5 PRINCIPLES TO GET STARTED AS AN ENTREPRENEUR

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Are you starting your journey as an entrepreneur? Exciting!

In this article I will describe 5 critical principles that will equip you for the rest of your entrepreneurial journey. They will help you to take action today as well as when you'll be more experienced!

The 5 principles from this article form the concept of "effectuation" invented by Saras Sarasvathy, a prominent Professor in Entrepreneurship at the University of Virginia Darden School of Business.

Simply put, you have two distinct models to start a business. You can apply a the causal model or the effectual model. You can also navigate from one to the other whenever necessary.

The causal model is the traditional approach from top to bottom. You define a market, segment it, select a target segment, position yourself, and sell to that segment. You predict and control.

The effectual model is the pragmatic approach based on reality, acknowledging prediction is difficult. You create a product, sell it, and transform it based on the market reaction. You transform your product and your environment to satisfy the market needs.

This is the principle of mean-driven action, as opposed to goal-driven action. The emphasis here is on creating something new with existing means rather than discovering new ways to achieve given goals.

Start with who you are, what you know, who you know.

This principle prescribes committing in advance to what you are willing to lose rather than investing in calculations about your expected returns to the project.

You should find creative ways to bring your ideas to market within the means you assemble. This usually necessitates taking on outside partners, who themselves may or may not use the affordable-loss principle in committing resources to the budding the venture.

Negotiate with all the partners who are willing to make actual commitments to the project without worrying about opportunity costs or carrying out elaborate competitive analyses.

Who comes on board determines the goals of the enterprise, not vice-versa.

Effectuation emphasizes alliances and pre-commitments from stakeholders as a way to reduce and/or eliminate uncertainty and erect entry barriers.

Expert entrepreneurs build partnerships right from the start. Time to network and partner!

Acknowledge and appropriate contingency by leveraging surprises rather than trying to avoid them, overcome them, or adapt to them.

Leverage uncertainty by treating unexpected events as an opportunity to exercise control of the emerging situation. It echos the bromide “When life gives you lemons, make lemonade”.

Rely on and work with human agency as the prime driver of opportunity rather than limiting your entrepreneurial efforts to exploiting exogenous factors such as technological trajectories and socio-economic trends.

The Effectual Cycle illustrates the effectual logic of entrepreneurship... and pretty much how you should behave in the next months.

In conclusion, follow these 5 simple yet super effective principles to drive your entrepreneurial actions. Start where you are. Build relationships with peers, mentors, leads, customers, and anyone interested in co-creating with you. Partner and co-create as the skill set of the partners together is greater than your skill set alone. Always leverage indications from the market to know if you are going in the right direction. Then, you will reach success.

Enjoy the journey fellow entrepreneur!

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