in San Francisco were booked for a local Industrial Design conference.
They wanted to earn more money to pay rent and had a spare bedroom, so they advertised their loft as a bed-and-breakfast. After hosting their first guests, they got emails asking when they would expand to other destinations.
The Airbnb founders identified a demand for hotel alternatives and decided to focus on that idea.
When thinking of a business idea, make sure you research three key areas:
Niche profitability: use Google Trends to check if your idea is gaining traction. For example, check if searches for “sustainable packaging” are increasing in your area or on a national level. You can also use IBISWorld to check revenue and profit by industry and sector.
Competition: type what your potential customers would search for in Google (e.g., sustainable packages, pet grooming, subscription boxes, etc.) Check industry-specific platforms, Yelp or Google Business Profiles. Your main competitors will appear repeatedly in these searches.
Potential customer needs: join online communities where your target audience hang out. Pay attention to their complaints for customer pain points you can solve. You can even read reviews on competitors’ products or services to find flaws.
Some of the best business ideas come from simple observation. Focus on solving your audience’s problem rather than obsessing over your initial idea.
How to validate your business idea
To validate your business idea, create a Minimum Viable Product (MVP) or basic prototype and test it with your target market.
In the case of Airbnb, the founders created a quick website called “AirBed&Breakfast”. They used their apartment space to accommodate airbeds and offered WiFi and breakfast for $80 a night.
Here’s what the first Airbnb website looked like:
Your first MVP doesn’t have to be perfect. Its sole purpose is to be functional.
When your MVP is ready, present it to your target audience. If it’s a product for a specific everyday use, let them try it at home and then get feedback through Google Forms, interviews, surveys or focus groups.
2. Develop your entrepreneurial skills
An entrepreneur’s skill set spans several technical and soft skills. To avoid falling into the trap of analysis paralysis, learn skills based on two simple rules:
Acquire the skills your business needs the most at its current stage
Get industry experience and stay updated
Focusing on high-priority skills ensures you keep moving forward as you grow, while industry-specific experience adds credibility and keeps you competitive.
As you’re just starting, some skills can prove particularly valuable.
Accounting | Why? Knowing where your money is going and when to invest or spend it is critical for your business operations. You need to plan for growth and sustainability. How to learn: You can check Quickbooks’ accounting basics for small businesses or learn through online courses. |
Marketing | Why? Marketing puts your business on the map. It drives customer acquisition and builds brand awareness so you remain top of mind as your audience seeks a solution. How to learn: Start experimenting with social media and email marketing. These channels offer the best cost-benefit ratio for new businesses. |
Sales | Why? The ability to communicate the strengths of your product or service and persuade a customer to buy it is how you generate revenue and drive business development. How to learn: Try Pipedrive’s CRM and read the sales blog for actionable advice and resources. |
Product development | Why? Product development helps you create offers that meet market needs, deliver value and scale your business. How to learn: Study successful products in your industry. What was the first version of the product? What improvements were added? How did these improvements meet customer needs? |
Growth mindset | Why? A growth mindset helps you adapt to challenges, learn from failure and be resilient. How to learn:
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3. Create a solid business plan
A business plan is a document for planning each aspect of your business and setting milestones for the next 1–5 years. It’s not a set-it-and-forget document. You should review your business plan quarterly and update it annually (at a minimum).
There are two types of business plans:
Traditional business plan | Lean business plan |
Scope: offers in-depth analysis that can be helpful when seeking funding. | Scope: Provides a high-level strategy that is better for swift changes and internal strategic decisions. |
Key components: Company description Market research and analysis Organization and management Product or service line Marketing and sales plan Funding request Financial projections Appendix | Key components: Partnerships Key activities Resources Customer relationships Channels Cost structure Revenue streams |
Length: 15–25 pages | Length: 1–3 pages |
To whom should you show your business plan?
Potential investors
Business partners or co-founders
Key employees
Yourself, to keep planning and strategizing
If you’re unsure what business plan is right for you, start with a lean plan for internal use.
Whenever you’re ready to seek funding, expand it to a traditional one. The US Small Business Administration (SBA) has helpful business plan templates for each type, or you can use a business planning app like LivePlan.
4. Build your initial network
You should network at every stage of your business, even if you don’t have an idea or a business plan. Building professional relationships with people in your field can help you validate ideas faster and learn from their experiences.
Noel Griffith, CMO at SupplyGem, a website that provides reviews, comparisons and help guides for digital business platforms, points out the importance of networking in his entrepreneurial journey:
“As an introvert, putting myself out there to connect with people hasn’t always come naturally, but it’s a muscle I’ve had to exercise and strengthen over time. The best connections often happen spontaneously through mutual friends or at industry events. I’ll never forget when I was first introduced to a successful entrepreneur in my city through a colleague. We immediately hit it off and she became an invaluable mentor who helped guide my early business decisions.”
Networking is a skill you can develop over time, even if you don’t consider yourself a natural conversationalist. The key is to start small, be consistent and focus on building genuine relationships.
You can network online using:
LinkedIn
Social media
Facebook groups
Slack channels
Discord channels
Or you can network offline using:
Local meetups through Eventbrite
Industry conferences
Coworking spaces
Tip: use My QR Code instead of handing out business cards, which can be expensive and wasteful. You’ll get a unique QR code that people can scan with their phones to see your website URL, business page or other social media profiles.
For networking events, prepare a 30-second elevator pitch so people remember you. Talk about what you hope to achieve or one of your immediate goals.
Your main networking objective is to build relationships. Instead of seeing how people can help you, approach each interaction with the interest of learning something new.
5. Secure funding and handle legalities
All businesses have an initial investment and legal considerations to address. Depending on your industry, you might need a higher investment or fulfill a long list of permits.
Sometimes, you won’t be able to profit from your business before getting these settled.
When should you legalize your business?
You can legalize your business whenever you want. However, it’s essential to do it before hiring employees or signing contracts with third parties.
Legalizing your business establishes credibility, protects your assets and avoids complexities that can slow down your operations. For example, tracking your taxes and deducting business expenses becomes more straightforward.
Here are the steps to legalize your business in the US:
Choose a business structure (e.g., sole proprietorship, LLC, corporation)
Select and register your business name
Apply for an Employer Identification Number (EIN) from the IRS
Obtain any relevant licenses and permits
Get business insurance and open a bank account
The requirements for opening a business can vary by state. Check with your local SBA office to ensure you comply with current laws.
How do you get funding for your business?
Securing funding is a vital milestone when starting and expanding your business. The right funding strategy depends on your business model, growth plans and how much control you’re willing to relinquish.
You can obtain funding from:
Angel investors: wealthy individuals who invest in your business. They often act as mentors or use their contacts to help your business succeed. Tap into online platforms such as Gust or AngelList.
Venture capital: firms that invest other people’s money in your business. In this case, you’ll have to give up more equity or control to investors. Research firms that focus on your industry on Crunchbase or PitchBook.
Crowdfunding: when you raise money from people typically through an online platform like Kickstarter or Indiegogo. Consider crowdfunding if you have a product that targets a broad audience.
Bootstrapping: use your savings or revenue generated by the business to self-fund. Most businesses bootstrap in the early stages – ideal if you want full business ownership.
You might be eligible for government grants if your business is in industries like education, research and development or geared toward specific communities.
You don’t have to pay back government grants, which makes them highly competitive. Check grant availability on the SBA website.
6. Develop your brand and initial online presence
While relying on techniques like word of mouth and referrals is a good strategy initially, the phrase “your product/service will speak for itself” is only valid to an extent.
Think of ways to expand your client base beyond your immediate network.
Building a brand identity and online presence gives you credibility and recognition, which makes people more willing to become loyal customers.
Search engine optimization (SEO) is important for long-term visibility, but it can be costly and takes time to achieve results. In the meantime, focus your efforts on social media platforms to build a strong customer base and network.
Here are some valuable steps to develop your brand and online presence:
Design a logo and choose your brand colors
Define your brand voice and values
Create a simple but professional website
Create one or two business accounts on social media platforms
Post valuable content multiple times a week and engage with your audience
Tip: if your business is in niches like business-to-business (B2B), finance, technology or other professional services, you should prioritize LinkedIn. You can use Pipedrive’s LinkedIn integration to transform leads from LinkedIn forms into contacts in the sales CRM and simplify your sales processes.
7. Launch and iterate your product or service
In this phase, you officially deliver your product to the market and test whether new customers want and need it.
You’ll make changes and adjustments to your product or service based on how your audience uses it, so this is an ongoing process rather than a one-time event.
Before launching your product, consider timing, marketing and distribution. Dollar Shave Club is a prime example of a company that leveraged these three factors.
Key factor | Example: Dollar Shave Club |
Timing: Choose the right moment to introduce your product. Consider events or seasonal factors that make your product or service stand out. | The brand launched in 2012 with a viral marketing video during March (i.e., March Madness), when its target audience was watching sports online. |
Marketing: use social media or email campaigns to create interest and enthusiasm around your product. Highlight any features and benefits to make it more desirable. | A funny, low-budget video ($4,500) got thousands of subscribers in the first 48 hours. It highlighted a common problem: razors are expensive and annoying to buy. |
Distribution: ensure your target audience can easily access your product or service. Choose channels your potential customers might prefer when buying. | The company ran a subscription model so people could get razors every month for $1 without visiting a store or worrying about running out of razors. |
Since your product is new to the market, consider a soft launch. Sell your product or service to a limited audience segment and test how they receive it. Establish performance objectives to measure success and guide future iterations.
Matt Little, founder and managing director of Festoon House, an e-commerce business specializing in party lighting, shares his experience of iterating the product:
“Launching a product is always nerve-wracking, especially when feedback starts rolling in. For example, when we first launched our lighting products at Festoon House, some customers mentioned they weren’t happy with the brightness levels. Instead of overhauling the product, we decided to release different versions with adjustable brightness. That allowed us to respond to feedback without losing the core of what made our lights special.”
If market conditions change or demand for your product declines, you should pivot your strategy.
Many successful companies look very different from their initial launch. What matters is staying responsive to your customers’ buying behaviors while focusing on the core problem you’re trying to solve.
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Why become an entrepreneur?
Being an entrepreneur allows you to bring your ideas to life, disrupt an established industry or impact the economy by creating more jobs.
It’s a journey that requires resilience and perseverance, so you must understand why you want to become an entrepreneur. This outlook will fuel your tenacity as you navigate the ups and downs of building a business.
Below are some of the main advantages and challenges of becoming an entrepreneur.
Benefits of becoming an entrepreneur
According to a study by GALLUP, 60% of aspiring entrepreneurs listed wanting to be their own boss as the main reason for starting a business, along with other key motivations.
Business owners: Why did you decide to start a business?
Aspiring entrepreneurs: Why do you want to become a business owner?
Here are some top reported reasons for starting a business:
Becoming your own boss: you take full responsibility for the decisions and direction of your business. Entrepreneurs choose their teams, what clients to work with and what projects to prioritize.
Earning more money: you have the opportunity to make more money than you would in a traditional job. Your income will often be tied to the performance of your business – the more successful you are, the more money you’ll make.
Having a flexible schedule: entrepreneurs often have more control over their work hours. With strong time management skills, you’ll have a better work-life balance.
Pursuing a passion project: you can build your business around your interests or passions, which can lead to higher motivation and job satisfaction.
Impacting an industry: entrepreneurs can introduce new products or services to an industry, from small innovations to significant disruptions.
Next, this guide will go over the most common challenges of the route to entrepreneurship.
The challenges of becoming an entrepreneur
When you become an entrepreneur, the risk of failure is real. You’ll face unpredictable income, high stress levels and the pressure of making decisions.
In the same study by GALLUP, 60% of prospective business owners listed a lack of money to start a business as the most significant challenge among others:
What are the most significant financial challenges to starting a business for prospective owners?
Lack of money needed to start a business: insufficient cash flow to cover your initial operating expenses can limit your ability to grow your business. This can affect everything from product development to your marketing efforts.
Concerns about the personal financial risks of going into business: some entrepreneurs use their savings or go into debt to start their business. You’ll have to deal with significant financial stress if your business struggles.
Inflation: you might have difficulty pricing products competitively as inflation affects operational expenses. You’ll need to consider inflation in the financial projections of your business plan.
Needing to learn more about starting/managing a business: without knowledge in crucial areas of your business, you can make costly mistakes or miss opportunities.
Lack of confidence that your business will succeed: if your company doesn’t perform well, you might start doubting your idea or solution. This can lead to hesitation when making decisions and facing new opportunities.
Most of these challenges must have already crossed your mind. While they might seem daunting, understanding them is the first step to being prepared.
4 key tips for entrepreneur time management
Throughout this article, we’ve talked about time. One of the most common benefits of becoming an entrepreneur is that you get more control over your own time. However, managing your time effectively is vitally important.
Here are four entrepreneur time management tips to help your business succeed:
1. Find the right time management tactics for you
There are several different approaches to time management that you can take, including:
The Pareto Principle, or 80/20 rule, where you spend 80% of your time on the 20% of activities that yield the greatest results
Eat the frog, a phrase that refers to the tactic of tackling your biggest or most challenging tasks first in your working day
Time blocking, which implies the process of allocating different parts of your day to specific tasks – for example, making calls first thing in the morning and sending emails just after lunch
The Pomodoro technique, another tactic where you block time, involves separating the day into quick bursts of activity
Make sure that you also set clear boundaries between your work and your life, as working non-stop can lead to burnout.
2. Make the most of the tech available to you
With so many AI tools now on the market, it’s been easier than ever for a busy entrepreneur to automate his tasks. You can automate your communications with an AI email writer, get quick answers to questions with AI chatbots or AI search and even set up an AI assistant to manage your admin and streamline processes.
Our recent State of Sales and Marketing report revealed that 76% of respondents think AI will support them going forward, so find a way to get AI support for your business.
When AI-powered software isn’t available, plenty of workflow automation solutions can be set up to help you focus on what’s important.
Use tools like project management software, scheduling apps and automation for repetitive tasks. For instance, email automation can help you manage your client communication, while scheduling tools can simplify meeting organization.
3. Regular review and reflect
Even when you feel like you have no time to slow down, it’s still important to assess how things are going.
Set aside time every week to reflect on what’s working and where improvements can be made. Use this review period to make adjustments and ensure you stay aligned with your short- and long-term goals.
4. Build a support network around you
If you have a team, know when to delegate. If not, acknowledge what tasks can be outsourced to others and consider hiring freelancers for activities that aren’t essential to your core business strategy, freeing up your time for decision-making.
Join entrepreneur networking groups so that you have like-minded business owners with whom to share questions and tips. Sometimes, it just helps to talk and fellow entrepreneurs will be able to sympathize with any challenges you go through.
As an entrepreneur you may also have investors and advisors, experts you can turn to for guidance when you hit a blocker.
It’s also wise to find a mentor who is there for you, not just your business.
Final thoughts
Becoming an entrepreneur is a journey in which you’ll face one challenge after the other. You’ll grow personally and professionally, learn all the aspects that make a business and know how to be resilient when things aren’t going as expected.
The feeling that you’ve built a business from scratch can be a validating experience. You’ll look back fondly on those days of chaos and creativity because you were brave enough to take the first step and turn your idea into a reality.
In the early stages, prioritize learning and having an open mind. Focus on a solution for your customer rather than your initial idea to set yourself on the right path to success.
