First-time entrepreneur? Here are the skills you will need to succeed.

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Laid-off workers use their severance packages to fund new businesses. It can be a smart move in a bumpy economy – with the right skills and a deliberate approach.

Some 4.4 million new businesses are created each year. A record 5.4 million of them started in 2021 as generous severance packages and pandemic-related government funding helped make entrepreneurship a reality for many Americans.

But a lot of startups fail in the first few years, often because business owners don’t understand the market for the product or service they offer. They may have a new idea, but they don’t understand that others can do the same thing with the same idea.

The challenge for a new entrepreneur is first to fill an unmet need, and second, to do it better than all the others who are targeting the same market.

A café, for example, must offer a good product, an excellent customer experience and an unbeatable location. It has to stand out from all the other cafes in the neighborhood. Doing this requires a thorough market analysis – which takes time and isn’t cheap – in addition to a solid business plan and sufficient funding.

Starting a business is not only a matter of market and motivation. Being a successful entrepreneur also involves identifying the skills gaps needed to succeed and knowing how and where to fill them.

Related: The 6 Most Important Things to Do When Starting a New Business

The Skills Every New Business Owner Needs

Financial literacy is one. What are the startup costs and tax implications of starting a new business? Should the business be structured as an LLC or a sole proprietorship? How much does the development of the product or service cost? What is the best way to determine the price? These are just a few of the key questions to ask upfront. There are also longer-term considerations, such as providing a quality customer experience to build customer loyalty.

A detailed business and financing plan is essential. It is important to understand how to generate revenue, as well as how to manage the costs associated with developing and launching a product or service. Some business coaches often recommend leveraging personal or family finances rather than seeking venture capital, which can be difficult to find and comes with return on investment (ROI) requirements and performance metrics .

Of course, there has to be a customer. It’s the purpose of a business, to quote marketing expert Peter Drucker. It’s important to know what excites customers and how to reach them.

But no customer will be interested in a business that doesn’t have a value proposition. Customers need to see how the product serves them. Does the product meet a need?

Other Critical Considerations

Before starting a business, it is essential to determine if you really understand the ins and outs of running an organization and if you know the market sector you are targeting. If you’re starting a business in an industry you haven’t worked in, you may need to consider a partner who is familiar with that market. Many people who start a business have great ideas but aren’t always the best equipped to take them to fruition over the long term.

Not every business owner needs to have all the right skills from day one. Taking several months to learn product development and then diving into marketing and operations might be a good way to go. Finding a partner who can fill in some of your skill gaps is another idea.

There are ways to build skills once you know where the gaps are. Refresher courses can help a new business owner learn the ropes. “Micro-certificates,” such as those offered online or through community colleges, can add value to a new brand. Artificial intelligence can help with business analytics and marketing communications. Some entrepreneurs have leveraged AI to write and implement business plans.

A support network can be extremely valuable. Owning a business can be isolating, especially in the beginning. Nurturing or building relationships with former colleagues, especially those with different skill sets, can make all the difference when trying to answer questions you aren’t too adept at answering.

Related: 5 Skills That Are the Foundation of Entrepreneurial Success

Starting a business is not for the faint of heart, but it can be rewarding. And if, after a few years, entrepreneurship hasn’t lived up to its dream, a well-run and profitable business can be attractive for another company to take over.

Either way, it’s important to know where your skills gaps are right from the start and start figuring out how to fill them. If you think you have a great product or service, you might have what it takes.

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