Below is an excerpt from Andrew Yang‘s new book, Smart People Should Build Things: How to Restore Our Culture of Achievement, Build a Path for Entrepreneurs, and Create New Jobs in America, which comes out in February 2014. Andrew was named Managing Director of Manhattan GMAT in 2006, Chief Executive Officer in 2007, and President in 2010. He left Manhattan GMAT in 2010 to start Venture for America, where he now serves as Founder and CEO.
Entrepreneurship Isn’t About Creativity.
There is a common and persistent belief out there that entrepreneurship is about creativity, that it’s about having a great idea. But it’s not, really. Entrepreneurship isn’t about creativity. It’s about organization building—which, in turn, is about people.
I sometimes compare starting a business to having a child. You have a moment of profound inspiration, followed by months of thankless hard work and waking up in the middle of the night. People focus way too much on the inspiration, but, like conception, having a good idea isn’t much of an accomplishment. You need the action and follow-through, which involves the right people, know-how, money, resources, and years of hard work.
I learned this the hard way. Here’s a list of things you can reasonably do on the side as you’re working a full-time job to explore an idea for a great new business:
1. Research your idea (figure out the market, talk to prospective customers about what they would like, see who your competitors are, and so forth).
2. Undertake legal incorporation and trademark protection (the latter when necessary; most companies don’t need a trademark at first).
3. Claim a web URL and build a website or have it built; get company e-mail accounts.
4. Get a bank account and credit card (you’ll generally have to use personal credit at first).
5. Initiate a Facebook page, a blog, and a Twitter account if appropriate.
6. Develop branding (e.g., get a logo designed, print business cards).
7. Talk it up to your network; try to find interested parties as cofounders, staff, investors, and advisers.
8. Build financial projections and draft a business plan (if necessary).
9. Engage in personal financial planning (e.g., cut back on expenses, budget for startup costs, and so on.)
10. Create a mock prototype and presentation for potential investors or customers.
If all of this sounds like a lot of work to do before you’ve even really gotten started, you’re right. Getting this stuff done while holding down a job would be a significant commitment. You might not have time to hang out with friends and family and do the things people like to do when they’re not at work. It is doable, though; I’ve seen it done or done it myself.
You’re just getting started. There’s a big jump in difficulty when it comes to the next things:
1. Raise money. In my experience, fledgling entrepreneurs focus way too much on the money—you can get most things done and figure out a lot without spending much. That said, most businesses require money to launch and get off the ground. For example, the average restaurant costs about $275,000 in construction and startup costs. Finding initial funds is the primary barrier most entrepreneurs face. Many people don’t have three or six months’ worth of savings to free themselves up to do months of unpaid legwork.
2. Develop the product. Product development is a significant endeavor. Even if you’re hiring someone to build your product, managing them to specifications is a huge task in itself. You can expect vendors to take twice as long and cost twice as much as you’ve planned for. Think of the last home improvement project you paid a contractor for; most experiences are like that. Depending on the product, you may need to travel to find the right ingredients, partners, and suppliers. This phase might require raising additional money as well. In some cases, you might want to patent your product, which will involve a patent search and thousands of dollars in patent attorney fees.