Employees who want to become entrepreneurs: How different…!

There are fundamental differences in being an employee versus an entrepreneur. Knowing a lot about business, doesn’t necessarily mean you can build a successful business. Here are some things employees need to know before becoming entrepreneurs:

The market doesn’t care how much your boss liked you or how smart you are. It only cares about what you do and if you create value for the customers within it. 

Your idea has little real value. We all have ideas. If the idea is good, then be sure that others have thought of it, are working on it, and some are probably already in market. New ideas are hard to sell because you need to invent demand. Ideas are a small part of the success equation.

There are no resources at your disposal. All of the things you had for granted in your company are gone. No departments, no staff, no supply chain, no existing customers. The job of the entrepreneur is to invent resources, to build an infrastructure.

90% of what you did in your company is irrelevant. You used to manage situations, people, and politics, now you need to get things in market and invent distribution streams, usage and revenue. You are no longer managing a system, but building one. The tasks you did in the company are rarely what you’ll do when starting from scratch. Employees operate an existing machine – they are maintenance managers. Entrepreneurs need to be inventors, builders, creators, they need to make something from nothing.

Startup finance is different to corporate finance. In a company, we manage budgets. We spend allocations on projects and manage a P&L. In a startup, we manage cash flow: money in and money out. Startups need to remember they can go broke while making a profit, but going broke is not possible while a company is cash flow positive.

Nothing is automatic, there’s nowhere to hide. There is no paid annual leave, no weekends, and no official hours. You need to be able to cope with that. You’re fully exposed.

A startup is different to a business. Businesses and startups are not the same thing. Startups are about building something new. If you want to own and run a business, then you may be a franchisee of a company which has proven success. You need to know whether you really want to create something, or just have more independence in your business life.

You need to terminate corporate thinking. It’s mostly the opposite of what happens in established companies. Companies test off market; startups test in market. Companies are risk averse; startups are risk tolerant.

Remember, entrepreneurship is hard and different! 

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