Thinking about starting a business and not sure where to begin? Or are you wondering if entrepreneurship is right for you? Whether you're exploring for the first time or looking for ways to succeed in business, this step-by-step guide is your ticket to success.
Practical advice and exciting real-life examples are here to answer your questions about entrepreneurship. With insights from top business books — 'The Lean Startup,' 'Zero to One,' 'The $100 Startup,' and 'The Hard Thing About Hard Things' — you'll be inspired and see a clearer path forward.
Follow these seven steps to avoid common mistakes and start your entrepreneurial journey on the right track from the very beginning.
Step 1. Find out whether entrepreneurship is for you
Starting entrepreneurship is a great idea. However, did you know that nearly 20% of small businesses fail in their first year? This happens often due to poor planning and a lack of market understanding (Forbes.)
In addition to "market understanding," there are other factors to consider when determining if you are fit for entrepreneurship, especially when it comes to your character traits. Let’s consider the story of renowned entrepreneur and Spanx founder Sara Blakely to learn more about these qualities.
Learn from Sara Blakely: How to turn an idea into a billion-dollar brand
Blakely started her business with just $5,000 in savings. Facing repeated rejections from manufacturers and investors, she had to decide: surrender, walk away, and let go. Or keep pushing forward and fighting for her idea?
With no industry connections, she kept pressing through. Blakely created the prototypes of comfortable, slimming women's shapewear herself.
Finally, Sam Kaplan agreed to produce her first design in his North Carolina hosiery factory. Within the first year, Spanx gained massive attention and skyrocketed in popularity, eventually becoming a billion-dollar brand.
Five traits behind Blakely's breakthrough success as an entrepreneur
Blakely's moment of truth revealed the five qualities of her character that helped her succeed. They are:
Resilience. Blakely pushed forward despite repeated rejections from manufacturers and investors.
Self-reliance. With limited funds, she created her own prototypes, reached out to others, and marketed Spanx herself.
Creativity. Blakely saw the opportunity in the market and developed the idea of comfortable, slimming shapewear to fill in the gap.
Courage. She risked smartly and invested $5,000 from savings to launch her business without outside support.
Vision. Blakely’s clear goal to improve women's undergarments drove her from idea to market.
Are these traits familiar to you? Do they describe you? Ask yourself the following questions to discover more about your entrepreneurship talents.
Ten questions to ask yourself before starting your entrepreneurial journey
Answer honestly with "yes" or "no" to see if you are a fit for entrepreneurship.
Do I enjoy solving problems and finding creative solutions?
Am I comfortable with uncertainty and taking calculated risks?
Do I see setbacks as opportunities to learn and grow?
Can you work independently and stay motivated without external direction?
Are you willing to invest time and resources, even without immediate rewards?
Do you feel confident in making decisions, even with limited information?
Are you passionate about creating something new or different?
Can you handle rejection and keep going despite it?
Are you willing to take responsibility for both successes and failures?
Do you have a clear vision or purpose that drives you?
If you answered "yes" to at least 7 out of these 10 questions, congratulations — you likely possess the key qualities to succeed in entrepreneurship.
If you hesitate about your entrepreneurial mindset or want to dig deeper, you can take the IPIP-NEO Personality test and connect its results to Forbes' author Melinda Elmborg's article "The Founder's DNA: Are You Wired For Startup Life?"
Step 2. Choose your entrepreneurial path
Now that you're confident in your abilities, let's explore which type of business suits your goals and ideas.
There are three types of entrepreneurship:
Traditional business produces goods or provide services to a local or niche market with steady demand.
Tech startups focus on innovation, creating unique products, and often entering new markets.
Social enterprises aim to address social or environmental issues, often relying on community support to fulfill their missions. These can be nonprofit organizations (in terms of purpose, not-for-profit) or NGOs.
So, first, define which one fits your aspirations best. (For basic advice, check the US Small Business Administration's guide or similar online resources.)
Secondly, answer the following three questions and gain insights from the top bestsellers:
Can you launch a new business with no money? The author of 'The $100 Startup,' Chris Guillebeau, says "yes." As long as you dream of a business that aligns with your passion and local market needs, his insights can be ideal for you.
In simple words, you don't need to seek "potential investors," business loans, or major funding to begin. It takes just a small amount of money and a meaningful idea.
2 What new features will you offer? To truly succeed, create something new. Aim to come up with new ways to make people's lives easier.
In 'Zero to One,' Peter Thiel warns you against copying others and challenges you to offer something entirely new and valuable. Whether or not you're in the tech industry, Thiel emphasizes that standing out with innovative ideas is a must for lasting success.
3 How will you grow your business? Whether you're starting big or scaling what you have built already, 'The Lean Startup' by Eric Ries and 'The Hard Thing About Hard Things' by Ben Horowitz will help.
Ries will help you understand "lean innovation" — building with minimal resources, testing with real customers, and adapting quickly — so you can grow efficiently and reduce risks. Horowitz will prepare you for the tougher aspects of scaling a business, from managing teams to making difficult decisions under pressure.
Start smart: Learn from the failures of Eric Ries to avoid beginner mistakes
Yale graduate and author of 'The Lean Startup' Eric Ries applied lean principles to drive efficient business growth. His company, IMVU, quickly grew to generate over $50 million in revenue. Ries became an innovator in virtual goods and social networking.
However, before using Lean principles, he learned a lesson with Catalyst Recruiting, his first startup. Ries and his team wasted a lot of time and money building a product they assumed customers would want — without testing their ideas with real users. Unfortunately, the lack of demand forced Ries to abandon the project.
"We spent countless hours building a product that, when launched, nobody wanted," Eric Ries honestly admits about his experience with Catalyst Recruiting in 'The Lean Startup.'
Thankfully, Ries transformed his entrepreneurial mindset by applying Lean principles at IMVU. He began with a Minimum Viable Product (MVP) to test customer interest immediately.
The new approach allowed him to adapt quickly, avoiding unnecessary costs and refining the product based on user feedback. The success was remarkable: IMVU grew rapidly, generating dozens of millions of USD in a short span of time.
Apply these Lean principles to your business from the very beginning
Lean. Originally, Lean was a manufacturing approach developed by Toyota to maximize efficiency and minimize waste. It focuses on eliminating any steps or resources that don't add value to the final product.
JIT and Kaizen. Lean's key principles include Just-in-Time (JIT) production, which reduces inventory by supplying materials only when needed, and Kaizen, or continuous improvement, where workers suggest ways to improve processes.
VSM and Poka-Yoke. Lean aims to boost productivity while reducing costs. Techniques like Value Stream Mapping (VSM) analyze each production step to remove redundancies, and Poka-Yoke introduces error-proofing to prevent defects. This streamlined approach transformed manufacturing by focusing on adaptability, quality, and resource efficiency.
Now that we have discussed entrepreneurial paths and gained valuable insights from bestselling authors let us move on to the next important step: identifying a problem to solve.
Step 3. Identify a problem to solve
Building on our earlier discussion about the importance of innovation ("Create something new"), it's now crucial to understand that, indeed, the best business ideas emerge from addressing unmet needs.
In 'Zero to One,' Peter Thiel warns against replicating existing ideas and encourages exploring new paths. He states, "The best projects are likely to be overlooked, not trumpeted by a crowd; the best problems to work on are often the ones nobody else even tries to solve."
In other words, identify unique problems and come up with your own solutions to fill gaps in the market and potentially dominate a niche.
Consider how Airbnb founders Brian Chesky and Joe Gebbia started with a simple concept — renting out an air mattress in their living room to help cover rent. This idea evolved into a larger vision, creating a platform for affordable short-term space rent worldwide.
Airbnb grew into a global business, generating over $8 billion in annual revenue by 2022 and surpassing 1 billion guest stays. According to Airbnb's Q1 2024 financial report, the company generated $2.1 billion in revenue, an 18% increase year-over-year. By mid-2024, Airbnb's annual revenue reached $10.5 billion, demonstrating continued growth since.
To test your idea's potential, The Lean Startup by Eric Ries recommends launching a Minimum Viable Product (MVP) to gather feedback from real users and make adjustments before investing too heavily (Ries, The Lean Startup, p. 48).
Three strategies to discover the best business opportunities
Learn to spot hidden market needs, leverage your skills and experiences, and use an MVP to avoid mistakes and discover the best business opportunities from the start.
Spot "hidden" market needs
In 'Zero to One,' Peter Thiel encourages finding problems others overlook, the needs that don't yet have solutions. For example, Venmo noticed that bank transfers were slow and lacked a social element, so it introduced fast, peer-to-peer payments with a social feed for users to view and comment on transactions. This approach filled an unaddressed need, quickly leading Venmo to process over $245 billion in payments annually.
2 Leverage your skills and experiences
In 'The $100 Startup,' Chris Guillebeau suggests looking to your skill set and interests to identify business ideas you understand well.
For instance, former scientist Pat Brown founded Impossible Foods after recognizing the need for delicious, plant-based alternatives to meat. By creating a flavorful meat substitute, Impossible Foods grew into a major brand in plant-based foods, generating over $500 million in annual revenue.
So, shape your entrepreneurial skills with your best talents. If problem-solving is your strong side, you are most likely to succeed.
3 Test with a Minimum Viable Product (MVP)
In 'The Lean Startup,' Eric Ries advises starting with an MVP — a basic, testable version of your product — to validate whether your idea resonates with real customers. Dropbox is an excellent example of this approach. It launched a simple video demo as its MVP, which generated 75,000 signups in 24 hours, confirming demand before fully developing the product. Today, Dropbox has over 700 million users and generates more than $2 billion in revenue annually.
By understanding the "problem" to address while starting or developing your business, you can analyze your own strengths and areas for growth as an entrepreneur. Step 4 in our list of avoiding common mistakes explores the three essential skills for succeeding in business.
Step 4. Develop these three skills of successful entrepreneur
To succeed in business, you must develop three skills to adapt to market changes, handle challenges, and innovate consistently. They are adaptability, resilience, and innovation. Learn the key ideas and real-life examples to develop these features in you.
Adaptability
In 'The Lean Startup,' Eric Ries suggests the "pivot" concept. He highlights adaptability — the skill of making strategic shifts based on real customer feedback to align better with market demands.
A notable example of adaptability is Netflix's shift from DVD rentals to streaming. In 2007, Netflix recognized the rapid growth of online content and pivoted to a streaming service. This move helped its subscriber base grow from 7.5 million in 2007 to over 247 million globally by 2023.
Resilience
Resilience, or the ability to recover from setbacks, is another essential skill. Ben Horowitz, in 'The Hard Thing About Hard Things,' emphasizes the importance of mental toughness, especially during moments when the survival of a business is uncertain.
Horowitz's company, Loudcloud, nearly went bankrupt during the dot-com bust, but his perseverance led to a strategic pivot into cloud computing, rebranding as Opsware.
In 2007, HP acquired Opsware for $1.6 billion, underscoring the value of resilience in building a successful business. As Horowitz notes,
"The most difficult skill I learned as CEO was to manage my own psychology."
Innovation
The term innovation originates from the Latin innovare, meaning "to renew or alter." It refers to the process of introducing something new or significantly improving existing products, ideas, or methods.
To succeed as an entrepreneur, you must learn to innovate — find better ways to meet customer needs with new or improved products or services. For example, you might offer new eco-friendly packaging, faster delivery, or personalized workout plans — endless opportunities for innovation. Come up with your own solution.
Learn from Apple, masters of innovations. By continually launching groundbreaking products — such as iPhone, iPad, and Apple Watch — and their new features, Apple's annual revenue surged from $8 billion in 2004 to $383 billion in 2023.
So, by developing the skills of adaptability, resilience, and innovation, you will be able to respond to market demands, navigate setbacks, and create valuable solutions for your customers.
To succeed, you need to learn to plan your business for growth and sustainability.
Step 5. Plan your business
The difference between a dreamer and an entrepreneur is the ability to plan effectively.
For an in-depth study of business planning, take the best from our business book lists on (1) entrepreneurship, (2) startups, or (3) traditional business.
Consider the following steps to grasp the key idea about creating your business plan:
Make a plan. In 'The $100 Startup,' Chris Guillebeau advises creating a simplified business plan that includes a clear mission statement, target audience, and funding needs, which is especially helpful for entrepreneurs with limited resources.
Explore funding options. To attract investors, you must be able to show a clear market advantage and a working revenue-generating business model (Thiel, 'Zero to One').
Create an MVP. Launch quickly, gather feedback, and improve your product based on real user input by creating an MVP, as Ries suggests in 'The Lean Startup.'
Step 6. Secure funding
Securing funding is one of the most challenging aspects of starting a business, especially for early-stage startups. You may need to risk your own money, seek support from friends and family, or approach angel investors — often without any guarantee of success.
There are organizations that offer grants and investments to support aspiring entrepreneurs, such as Y Combinator, Seedcamp, Techstars, 500 Global, Creandum, EQT Ventures, LocalGlobe, Speedinvest, Ascension VC, and many others.
However, their acceptance rates are often below 3%. This means that most applicants will face multiple rejections before landing support.
Good news: you are not alone. The most thriving entrepreneurs know the cost of their success. For example, Brian Chesky (Airbnb) received dozens of rejections from investors. Tim Westergren (Pandora) faced over 300 "no's" before securing funding. Howard Schultz (Starbucks) was rejected 217 times while raising funds.
May their lives encourage you. Stay determined and refine your pitch as long as it takes to succeed. Remember: with each rejection, you grow closer to finding the support needed to bring your vision to life.
Step 7. Get prepared for entrepreneurial challenges
Entrepreneurship comes with hurdles such as market competition, self-doubt, and burnout.
Avoid crowded markets, 'Zero to One' bestseller advises. Build businesses with unique value propositions instead.
Many beginners face imposter syndrome. Ben Horowitz encourages learning to manage self-doubt, dealing with burnout (ideally avoiding it), and staying motivated.
As you start your entrepreneurship journey, keep in mind the following. A 2023 "Work in America" survey by the American Psychological Association found that 77% of US professionals experienced work-related stress, with 57% reporting negative impacts such as emotional exhaustion (31%) and lack of interest or motivation (26%).
Consider these five self-care rules every aspiring entrepreneur must keep to avoid burnout and be effective:
Five self-care rules for every aspiring entrepreneur
Set boundaries. Define work hours and protect personal time to prevent burnout. Avoiding long, unbroken work hours helps sustain energy and focus over the long run.
Take regular breaks. Short breaks throughout the day and scheduled time off can reduce stress and restore motivation. According to the WHO, breaks are essential for mental recovery and productivity.
Build a support network. Connect with mentors, peers, or support groups to share experiences, receive guidance, and get encouragement during tough times. Support from others can help combat feelings of isolation and imposter syndrome.
Focus on small, achievable goals. Setting smaller, incremental goals (showing small but tangible results) builds confidence and motivation. Celebrating small wins reinforces progress, helps manage self-doubt, and keeps the momentum strong.
Maintain physical health. Regular exercise, sufficient sleep, and a balanced diet enhance energy levels and resilience. A healthy body supports a healthy mind, which is essential for making sound business decisions.
These five rules may be easy to read, yet not easy to practice. Ensure you follow them to take care of your mental and physical health to succeed.
Discover more about entrepreneurship with the Headway app
To dive deeper, check out Headway's startup and business resources. If you are ready to learn more, read the summaries of these four recommended books on the Headway app:
'The Lean Startup' by Eric Ries
'Zero to One' by Peter Thiel and Blake Masters
'The $100 Startup' by Chris Guillebeau
'The Hard Thing About Hard Things' by Ben Horowitz
These bestsellers will help you avoid numerous mistakes beginners make and build your competence as an entrepreneur.
Additionally, explore the lists of recommended books and find those that meet your specific needs on the following topics:
How to use the Headway app
Download the Headway app. Decide which topic you are interested in. Then, browse the app's curated library to review summaries of top books in your interest area.
