Principles And Ideas Of Entrepreneurship

"Everyone has a plan until they get a punch in the face."

This sentence came from Mike Tyson, and was first quoted by a new book, Fundamentals for Founders: The Practical Guide to Kick-Starting Your Business, from the ideal to the reality.

The author of the book, Peter Bhatt (Peter Burchhardt) and Hou Dan (Dan Hou), believe that entrepreneurship is an adventure business that needs passion, ideals and creativity. This business will also be full of unexpected unknown events, which may damage your ambition to start a business.

But the chance of these accidents can be reduced.

In the book from ideal to reality, two authors who have had a series of entrepreneurial experiences in China and the United States in the past 10 years have listed some important principles and behavior patterns that start-ups should understand and follow.

They explained in detail how to understand the target market, how to conduct market research and competitor research, how to design products that meet the needs of users, how to make use of marketing skills such as online advertising, search engine optimization, post advertising, and how to set up a financial model to measure the capital needed for starting businesses, and understand which part of the operation is most important for the contribution of profit margins.

In an interview with Walton knowledge online, Bhatt said: "if you can remember some guiding principles and ideas, you can greatly reduce the chances of falling into traps, and at the same time achieve your goals more efficiently."

The two author's first business plan was completed in the Walton business school classroom 10 years ago.

In the past 10 years, they have created a file sharing company, developed a wireless communication network product, and several other enterprises, such as the development and sale of children's educational games.

"We are concerned about the initial stage of Entrepreneurship: at this stage, entrepreneurs have their own ideas, hoping to know how to turn their ideas into enterprises.

We hope to share with them our knowledge and experience, as well as our friends, other entrepreneurs and investors' experience and insights. "

In this book, Bhatt said.

The following are the edited interviews.

Bhatt talked about his entrepreneurial experience and made suggestions for start-ups.

Walton knowledge online: let's start with your own professional experience.

You worked at Microsoft, and then became an entrepreneur.

Why do you choose so?

What is the difference between your life and what you used to work for a big company?

Bhatt: I hope I can try all kinds of challenges and be able to manage all the responsibilities of an enterprise alone and build up my own assets.

My goal is not to change my salary with my time, but to hope that my time spent on work can be exchanged for different rewards.

Another important reason is that I like freedom and hope to go anywhere at any time.

That's why I choose to create a relatively large scale business, because it means I don't have to stay somewhere at some time.

Walton knowledge online: what do you think are the most interesting and most challenging tasks in the start-up process?

Bhatt: I think the most interesting thing is that I have to solve all kinds of problems.

Some problems are strategic, and some are very socialized. For example, establishing and motivating a team, others involve creativity or technological ability, such as designing products that users like, or building an effective supply chain.

(more exciting content, success in venture network.

As for challenges, I think the biggest challenge is to find a suitable entrepreneurial team.

It's kind of like finding the right person to marry.

When you meet someone, you fall in love at first sight, then you spend time understanding each other's qualities, such as how to deal with conflicts, mutual interests, skills and character complementarity.

And timing is also important, like finding an object.

Can they devote themselves to your new career, or do you have other fetters?

Other aspects can be analogous: the internal strife between partners is as devastating as divorce.

I think that's why Vc firm often say that they invest first in teams, not just in thinking.

Walton knowledge online: your book lists many examples of Internet and software companies. How will traditional enterprises benefit?

Bhatt: our book may be a little more technical, because we talked about many online marketing issues and how to outsource business, but these principles or tools can also be applied to most traditional businesses.

For example, we teach our readers about the experience of language training enterprises, education tourism and even clothing sales in the book.

They all plan to use the Internet to win customers, so they have built websites, try online advertising and do some search engine optimization.

These entrepreneurs have no technical background, but it doesn't matter. As long as they can clearly clarify their needs from the perspective of end-users, technicians can help them implement them.

Since outsourcing has become increasingly convenient and popular over the past few years, it is not so important for entrepreneurs to have a technical background and whether to use the Internet to effectively sell and publicize.

Unless the main product or service of a company is technically technical and requires several different editions, the entrepreneur must have a technical background.

Because in this case, if it is only outsourced to the development of technicians, it will be very difficult to build a product that needs to maintain several different versions.

Walton knowledge online: you spend a lot of space in books about online marketing, especially search engines.

Do you think the search engine is playing an increasingly important role in the current product promotion?

Bhatt: Yes, I think more and more enterprises are trying to use the Internet to win customers.

Online advertising is powerful because it can scale and measure results.

You can invest a small amount of money first, evaluate the result, then invest and optimize it.

Compared with the traditional media, online advertising is especially suitable for start-ups, because you have full control over how to spend money and the return is relatively pparent.

In addition, enterprises now attach great importance to how advertising aims at various users.

In the future, advertisers will be able to more precisely set target customers' standards, improve advertising efficiency and measure advertising investment and return.

Facebook and LinkedIn are the forerunners who allow advertisers to advertise for people with different age, interest and work experience.

Of course, there are many enterprises that are not suitable for online advertising. The fundamental reason is that the profits of these enterprises are not high enough to offset the cost of their efforts to win customers.

This is mainly determined by the conversion rate of the conversion of visitors to consumer customers and the cost of each click advertisement.

This conversion rate may be very low when users' ability or willingness to pay online is not sufficient, or it is difficult to establish enough trust through websites.

Similarly, some market is because advertisers carry too high advertising prices, so that customers simply can not profit from it.

In this book, we teach entrepreneurs a way that they can conduct a simple test to assess advertising costs and conversion rates, so as to test the turning point of online advertising investment to achieve profitability.

Walton knowledge online: from the perspective of financial model, what is the most important lesson that entrepreneurs should learn?

Bhatt: we often encounter entrepreneurs who do not know much about their financial models. Because they do not understand them, they will make irrational decisions and spend time studying and optimizing the business links that have no significant impact on profit margins.

Our first important suggestion is to set up a financial model and update it in time.

Use this model to understand which variables have the most important impact on your earnings, then calculate the threshold of these variables.

Verify your hypothetical number before the additional investment.

Instead of focusing on accurately predicting the value of real variables, we should pay more attention to the possibility that these variables can exceed the minimum threshold required.

Walton knowledge online: according to your observation, what is the most important factor for a startup to succeed?

In these principles, what are the factors related to human characteristics?

Bhatt: this has a lot to do with the characteristics of the industry.

Enterprises with network effects, such as community based websites, are most likely to benefit from seasonable publicity.

For other enterprises, the quality or creativity of the product may be the most important. Some people may think that they are the key to win the best quality customers as soon as possible, so they set up a recommended circle and strive to establish the reputation of the enterprise or product.

But no matter what line it takes, it depends on the quality of the team.

In addition, the founder's personal connections are also the key to winning early customers and finding excellent talents.

Some personality traits are common.

For example, successful founders need independent problem-solving skills and the ability to attract and motivate talented people.

On the one hand, the founders themselves have to play many different roles. From CEO to administrative assistants, they have to do their best, so they will encounter many new problems that need to be solved quickly.

At the same time, they must be able to attract employees or partners to join, and whether these people are willing to join is mainly determined by the founder's personality.

Walton knowledge online: do you think your book is also applicable to Chinese entrepreneurs?

What are the main differences between starting a business in China and starting business in Europe and the United States?

Bhatt: there are many global business rules that apply equally to China and all other regions.

For example, the principles of product design, scale and financial model are equally applicable in China.

But I think a big difference between China and Western start-ups lies in their willingness to outsource.

Chinese may be used to having cheap labor, so all jobs are done as much as possible and rarely considered outsourcing. Part of the reason may be that outsourcing is considered as a way of cross-border wage arbitrage.

Yes, that's true.

But the greater benefit of outsourcing is that it can quickly fill skills gaps and achieve cost effectiveness.

Outsourcing enterprises do not need to hire employees and find ways to keep them for a long time. Instead, they can select suitable professionals for each task on a global scale, pay their salaries according to their performance, and end the employment relationship after the project ends.

In most cases, this approach can convert fixed costs into variable costs, and produce higher quality products at a faster and lower cost.

We described in detail how to use elance.com and other platforms to outsource projects to professionals from all over the world.

In addition, China's online advertising market is also very different from western countries.

The principle is the same, but the operation may be very different, for example, the optimization for Baidu or Google is different.

At the same time, China's online advertising may be relatively cheap.

China has huge and growing advertising sites that can be sold: China is the largest Internet market in the world with more than 300 million users, but the penetration rate of online advertising is less than 25%, while the United States is 75%, that is to say, China has huge room for growth.

And online advertising is relatively small.

I just saw a Nelson research report that China's advertising budget in 2008 was only 3% for online advertising, and the United States was 12%.

This is probably because customers can hardly turn traffic into profit.

There are many reasons for this phenomenon, including low average wages, low penetration of credit cards, and users like pirated content.

My most important suggestion is to regard this challenge as an opportunity, because that is to say, purchasing traffic is very cheap now, so for those online marketers who can think of ways to turn traffic into consumption, they will get an excess return on investment.