How To Become an Entrepreneur in 7 Steps

By Erin Wike

Updated July 14, 2021 | Published February 25, 2020

Updated July 14, 2021

Published February 25, 2020

Erin Wike is a career coach and lecturer at The University of Texas at Austin and owner of Cafe Con Resume. Erin has over 14 years of experience in corporate marketing, advertising, PR, non-profit and higher education as well as recruiting for many well-known brands and small businesses

In 2020, there were 33.7 million small businesses (also known as “entrepreneurs”) in the United States. You may have interacted with an entrepreneur and not really understood what that meant or if that may be something that might interest you in your own career growth and development.

As we grow and learn, we tend to gravitate to careers that are exciting or interesting. Think back to your childhood. Was there someone that you always loved hearing talk about what they did for work? Did they own their own business? The unique ideas of entrepreneurs can address a variety of needs in business, technology, social, economic, community or other problems. They tend to solve an issue while providing job opportunities for others to help them give back to the community.

Becoming an entrepreneur may not have a degree requirement nor specific professional requirements, but it takes lots of knowledge, passion and a drive to achieve. It’s also the type of venture that requires someone who is risk-averse and has support to handle failure or acceptance if the idea doesn’t match the exact need and timing in the market. In this article, we share what an entrepreneur is, things to consider and address some common questions about the career opportunity.

What is an entrepreneur?

According to Merriam-Webster, an entrepreneur is “one who organizes, manages, and assumes the risks of a business or enterprise.” They often take on greater risk than the average business person, possibly reaping greater rewards. Economists recognize entrepreneurship as an essential resource in production. Entrepreneurs use land, labor and capital to give back to the economy by providing goods and services.

For most new projects, an entrepreneur creates a business plan that lays out the resources required for hiring, financing and the leadership of a new business. Capital funding can be hard to come by for new entrepreneurs and their projects, so they often start small and invest their own resources into the project. Some entrepreneurs start projects alone, taking on the risk-reward ratio with little help. Others, however, seek partnerships. With the benefit of additional credit and resources, businesses tend to grow faster, seeing greater success.

Related: Best Self-Employed Jobs

Entrepreneurs and the economy

To succeed, entrepreneurs coordinate with capitalist economies. They're identified as a resource that can build profit and provide new opportunities. Entrepreneurs make difficult decisions, often taking risks to achieve their goals. It's because they're willing to take these risks that entrepreneurs make a significant impact on their local economies.

Related: The Best Business Degrees for Your Field

How to become an entrepreneur

“Entrepreneur” is an exciting title for many as it can be a fulfilling and rewarding career. The entrepreneurial path tends to start with a great idea. You may turn to your friend and say “wouldn’t it be great if…?” and your wheels start turning on what resources and technology you might need to bring this idea to life. Those interested should create a plan and include the following steps on becoming an entrepreneur:

  1. Identify a problem.

  2. Expand your formal and informal education.

  3. Build your network.

  4. Reach financial stability.

  5. Solve the problem with a business idea.

  6. Test the idea.

  7. Raise money.

1. Identify a problem

After you’ve come up with your great idea—like a restaurant concept, delivery service, coaching specialty or new app—you can then start creating the business plan. Often, you’ve found a concept or process that will make consumers’ lives easier. For example, after watching the news, an entrepreneur finds that their city lacks sufficient daycare centers for the working population. Through further research, the entrepreneur discovers that surrounding counties share the same problem.

2. Expand your formal and informal education

Education is essential in an entrepreneurial career. This may be a college degree program, apprenticeship or a variety of work experience. You will want to learn the basics of business and build your vocabulary, as well as have solid business acumen. Problems occur frequently when starting a business and knowing how to overcome them is vital for the entity to thrive.

Before getting started, you may want to explore a variety of success stories—and even failures—of certain business entrepreneurs. Doing so, will likely both help you comprehend the tenacity that’s required, and inspire you to make the seemingly impossible, possible. Start by following entrepreneurs from your university or alma mater or even find influencers on social networking sites. Famous entrepreneurs who have made a demonstrative impact with their projects include Oprah Winfrey, Steve Jobs, Richard Branson, Marc Cuban, Anne Wojcicki, Reshma Saujani, Sara Blakely, Kendra Scott, Bill Gates and Michael Dell.

3. Build your network

It can be challenging to get a business venture going, but you can make it easier by enlisting help from other professionals or mentors. Those who take the time to network and make new connections can gain valuable benefits. Contacts may provide helpful starting loans, relevant advice or present new and greater opportunities.

Look for entrepreneurs among family, friends, neighbors or university alumni networks and reach out to them for informational interviews. Consider yourself an investigative reporter and make it your goal to learn two to three things from each of them about entrepreneurship. Take copious notes.

Also, take the time to learn about angel investors and funding for entrepreneurs and small business grants. You can find grant information on the U.S. Small Business Administration’s website.

4. Reach financial stability

Although it's possible to obtain additional capital, experts advise that new entrepreneurs have a decent amount of savings, since they may lose money on their first business. Do not hesitate to work with a financial expert on what your P&L (Profits & Losses) worksheet may look like one, two and three years out. Many entrepreneurs find that they really start to turn a profit in three to five years and a lot can change in the market during that time. If you have a back-up stream of income, support or an additional pool of money, this can make the transition to a new business idea easier to manage and help educate your expectations.

5. Solve the problem with a business idea

Continuing with the previous example, the entrepreneur's solution is to open a childcare facility with multiple corporate partners who support the tri-county area. With so many businesses employing parents with small children and no business already providing dependable childcare, there's plenty of customers and revenue to be made. The entrepreneur can now formulate their business plan.

6. Test the idea

The entrepreneur’s idea is solid, but they need to test it. Local business owners are the best place to start. So, the entrepreneur surveys multiple business owners in the area, assessing their need—and the need of others they might know—for childcare. Results show that the vast majority are unsatisfied with their current childcare, citing long commutes and/or work interruption as their chief complaints.

The entrepreneur learns two valuable pieces of information:

  • Most community members need the service.

  • There are three large employers with a sufficient amount of employees and potential onsite daycare space.

A competitor analysis can provide areas of improvement in the business plan.

7. Raise money

It's good to have savings to fall back on, but the entrepreneur may need a lot more to start the business. There are three primary ways to obtain capital:

  • Bootstrap. This term refers to the act of starting a business without help. It can be done by cutting costs or using an individual's own money.

  • Apply for a loan. A common method for raising capital is applying for a bank loan. It may not be possible to apply for a small business loan this early on. However, individuals can apply for generic loans to cover start-up costs. The U.S. Small Business Administration provides more details on small business loans.

  • Find an investor. Networking helps in finding those who can provide financial aid. Pitching a business plan to an angel investor is a great option. Otherwise, the individual may need to contact a venture capitalist firm. These firms require entrepreneurs and their businesses to meet specific requirements to apply.

Related: 10 Tips To Help You Network Like a Pro

Frequently asked questions about becoming an entrepreneur

If you’re thinking about becoming an entrepreneur, you likely have several questions. Here are the most common questions you might have:

  • Are there any educational requirements?

  • How do new entrepreneurs advertise their business on their own?

  • Do entrepreneurs need to be creative?

  • How do new entrepreneurs start a business on their own?

  • What are the common barriers to becoming an entrepreneur?

  • Can you start a business in college?

Are there any educational requirements?

Entrepreneurs are in business for themselves. Since they're often their own boss, entrepreneurs may not need higher education. There are plenty of helpful resources on the internet to guide individuals on their new career paths. Having a college degree can be very beneficial, however. degrees in business, economics or a related field offer valuable insight into the field. Earning a Master’s in Business Administration may look better to potential investors than no degree at all.

A lot of life experience can also help. For example, if you have worked in customer service, hospitality, the service industry or even healthcare, you have a true sense of many elements to make a business successful and also unpredictable scenarios. This can help you to be adaptable and flexible to juggle your learning with your action steps to bring your idea to life.

How do new entrepreneurs advertise their business on their own?

Advertising is expensive and takes proper instruction to truly understand. For those without degrees, the internet provides resources and even introductory courses to advertising. Entrepreneurs may not always need a complicated campaign or scripted commercial. They can instead use digital marketing to advertise their business. Social media platforms allow business owners to advertise on their sites and even offer guides on how to use their ad management systems.

One key thing is to consider the power of “word-of-mouth” marketing. You may want to understand your target market and how would they help be your best advocate. This includes being clear on your values, mission, products and services as well as how you’re different from your competition.

Do entrepreneurs need to be creative?

It is helpful to harness creativity to conceptualize a business since the entrepreneur's goal is to come up with creative solutions to problems. Each entrepreneur may have a different sense of creativity (art, marketing, finances, promotions, partners). It is important to have strong skills such as mathematics and problem-solving to really bring your ideas to life.

If you like to exercise your creative brain, here are two resources to try:

  • Design thinking

  • Knowing your strengths

How do new entrepreneurs start a business on their own?

To start a business, entrepreneurs need to educate themselves on the industry they're entering. They need to understand the requirements and expectations needed for success. Financing can be challenging this early in a new entrepreneur's career, but they can benefit the venture by only investing in what is necessary for the business to operate.

What are the common barriers to becoming an entrepreneur?

One of the biggest barriers is simply coming up with a reasonable idea. Many factors play into a business idea such as location, audience and general need. Many new entrepreneurs only see their idea at face value, not realizing that these factors may be vital to its success. Another common barrier is the lack of opportunity. If individuals seek to open a business in a particular town or city, they should research the area to make sure there is a need for their product or service. There are many unknowns in entrepreneurship, so it takes someone with tenacity, a willingness to learn and a dedication to making their idea come to life.

Many entrepreneurs find great value in having a day job as they build their side business. This allows them to have the finances to pay their day-to-day bills and give their passion to their side project—although it can feel like it may take longer that way. Some may argue that this doesn’t allow you to fully dedicate yourself but it may relieve you of the initial financial burden so that you don’t burn out too quickly.

Another key skill that cannot be ignored is to network, network, network. You will need multiple areas of support for your new business to succeed so make sure to schedule time to speak with potential partners, investors, customers, sales or technology experts. You might start by joining networking groups in your area.

Some examples—and you can find ones that are a match for your skills and interests:

  • Affiliate organizations: Black Accountants Talent Network

  • National professional organizations: American Marketing Association

  • Women’s groups: Herdacity, Prowess Project and Forte Foundation

  • Industry groups: Search LinkedIn or Meetup for areas of interest

Pro Tip: You can even create your own with another entrepreneurial friend. Use this as a chance to invite speakers and offer a variety of entrepreneurship education within your community. You may also find some great resources at an area college or university—entrepreneurship centers, newsletters, webinars. One other way to network is to plug into a startup community or hub like Capital Factory in Austin, TX or sign up with a mentor through SCORE.

Can you start a business in college?

You can become an entrepreneur in college, but it requires a strong conviction and will to succeed. Students need to devote time and energy to both their studies and their business and maintain a proper balance. If you decide to start a business while still in college, consider how factors like student loans may affect your credit or the amount of money you will need to earn.

Explore resources and networking groups on campus so you have the support of others who may be pursuing their own business ideas. This will also allow you to meet and greet local entrepreneurs, participate in pitch contests and be exposed to many who may help spread your idea and introduce you to great partners and areas of consideration to work toward success.

Please note that none of the companies mentioned in this article are affiliated with Indeed.

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