Entrepreneurial Risk

In the world of entrepreneurship, one of the most interesting questions that is debated is what really defines an entrepreneur.  Much of the research and efforts in academic circles and Entrepreneurial Service Organizations are focused on getting people to start businesses. The curriculum covers everything from teaching the fundamentals of market research to building a business plan.  The rationale is derived from studies that show that small businesses create much, if not all, of the growth in employment in the US.  I believe that this type of education is important, but I truly believe that there is a more critical area that needs to be emphasized.

The usual definition of entrepreneurship usually has some connection with risk.  That is, an entrepreneur is someone who is willing to assume the responsibility, risk and rewards of starting and operating a business.

Getting an idea is not difficult. In fact, most of the skills necessary to start a business are relatively easy to obtain.  The difficult task is to finish.  Let me explain.  Many of the entrepreneurs that I have met have a reasonable business idea.  They can put together some sort of business plan; some go with the mini 10 page report, others produce a tome of over 100 pages. They can put together a demo or a prototype.  Then they lose their nerve.  They review their research, they add just another modification to the web demo, they send out another survey.  This is the point when they need to drive forward.  As Steve Jobs says, Real artists ship.

I believe that real entrepreneurs ship.  By shipping (or opening the website or performing the sales calls or signing the partnership agreements), the entrepreneur will gain knowledge about what the market really wants. She can make the changes to the offering to appeal to the customer. She can invite customers to be part of an inner circle and tie them closer to her company.  And, possibly, even record some early revenue.

Lose the fear. There are few downsides to shipping earlier.  Make sure that what you ship, you can be proud of, but don’t obsess over every aspect.  Remember that Windows was unusable (but a good demonstration of future technologies) for the first several releases.  It wasn’t until Windows 3.1 that Microsoft had a solid winner.

Yes, it is good to start businesses.  But the risk inherent in an entrepreneurial company is multiplied if you don’t ship your product.  You risk increased competition.  You risk wasting critical capital by waiting.  You risk your potential customers finding alternatives.  You risk losing employees to other more exciting projects.  The way to reduce the risk is to deliver a product to the marketplace and continue to respond to the market by reacting quickly to new information.

Shipping product is a virtue.  Get it out there and find out whether you actually have something that the market demands.

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