What do
successful entrepreneurs start out with?
Most
people do not bother with an idea that is not novel. A successful entrepreneur
is the one who builds upon an existing idea, improvises on it, and delivers
the end product faster, thus adding further value to the customer.
It is important
for the entrepreneur to possess good interpersonal skills in order to
be able to draw potential investors. When the opportunity arises, he
seizes it often with little time for preparation. He is driven by the
belief that the venture is profitable, and he can serve the customer
faster and better than the competition.
What about
the risks involved in a start-up?
In
the initial stages, the best entrepreneurs do not innovate or take excessive
risks.
Entrepreneurs have very little human capital at their disposal during
the start-up. Most of the entrepreneurs ensure that the financial stakes
during start-up are low. Keeping this factor in mind they are sure that
they are not taking on a great deal of risk.
It is a tolerance
of ambiguity and not risk that makes a difference. Entrepreneurs take
the plunge without an idea of the possible outcome. This tolerance is
characterised by embracing the opportunity without a novel idea or a
great deal of capital backing.
Who takes
the risks?
What
is the difference if entrepreneurs do not have the proprietary idea,
the required capital and not innovate the idea? The difference lies
in the product that such companies have to offer. The product is neither
aimed at nor designed for the typical consumer. The sales are not instant,
and it takes weeks of selling to clinch the deal. Successful start-ups
sell directly to the end-user, and not through retailers or intermediaries.
In the majority of cases it is the entrepreneur who does the selling
himself. When selling during start-up, an entrepreneur is able to adapt
products to meet customer needs. An entrepreneur listens to what the
customer has to say, and is able to convince him through effective interpersonal
skills that he is well established.
There are a host
of constraints that an entrepreneur faces - lack of financial resources,
professional qualifications and human resources, to name a few. It takes
immense creativity on the part of the entrepreneur to break these barriers,
and at the same time ensuring that the customers are convinced about
his track record (or the lack of it).
The success of the
start up depends on the success of the entrepreneur. It lies in being
able to convince the customer to take the risk of trying his product.
It is the customer who takes the risk. The entrepreneur spends time
and money on a product, and risks a great deal in switchover costs (if
the start-up goes bust). In many cases, the entrepreneur has investors
who also take risks by providing capital at an early stage in the venture.
The risk increases
progressively once the start-up has been established. Once established,
there are customers and assets, there are risks being taken because
there is much more at stake. It is in this stage that risk-taking becomes
important.