Trixy Castro is the founder and CEO of TRX Capital, as well as a partner and board member of Verifee.
Taking a business from idea to execution is exciting. You might want to hit the ground running as soon as possible, using your vision for the business and passion for it to fuel success.
But in my years starting and advising companies, I’ve learned that while vision and passion are essential, they aren’t enough. Vision and passion alone don’t translate to business success. They need to be combined with sound strategy and execution. Based on my experience, here’s a roadmap for how aspiring entrepreneurs can take their big ideas and turn them into scalable companies.
1. Identify A Need Or Niche That’s Underserved Or That Can Be Served Better
The starting point of any business you start should be the need or niche you want to focus on. This need should either be underserved or one you believe can be served better.
When you home in on that need, you can identify your differentiator (or differentiators). If you enter the market and do the same exact things as your competitors, you’ll likely face an uphill battle trying to secure significant market share. But when you know what makes your value proposition unique, you’re in a stronger position to win over prospective customers.
2. Put Together A Business Model
Once you determine the need you’ll focus on, you should put together a business model. Your business model doesn’t need to have all the answers, but you should at least determine the basics, such as your revenue model, target customers, distribution channels, costs and operations.
These details are likely to change down the line, but you need a starting point. With that knowledge in hand, it’ll be easier for you to get the right people on board.
3. Build The Right Team
This brings me to the next step: building the right team. Some entrepreneurs, I’ve observed, tend to want to handle everything on their own. That’s understandable—it can be challenging to delegate tasks when an idea is so meaningful to you.
However, the reality is that we can’t do it all. Businesses need diverse skills and knowledge to succeed. When bringing team members on board, be it on a contract, part-time or full-time basis, evaluate whether they are committed to your vision and how adaptable they are to change. To say that startups are chaotic is an understatement. You’ll want team members who truly believe in what you’re trying to accomplish and who are ready to pivot by your side.
4. Raise Capital
You can raise capital before you build your team, but depending on your circumstances, you might decide to secure it after you’ve got your team in place. If possible, I recommend securing funds after you’ve formed your team, especially if you want venture capital or private equity funding, because investors often want to see a strong founding team.
If you don’t want to pursue venture capital or private equity funding, you could explore other avenues, such as angel investors, crowdfunding and funding from family and friends. Whichever route you pick, it’s crucial that you understand the pros and cons and take your long-term goals into account. For instance, if you hope to sell your company within a decade of launching it, then venture capital might be your best bet, since, from my observations, those firms typically aim for an exit within five to 10 years.
5. Manage Your Finances Strategically
Once you secure capital, diligently and strategically manage your finances. Financial mismanagement could lead to cash flow issues. As you spend, you need to make sure you’re not straining your resources and outpacing your growth.
I advise working with a financial professional who can help you with both day-to-day financial management as well as longer-term strategic financial planning. A CFO or a CPA are two options you can consider.
6. Be Willing To Receive Feedback And Adapt
As an entrepreneur, it’s important to tune out the naysayers and negative comments, but it’s dangerous to completely shut out all feedback.
As you launch and run your business, it’s natural to have your own ideas about what to focus on and how to manage different things, but be aware of the feedback your investors, team members and customers give you. Be willing to receive and listen to feedback and adapt accordingly. You might think, for instance, that you should prioritize a particular feature, but your customers might indicate that you should focus on another. Being unwilling to listen or be flexible is a risky game. Entrepreneurship is a marathon. By course-correcting and adapting along the way, you’ll put yourself in the best position possible to cross the finish line.
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