If you are considering becoming an entrepreneur, currently side hustling, or you’re new on the entrepreneurial journey, it will be important to know what you can expect.
You’ve probably already heard that being an entrepreneur is not for the faint of heart (which is completely true!). But unlike more traditional careers, being an entrepreneur can be highly unpredictable.
In fact, taking risks is a defining characteristic of entrepreneurship.
While this level of unknown or unchartered territory can feel overwhelming particularly in the beginning, it can also be very exciting and extremely rewarding.
In fact, over 582 million entrepreneurs around the world have already taken the leap.
Which means that although there is not one single, universal clear path to successful entrepreneurship, there are certainly common experiences that aspiring and new entrepreneurs can expect to encounter.
Small Business Success Versus Failure Rates.
Some experts tend to use small business failure rates as a deterrent for aspiring entrepreneurs.
According to the U.S. Bureau of Labor Statistics, twenty percent of small businesses in the U.S. fail in their first year and 50% of small businesses fail after 5 years.
But if we flip that statistic and focus on parallel success rates, then it must be acknowledged that 80% of small businesses in the U.S. succeed in their first year and 50% succeed post 5 years.
There are several factors that impact these success rates, one of which is adequately preparing for the entrepreneurial journey in both tangible and intangible ways.
Having a general understanding of the entrepreneurial process, which is iterative and not linear, is one way you can begin to prepare.
Four Stages of Entrepreneurship.
The entrepreneurial process generally includes 4 broad stages.
Stage 1: Ideation.
This is the very beginning. In the ideation stage, individuals are just getting started. They’ve already decided on a product or service. And are taking initial steps to establish a business that could replace other sources of income.
- Acquire customers.
- Legally establish the business.
Excitement. Hope. Everything is brand new and there is an excess of emotional energy to pour into the business.
Stage 2: The Grind.
In this stage, hard work has paid off.
A viable niche has been identified, customers are being served, and the business is generating revenue.
But instead of being able to sit on laurels and enjoy the accomplishment, individuals work harder and longer because the business is highly dependent on a single person or two.
- Refine the service or product offering.
- Make a profit.
Proud. Overwhelm. There is proof that the initial business idea is valid and can make money but sustainability is questionable.
Stage 3: Scale.
In this stage, infrastructure is put in place to increase the stability of business operations.
- Build a team.
- Automate business processes.
Lack of control. There’s a great deal of emotional conflict in this stage knowing that scaling is the right thing to do for longevity, but the entrepreneur not wanting to give up direct control over all aspects of the business.
Stage 4: Expand.
At this stage, an individual has moved past most of the early tentativeness and is more of a seasoned entrepreneur.
The focus now is on growth and expansion, as well as perhaps diversification.
- Evolve the business.
- Manage versus “do”.
Re-energized. Here entrepreneurs can start to ideate again and introduce new forms of innovation into this business. Except this time innovation is done on the solid foundation of a core business and customer base.
These four broad stages of entrepreneurship can be used as a general guideline to help understand some of what you are likely to encounter and feel on your journey.
Keeping these stages in mind will give you a general sense of what is to come.
Building and sustaining a small business can be challenging and complex, but planning ahead, remaining flexible, and leveraging all the resources available to you can set you up for success.