Successful entrepreneurs analyze and strategize extensively, cheaply, and quickly while leaving room for exploration. They don’t take risks blindly, but neither expect to have every detail planned in advance. They don’t expect perfection to act, instead, they use initial analysis to sketch hypotheses, test them, and modify them along the way.
To accomplish this, they use an approach that represents the middle ground between planning paralysis and not planning at all. The balance is achieved by using three guidelines:
- Screen opportunities quickly to weed out unpromising ventures.
- Analyze ideas parsimoniously. Focus on a few important issues.
- Integrate action and analysis. Don’t wait for all the answers and be ready to change course.
While the process is the same, the entrepreneur requires specific skills according to the business they are pursuing. To make this writing more actionable, I will separate these guidelines by kind of venture.
Revolutionary Ventures: Those who seek to create or transform an industry.
These ventures will require the highest amount of resources and commitment and, as such, the most planning. If done well, these ventures result in the highest rewards. A downside is the high requirements to create a business that shakes the world, especially in a mature market.
The entrepreneur must be able to attract, retain, and balance the interests of investors, customers, employees, and suppliers. Leadership, organizational, and technical skills are necessary. Creative thinking, deal-making, strategic planning, and managing overhead, are some of these skills.
The entrepreneur must feel comfortable staying in the venture for the long term. That means the venture must align with the entrepreneur’s values and offer sufficient rewards to ensure an undistracted, profitable, and positive commitment.
Market Niche Ventures
These ventures don’t require extraordinary ideas but flexibility and focus on customization. They exist to offer what large organizations don’t. A downside of these ventures is the difficulty of escalating them.
In this case, the entrepreneur must be able to secure others’ resources in favorable terms and do more with less. They also need a bit of ingenuity to design a product and make the most of a small market mostly by letting customer feedback guide their efforts.
They also require innovation to face competition from rivals, substitutes, suppliers, buyers, and new entrants. They don’t need organizational or money-raising skills to begin.
Speculative ventures
These ventures require good timing, analytic skills at a macro level, and capital. These ventures benefit from external changes, so innovation isn’t necessary.
The entrepreneur in this area needs to be able to analyze external circumstances, have the courage to go against the trends, and possess capital to purchase assets and hold them until the moment to sell. The skills of this entrepreneur are based on negotiating with sellers, creditors, and investors to ensure the best conditions for the venture.