turn your passion into profit: a guide on how to become an entrepreneur

Interested in launching your own business? Learn how to become an entrepreneur with eight key tips on how to get started

The European Union is home to nearly 26 million businesses with more than 133 million active employees, many of whom work for a small business. If you want to join the successful entrepreneurs leading these businesses, take time to inform yourself about the ins and outs of entrepreneurship first. In this article, you’ll find a comprehensive guide on how to become an entrepreneur with our top eight tips for aspiring entrepreneurs to get started.

Do you find yourself asking the following questions about entrepreneurship often?

• How do I turn my business idea into reality?
• What products or services can I sell?
• What skills do I need to develop?
• What are the resources required to start a business?
• Who can help me open a company? 

If you do, then you should read this guide, which will help you think them through. Answer these questions and you’ll master how to be successful in business in no time. Luckily, there are many resources at your disposal to get your business going - especially if you choose to set up in Estonia with e-⁠Residency. 

So, let’s get down to business! 

What Skills Should I Develop?

Before we get into our top eight tips for aspiring entrepreneurs, let’s cover some of the key skills of entrepreneurship. While there is no one set that all entrepreneurs have, some of the most successful entrepreneurs have a few notable skills in common.

Creativity is often referred to as the single most important skill for an aspiring entrepreneur. Creativity doesn’t just relate to a person’s artistic or storytelling skills, it also covers problem-solving, the ability to think outside the box, and the foresight of innovation in business.

Another key skill is communication. Good leaders are those who communicate important information in a timely manner to their teams. Work alone? You’ll still need to communicate well with business partners, suppliers, investors, contractors and of course customers.

Other key skills and characteristics include time management, networking, pattern recognition, intuition, financial literacy, calculated risk-taking, and persuasion.

How to become an entrepreneur? Develop these skills! Stay tuned for our upcoming article on skill development for entrepreneurs.

8 tips on How to Become an Entrepreneur

Starting a company requires preparation and planning on a number of issues. It’s important to do research and due diligence on several key areas before you draft a business plan and launch your business.

1. Decide on your core product or service

Deciding on your company’s core business will depend on a number of things. Clearly, it should align with your passion, know-how and skills. There’s no use starting a business selling a product you are not passionate about, or providing a service you know nothing about.

Secondly, is there a market for your product or service? Whatever type of business you choose to focus on, it’s important to validate it. This means first thinking about whether it is a solution to a common problem. Also, identify the potential market, i.e. who is facing the problem. Out of this market, find the customers or clients you can access and whose needs you meet. Finally, it’s important to make sure there is actually demand for the product or service. So, test it has product-market fit well before investing heavily into building or scaling.

Another thing to think about is whether your core business is innovative. Or put another way, is what you’re offering new and useful enough to attract customers and grow into a successful business? Are you entering a crowded field of competitors? Or will you be an early adopter and first mover?

The OECD defines innovation in four ways. You could focus on product innovation, like coming up with a new and interesting technology or service to solve a common problem and help your customers. There is also process innovation, which might result in new service delivery design and methods. Thirdly, marketing innovation leads to new ways to brand and promote products or services, such as new channels or strategies. The final way is organisational innovation, such as introducing new business practices to ease administrative burdens.

2. Evaluate whether the timing is right and set a goal to start

Now that you’ve figured out your core business and found a willing customer market, you’re almost ready to take the plunge. But this might be a good point to stop and take stock of the economic, social and market conditions. Take a bird’s eye view and ask yourself honestly, is the timing right to start a company? 

You can start a company in any economy, including during a recession. Waiting for conditions to improve might be a good idea, especially if it’s your first business or you have family or financial commitments to consider. 

But don't just look at the economy. If socio-political conditions near you are unstable, you would be wise to undertake a risk analysis. Check whether your core business could be affected by interrupted supply chains, corruption or other disruptions.

If this is the case, how to become an entrepreneur now? One alternative is looking outside your own country for ways to do business in more secure and stable business environments.

Estonia could be a great solution. Its e-Residency programme is a digital access gateway to having an EU-based company, which you can start, run and grow completely online and remotely. The country has built secure, trusted digital infrastructure and e-services and its business environment is transparent and safe. The examples of this working in favour of e-residents are numerous. You can read on our blog about the many e-residents who have relied on e-Residency to support them through tough times during the covid pandemic or kept business afloat amid war.

If the time is right, then you should set a deadline for opening your business. Business goals should always be extremely specific: so choose a month or even a specific date to start. You might even set a few different goals on the path to opening your business, e.g. drafting a business plan, raising funds, registering the company, and launching it to market.  

3. Find funding

Are you ready to give your own money to your business? Many entrepreneurs choose to bootstrap or self-finance their business entirely, and you can too. The main advantage being that you remain a sole shareholder and director of your company and therefore retain control. The key disadvantages are that you’re limited by your finances and cannot share liability.

Do not put all of your savings into your business. Keep at least six months of money in the bank to cover your expenses in case you lose your job or need to deal with emergencies.

The other option is of course to find funding from an external source. This could be from a private investor, a public grant, or credit from a lending institution like a bank. The advantages here include: you raise more money sooner; you benefit from working with experienced investors or financiers; and you might share responsibility by taking on a co-founder. The disadvantage is of course that you will be relinquishing your independent control over your company.

If you’re new to business, talk to a financial advisor and look at your funding options. 

4. Design your business plan

So you’ve identified your product or service, located funds and it’s time to take the plunge. But how to convince business partners that your idea is profitable?

It’s time to write your business plan.

A business plan is a formal document that describes your strategy for starting and running a business.  There is no one business plan format but they all share common features. 

A traditional business plan is a long document that describes in detail your objectives, product or service, industry statistics, available market, resources, milestones, sales and marketing strategy, financial projections, and more. Many investors like to read them, so definitely prepare one if you’re planning to raise capital. 

Whatever format you choose, it also helps to write an executive summary. Your summary should be brief and tell your reader why your company will be successful. Include a mission statement describing the purpose of your business. Be ambitious but realistic! 

Your business plan can make or break you. Use it to inspire potential investors and partners with your vision while at the same time setting out clear, evidence-based, measurable goals and projections.

5. Make connections and ask for help

As an entrepreneur, you will need to make connections with all sorts of people to succeed. Start by networking with and asking questions from business people and industry leaders you respect. Reach out on LinkedIn, attend industry conferences, and participate in relevant community events.

An effective way to network about your business is to prepare a short pitch deck and perfect your 60 second elevator pitch. You never know who will sit next to you on a plane or in a coworking space and be interested in your vision. 

When making connections, don’t be afraid to ask for help. This could be anything from asking for feedback about your business plan to providing investment. Know your strengths and weaknesses and be on the lookout for someone who has complementary skills to yours. Know nothing about marketing? Be sure to listen to and ask lots of questions from someone who does!

E-residents are lucky - we’ve curated a vetted Marketplace of business service providers to give you all the support you need for your business.

6. Listen to your customers

We covered above that before investing time and resources building or scaling, you should identify your core customers and validate your product or service. Successful entrepreneurs know that this process of testing and validation among your customers continues throughout the lifecycle of your business. 

We'll let you in on one of the most important secrets for how to become an entrepreneur - and to be a successful one:

Understand the main groups of people who buy your product or service. Know their age, motivations, challenges, geographic location, and other characteristics. This is helpful not just for product development but also for marketing and sales strategies, which can vary. Many younger consumers respond better to social media and digital marketing while the older generation might trust print or broadcast marketing more.

Listen to customer feedback as it will most definitely give you ideas how to improve, add new features, and sell more. If some groups are asking for a cheaper price, could you sell different product categories or service packages? If one geographical market has particularly high demand, can you increase distribution there? Learn how to do market research and take steps to appeal to your audience. 

7. Keep your day job (for now)

Our penultimate tip is also a reality check. 

Take steps right now to start a company - sure. But maybe don’t quit your day job to pursue your dream full-time just yet. 

In the early days of business entrepreneurship, you’ll need some way of supporting yourself. A full- or part-time job offers you the money to become an entrepreneur, and might also help you build valuable skills and contacts.

Keep in mind that it may take years to develop your skills, start your business, and master company growth. Be patient and balance your desire to be independent with your need to have a solid financial base. Over time as your business grows, scale down your day job to match.

8. Open your business the right way

Congratulations! You’ve read all the way down to here. So, this means you now know how to become an entrepreneur. And you’re ready to get started and open your business.

Where you decide to register your company is really up to you and your personal situation.

But before taking the plunge in your own country or another business jurisdiction like Delaware or Dubai, consider Estonia. 

In Estonia, e-⁠Residency provides a secure digital key to easily start an EU company totally online and manage it remotely from wherever you are in the world.