From the moment you choose to become a digital entrepreneur, the way you look at business will never be the same.
While you likely already have a passion for your niche, you don’t fully appreciate how important each and every move you make can be until you are the boss yourself.
As an employee, you might not worry as much about making the wrong choice. There’s always someone above you to help make sure the business is heading in the right direction. But when the business is yours, you don’t have that same margin for error.
Of course, you’re allowed to make mistakes. In fact, most (if not all) successful entrepreneurs have made–and continue to make–many mistakes throughout their career!
However, there are some important decisions which you can avoid messing up by learning from others who have gone before you. We’re going to go over some of these key decisions so that you know where you should be focusing your energy right from the beginning.
When you take the time to make these key choices, the decisions you make moving forward won’t be as scary, and the consequences won’t be as dire.
Let’s take a look at these tough choices we all have to make, and go over some ways to make sure you’re heading down the right path…
1. Choosing a Target Market
This is such a critical decision to make that it can really make or break your success. Unfortunately, too many entrepreneurs don’t take enough time to really carve out their niche.
It’s all too common to think that knowing a few people who like your idea will automatically lead to resounding success when you decide to launch the business. But this isn’t enough, and saying that you are making a product or offering a service for “young professionals” or “urban millennials” still isn’t enough.
You need to get inside the head of your ideal customer.
One of the best ways to do this is to map out a customer avatar. This is a brainstorming activity where you create a detailed outline of the person who is going to use your product or service.
For the sake of example, let’s say you’ve developed an app that consolidates news stories into short snippets for people to read on their phone. You may consider it enough to define your target market as “well-informed citizens who use smartphones.”
Okay, sure. But this isn’t nearly specific enough. Using the ideal customer activity, you might come up with something like this:
“Our ideal customer is Sally. She works in human resources for a large company, and she lives in the Chicago suburbs. Sometimes she drives to work, but she tries not to, both for environmental reasons and also because the traffic is awful. When she doesn’t drive, she usually takes the train. Sally is rather social, spending three to four nights a week in bars or restaurants with friends trying out new foods and craft beers. She doesn’t really have a lot of time to read the news, so she either listens to it on the radio or reads short snippets on our app.”
Now that’s just a brief summary– your customer avatar could go way more into depth than this.
However, you may be thinking that this seems overly-specific. After all, this is just one person of many that you hope to reach with your app, right?
Yet, this exercise has significantly enriched your understanding of your ideal customer. You can see why your product is relevant to them, you’ve uncovered touch points where you can reach them (the radio, social media, etc.), and you’ve also gained a deeper understanding of what your branding and messaging should be.
(By the way, you can always create more than one customer avatar if you need to. But every entrepreneur needs to create at least one!)
2. To Outsource, or Not to Outsource
That is the question. (Sorry, I couldn’t resist!)
One of the biggest challenges that comes with running a small online business is managing resources. Especially human resources. If you are a one-man show, you can only do so much.
So, one of the important things you need to figure out early on is what you are going to worry about doing yourself, and what you are going to send out for someone else to do.
There may come a time later on in the life of your business where you want to bring some of these things back in-house. But in the beginning, it’s of utmost importance you focus on your core business processes so that you can carve out some space to breathe in the market.
Some common choices for entrepreneurs regarding outsourcing are:
Accounting and Bookkeeping
As you grow, it becomes harder and harder to keep up with this stuff, yet managing cash flow is essential if you want your business to succeed. It’s far better to send this stuff to someone else so that you can be sure everything is in tip-top shape, and also so that you can focus your energy elsewhere.
Marketing and Advertising
While you’ll want to be the one deciding higher-level things such as strategy, don’t be afraid to get some help with this. Today’s marketplace, especially the digital one, is very competitive, and if you spend too much time trying to figure it out, other aspects of your business are going to suffer.
Consider hiring an agency to help you advertise on Facebook, Instagram, Twitter and Pinterest. You could also outsource your content creation. For example, Mary Fernandez gets guest bloggers to write her blog posts so that she doesn’t have to create all the content herself.
Nowadays, it’s not enough to give customers the product or service they want. Instead, you need to deliver a top-notch “customer experience.”
You can do some of this on your own, but you can’t do it all. For example, setting up a 24-hour call center is impractical for a solo entrepreneur, but you may be able to hire a customer service firm. Getting some help allows you to delight your customers, while also keeping your focus elsewhere.
3. Crafting Your Company Culture
Watch this fantastic interview with Brian Chesky (founder of Airbnb), and you’ll be surprised to find out that one of the things he thinks helped make Airbnb such a success was that the founding members spent time in the beginning outlining their core values.
As a solo entrepreneur, you may be thinking it’s way too early to start thinking about your company culture. But the reality is, you already have a culture, whether you realize it or not!
What is your mission?
What are your values?
What is your work environment like?
What habits and systems do you have in place?
Write down what you would like your company culture to be, because it’s unbelievably important, especially for a digital product business where every employee is living in a different part of the country. Having a positive company culture makes it easier to attract and retain quality employees, and it also makes it far easier to reinforce your branding strategies.
Company culture isn’t entirely organic, especially when you as an entrepreneur make the choice to guide it in one direction or another. Of course, there will always be things out of your control, and the spontaneous emergence of culture will likely be a good thing. But, if you take the time in the beginning to think hard about what type of company you want to be, then you are setting yourself up for success down the road.
You’ll have to mold things as you go, but if you don’t take the time now to hammer out your culture, you run the risk of it developing on its own, and if there’s one truth with culture it’s that once it’s there, it’s very difficult to change.
4. Forming Your Management Strategy
In the beginning, there may not be much of a need to figure out a management strategy. Your team may be small, and you may have an intimate relationship with each person. But as you grow (and you will grow), you’ll want to be ready for how you will handle suddenly being in charge of a large operation.
There are lots of resources out there for you to learn about different management styles, but consider also taking some courses or talking to some former bosses. Each one will surely have a few pieces of advice that they wished they’d had when they were first starting out.
You’ll also want to give some consideration as to the benefits you are going to offer employees, as this will play a big role in how you budget. For example, will you offer just the essentials, such as healthcare and a retirement package, or will you throw in some enticing extras, such as a free coffee subscription service, or a maid service for employees who telecommute?
It might seem weird to think about this stuff now, but the earlier you begin, the easier it will be for you to transition from a glorified team leader to the head of a serious company. Knowing how to lead and to manage will help you bring in good talent and keep them on board, further guaranteeing the success of your company.
5. Choosing an Exit Strategy
Again, it may sound a bit strange to be talking about an exit strategy when your business has just gotten off the ground, but it’s never too early to discuss this important part of entrepreneurship. There are a few reasons for this:
1. Having an exit strategy makes you more attractive to investors.
In the beginning, being able to secure funding is often one of the biggest challenges for business owners. Investors want to know when and how they are going to get their money back, and presenting them with a viable exit strategy is a great way of doing this.
Don’t have any investors? Think again! You and your family are investing in your business, so it’s important to think this through to the end before you launch into anything.
2. Thinking out an exit strategy forces you to strategize long-term.
It’s so hard to get started as an entrepreneur that it’s easy to forget about what’s going to happen down the road. Entrepreneurs tend to not pay enough attention to risk management, or they tend not to think past their first growth cycle. This makes sense, but it’s also setting your business up for failure.
By thinking about an exit strategy, you are forcing yourself to think backwards, from the end to the beginning, and this makes your planning far more effective, as it sets you up working towards a very specific goal.
There are a couple of different exit strategies you could plan for, but the best one is really to sell the business. Investors are out there who are always looking for profitable businesses to throw some money at, so this is really the most practical choice.
For help with this exit strategy, Mary recommends reading the book Built to Sell by John Warrillow.
Other options include an initial public offering (IPO) and a merger or acquisition. An IPO is ideal, as it’s what usually leads to the biggest payday, but it’s akin to winning the lottery. Planning for it is unrealistic, and investors will most certainly look at it this way.
A merger or acquisition can be very lucrative, but it depends heavily on the market. If similar or related businesses aren’t interested in expanding, you may find yourself out of luck.
Saying you’re an entrepreneur is another way of saying you’re a full-time decision maker. While you may work to empower your future employees to work on their own, everything ultimately comes down to your decisions.
The range of decisions you will need to make as a digital entrepreneur will depend on the type of business you run, but those we’ve discussed today are common among all business owners. Take some time to think through them today, and you’ll enjoy greater success tomorrow.