For so many of us, going into business for ourselves is the ultimate dream. We crave the creative control, flexible hours, and the freedom that comes with being an entrepreneur.
But there’s a lot of work involved behind the scenes, and much of becoming an entrepreneur is about planning, strategy, and then dedicated execution. If you’ve always wanted to get into the game but haven’t been sure how to, we’ve created this resource as a jumping off point.
Should you become an entrepreneur?
Getting into business for yourself can be fun and exciting. It can also be daunting and difficult. First, ask yourself if you’re willing to build a business for the long term. Though the prospect of being an entrepreneur might feel exhilarating at first, growing a business takes time. Are you ready to commit to this for the next several years?
New businesses have a high failure rate. Entrepreneurs have to cast aside the safety of a stable paycheck and take the highs and lows in stride. It may take some time for your business to be profitable. That said, entrepreneurship is rewarding—just know what you’re getting into.
Entrepreneurship has many advantages that, for many people, outweigh the negatives. Small business owners on Shopify tell us there are aspects of running their own business that they’d find hard to get elsewhere. Particularly, being independent and controlling their own time.
How to become an entrepreneur
From figuring out what you’ll sell to how you’ll create inventory, we’ll walk through the 7 essential steps you need to take to become an entrepreneur.
1. Find your first profitable product
The product category you choose is at the core of your online business and will be one of the most important decisions you’ll make.
Although the “perfect” product may not exist, there are definitely ways to minimize risk by choosing a product and niche that have more working for it, than against it. Use the criteria below as a guideline that can help you better understand the pros and cons of the product you’re considering—and, hopefully, increase your overall chances of success.
Does your product serve a passion or solve a problem?
It’s always an advantage to sell products that serve a passion or solve a problem. An additional benefit is that when you sell products that satisfy one of these requirements, your marketing costs tend to be lower since customers are actively seeking out a solution as opposed to you having to heavily market your product to find them.
It’s always an advantage to sell products that serve a passion or solve a problem.
Is this a trend, fad, or growing product category?
Riding a fad can be dangerous. A trend can be lucrative. Stable markets are safe and growing markets are ideal. Understanding where your product and niche lay can play a huge role in your success or failure.
To better understand the differences, let’s look at the conceptual growth curves and then go through a real world example for each type.
Fad
A fad is something that grows in popularity for a very short period of time and fades out just as quickly. A fad can be lucrative if your entry into the market and exit are timed perfectly, but this can be difficult to predict and a recipe for disaster—it’s better to build your business on a more solid foundation. Remember fidget spinners? The handheld spinning toys were all the rage in 2017, peaked in popularity, and then became irrelevant almost overnight.
Trend
A trend is a longer term direction that the market for a product appears to be taking. It doesn’t grow as quickly as a fad, it lasts longer and generally it doesn’t decline nearly as quickly. Trending products can sometimes also develop into long-term growing markets, although this can be difficult to predict. There have been several trends that have popped up during the pandemic: with the amount of time we’re all spending at home, household items like kitchen towels and storage containers have become increasingly popular.
Stable
A stable market is one that generally is immune to shocks and bumps. It is neither declining or growing but maintains itself over long periods of time. Tea pots, for example, have maintained a stable level of popularity for the last 15 years.
Growing
A growing market is one that has seen consistent growth and shows signs of a long-term or permanent market shift. The athleisure market has been growing since the end of 2014, but the pandemic seemingly added to its growth. Now, the market (and the demand for it) is so big that it’s not likely to go anywhere anytime soon.
What does the competitive landscape look like?
What does the competitive landscape look like for your selected product and niche? Are you first to market? Are there already a few competitors or is the market saturated with people selling the same product or targeting the same niche?
If you’re first to market, you’ll want to do a lot of market research to determine that there is in fact a market interested in your product. If there are a few competitors already in the space and they seem to be doing relatively well, this could be a good sign that the market has been validated.
If there are many competitors in the market, it’s also a sign that the market has been validated, however, you’ll likely have to determine how you can differentiate your brand and products from the sea of competitors in order to carve out your own spot.
2. Get your product developed
Once you decide what you’ll sell, there are several options for product development. You can make your own products by hand like the artisans at Heath Ceramics. You can find a manufacturing partner who will develop your product idea to your specifications like the team at West Path does for their Mexican blankets.
There’s also the option to buy your product wholesale, which means that you’ll purchase pre-developed items from a wholesale marketplace. Our marketplace Handshake is a great option for this.
If you’d rather not hold inventory, you can look into dropshipping. Dropshipping is when a customer purchases an item from you, and you in turn buy that item from a third party. The third party then ships the item directly to the customer so you never have to store, handle, or ship any products.
If you create your own designs for t-shirts, art prints, mugs, etc., a similar option is to offer printing on demand. Printing on demand is where you partner with a supplier to print your own designs on white labeled items that are only created when a customer purchases them. This way you sell only as much inventory as there is demand for, and never have to store or ship the products yourself.
3. Validate your product
The next step is to validate your product idea. This is the process where you figure out if you’re selling products that customers really want. Real product validation happens when you make your first few sales. So, before investing too much money or time into your new product line, it’s helpful to do a few low-cost tests.
