Follow these five tips to set yourself up for success on the path to entrepreneurship.
August 31, 2018 6 min read
Opinions expressed by Entrepreneur contributors are their own.
There are two paths to becoming an entrepreneur. The first is the dream scenario: Have a great idea, set up a company, enjoy instant overnight success and become rich, famous or both.
In reality, the above scenario is very much the exception, not the norm. More commonly, someone decides to set up their own company after gaining experience within a particular industry, using their vantage point to determine what the industry or its customers need that is not currently being provided for.
This piece is about the second path: becoming an expert in a particular field, usually at an institution or a large corporation, then striking out on your own to offer a better product or service.
During my transition from the CEO of a well-known, established organization to the CEO and founder of a startup asset management firm, I’ve learned a handful of important lessons:
Build a career and develop experience.
When I started my career in asset management at iShares — the world’s largest provider of exchange-traded funds (ETFs) — my main goal was to learn the business and contribute as much as I could. I had no idea that one day I would end up owning my own company.
My best advice would be to gain as much relevant experience as possible to master the industry in which you are interested. Ideally, this will include knowledge and expertise of the three key aspects of any business: product/operations, sales/marketing agency and management.
After several years with iShares, I left to join a startup ETF provider so I could get closer to the business and use the skills I’d acquired at a large firm to create an impact in a smaller one. After that, I went on to become the CEO of World Gold Trust Services, the sponsor of the largest gold ETF in the world.
One of the main reasons I decided to step away from running the largest commodity fund in the world and set up my own company was that I felt early 2016 marked a turning point for the commodity markets. I thought the bear market that had begun in 2011 was most likely over and that 2016 would be a good time to launch a new business focused on commodities. Not only did I believe the market conditions were right, but I also knew from my many years of experience in the industry that I could launch a better fund at a lower cost than what competitors in the industry were doing. Investors were paying too much for funds that were not performing the way I thought they should. That was the basis for starting GraniteShares.
Learn to properly evaluate and asses risk.
During my career, I’ve interviewed many outstanding candidates who missed out on the opportunity to join a startup or early stage growth company because they deemed it to be “too risky.” In my opinion, the majority of people have a completely irrational view of risk, especially when it comes to their career.
I always find it helpful to ask yourself the simple question: What’s the worst that can happen? For the majority of people it simply means that if the startup doesn’t work out, they go back to a corporate job or something similar to what they were doing before. Either way, I would argue the experience gained from a startup makes you more marketable to employers.
Raise external capital.
To successfully secure funding to launch your new business, you need to understand that venture capitalists require credibility for you to be “backable.” Investors want to see that you have solid experience in the space — that you have done this before, know what you are doing and are a trusted solution for the problem you are trying to fix.
In my case, I was able to secure financing from a highly recognized and prestigious venture capital firm by presenting a long-term and sustainable business plan. Most financial startups get rejected by venture capitalists because they’re not able to clearly articulate a vision for their company. Instead, they fixate on one or two ideas with minimal supportive details. For the entrepreneur looking to make the transition from C-suite to startup, this should be familiar, as you will be very experienced in business planning, financial modeling and running a business.
Adapt to new opportunities.
Many people think that starting a business is as simple as putting together a business plan and executing it. In reality, a business plan is just a starting blueprint. Many things can, and will, force you to readjust your strategy and you’ll have to adapt quickly to survive. For example, GraniteShares originally planned to launch an ETF focused on master-limited partnerships (MLPs). We thought we had a better tax solution than other competing products on the market and were excited to move forward with this approach. However, we ran into some obstacles along the road and realized that the structure wasn’t going to work. Instead of giving up, we adapted our plans and ended up launching an ETF focused on high income pass-through securities instead. How you navigate these changes will ultimately make or break your business.
Hire the right people.
No matter how ambitious you are, you can’t go it alone. You need to recruit a team of experienced, competent professionals who share the same vision for your company. This can be difficult when you’re starting out, but it’s the most important task for an entrepreneur. When you’re a small company, culture really matters. When you hire someone who is not a good fit for your culture, it shows quickly and can be toxic for your organization. As an example, I have made the mistake of hiring a candidate where I prioritized experience over attitude. That hire was just the wrong fit for our firm. Someone can look great on paper, but it’s not a sufficient method to identify a person with the right attitude who will match the DNA of your company.
Becoming an entrepreneur is a life-changing decision, but one that can reap great rewards — if you properly prepare. If you find yourself unsatisfied by working at the whim of other people, an entrepreneurial path could be right for you. But, don’t expect to have an idea one day and wake up rich the next; entrepreneurial success can only come with a sound knowledge base, good preparation and the right team.