Webster: Entrepreneur one who organizes, manages, assumes risks of a business or enterprise
Confucius: Only man with happy face should open shop.
Want a job evaluation of you as an entrepreneur? You are your most important employee, after all, but chances are you’ve never done a self-analysis at least as thorough as what you do for any job candidate.
When going into business, whether starting or buying one, you probably thought only of the business and not about what kind of entrepreneur you would actually be.
Here’s another important question: Are you even the entrepreneur type? Yes, there is an "entrepreneur type," and we will describe its characteristics and even give you a test to see if you fit.
If you don’t fit the mold, then you’d better do something about it, and we’ll tell you how.
It’s tough being an entrepreneur. Dun & Bradstreet Business Failure Record says 28% of all new businesses fail within their first three years, and 63% fail in six. But consider the upside: 72% survive at least three years, and more than a third are operating successfully after six years.
Who Are the Entrepreneurs?
Just who are the entrepreneurs? Increasingly, it is the young who are the most entrepreneurial of all, according to Wells Fargo Bank and the NFIB Foundation. Of the almost six million Americans going into business for themselves annually, almost half are under age 36. Not including lemonade stands, three out of every 10 owners were 30 or younger when they started their businesses.
How about education? Slightly more than half of all entrepreneurs studied business in school, with 40% earning a bachelor’s degree. But an American Express poll found that the vast majority learned their most useful information at Hard Knocks U. Fewer than 20% said that a formal education was the primary source of know-how for starting and running a business.
Almost half of the affluent are entrepreneurs. Research by financial services consultant Spectrum Group shows that, of those with annual incomes above $100,000 or net worths of at least $500,000, excluding home equity, fully 40% are business owners.
Pressing the Start-Up Button
Just why do would-be entrepreneurs go into business in the first place? There are the obvious reasons: money, prestige, power. But mainly it’s about the chance to do things their way. A Marquette University study of business owners showed autonomy (29%) led all reasons for going on their own, followed by wealth (19%) and challenge (12%).
Being your own boss is the main thing, especially in a small business like a tire dealership. An executive in a large business may only bend the rules to his/her wishes. But in a small business, the owner can make and break the rules ®€“ or write all new ones.
Nothing quite like it. The highs are higher (and the lows lower), and that rush from "success" is undeniably huge. That’s why many an executive, laid-off in a downsizing or whatever, leaps into starting or buying a small business. No more board of directors looking over the shoulder.
Myths About Entrepreneurs
There are many myths about what it takes to be an entrepreneur. The most popular is that entrepreneurs are born, not made. Nothing could be farther from the truth. Entrepreneurs are most definitely made, not born.
There are some specific characteristics, such as being a self-starter and persistent, that seem innately part of a successful entrepreneur’s makeup. But rather than "being a natural," the successful entrepreneur is made from a combination of work experience plus study and development of appropriate skills.
Among the most vital entrepreneurial factors that must be learned are self-motivation, internal locus of control, creative thinking and orientation toward action.
How about this myth: Entrepreneurs are eager gamblers, rolling the dice and taking the consequences? False again. Actually, they find little joy in taking chances, but they are willing to face calculated risks. Entrepreneurs are percentage players, quickly assessing the risks of ideas or strategies, discarding the least promising and focusing on the best ones.
Here’s another myth: Money decides whether your startup succeeds because having enough working capital makes all the difference. Again, this is false. Actually, money is the least important ingredient in the success mix. When the other pieces and talents are there, such as a sound business plan, a good idea, and, most of all, a strong entrepreneur, the money will follow.
Then there is the myth that successful entrepreneurs are distinguished by their ability to generate brilliant ideas. Once again, this notion is completely false. Successful entrepreneurs are distinguished more by their capacity to execute ideas than their ability to generate them. Many people can think the great thoughts, but it takes entrepreneurs to turn them into viable businesses.
That doesn’t mean that successful entrepreneurs aren’t creative. On the contrary, their fresh insight allows them to see a new opportunity or a better way to deliver a product or service.
Drive, Initiative, People Skills
So what are the primary characteristics of a successful small-business entrepreneur?
There is no solid consensus, since what is important in one individual may not be important in another. Also, the type of product, service and business can have a major bearing on the personal requirements of a successful entrepreneur in that field.
In general terms, though, there are some basic characteristics common to all business entrepreneurs:
®€′ Drive or energy and readiness to take responsibility and risks, make decisions and accept consequences;
®€′ Personal initiative and reluctance to
wait for others to get the ball rolling;
®€′ Human relations ability, including emotional stability, sociability, cheerfulness and consideration;
®€′ Organizational ability with an eye to detail;
®€′ Written and oral communications skills with employees, suppliers, customers and all others;
®€′ Ability to plan, set goals and objectives and measure results, including interpreting financial statements;
®€′ Technical knowledge about a particular business or the wisdom to hire supplementary experts;
®€′ Good judgment, patience and self-restraint;
That’s quite a list and just about all-inclusive. You may not possess all those good things ®€“ and being short a couple does not doom you to failure ®€“ but it is helpful to know where you are lacking.
10 Important Questions
Just how do you stack up as an entrepreneur? Were you the model candidate from the start of your solo career, or were you the beneficiary of the wisdom of others over the years?
Regardless of how you reached your pinnacle of success, every entrepreneur started somewhere at some time. And, in some form or fashion, every entrepreneur went through a process of self-examination to decide if he or she would succeed. Perhaps you were able to examine your entrepreneurial potential before you took the plunge, or you did a thorough self-examination after the fact.
Here are 10 important questions every entrepreneur should consider and answer (truthfully). The answers to these questions about your personal condition will tell you a lot about your suitability to be self-employed:
1) What are my interests/hobbies?
2) What are my financial needs?
3) What areas of expertise do I have?
4) What special skills and talents do I possess?
5) How much financial risk can I handle?
6) How many years do I want to work?
7) How many hours per week am I willing to work?
8) What type of temperament do I have?
9) How well do I handle stress?
10) How driven am I to own and operate a business?
If you haven’t considered your entrepreneurial threshold before, take some time now to ponder and write your honest answers to these queries. Even the most successful independent dealer should learn where his or her strengths and weaknesses really lie and see how these may impact future levels of success.
Optimistic and Industrious
Just about all small-business owners share two traits: optimism and a strong work ethic. Besides that, their personalities fall into five distinct types, according to a survey by pollster Yankelovich Partners:
®€′ Idealists ®€“ 24% of all entrepreneurs, the largest group ®€“ love their products or services but hate running a business and don’t want to own real estate.
®€′ Optimists (21%) focus on maximizing profit but not necessarily on growing their companies.
®€′ Hard Workers (20%) are most eager to enlarge their firms and big on providing employee benefits.
®€′ Jugglers (20%) constantly struggle to make ends meet and are big users of credit.
®€′ Sustainers (15%) avoid credit and risk taking, preferring to own rather than lease business sites.
Which type are you?
The Small Business Administration (SBA) provides a "Small Business Start-Up Kit" with questions and answers to determine whether entrepreneurship is really for you. The first puzzler is: Are you a self-starter? After all, it will be up to you, not someone else, to generate business and organize and follow through on details.
SBA asks: How well do you get along with various personalities? You will need to develop good working relationships with a wide variety of customers, vendors and professionals, such as lawyers and accountants. Oh, and let’s not forget about employees.
How good are you at making decisions? Small-business owners often have to make decisions quickly and under pressure. And, are you willing to live with the consequences? Entrepreneurs, like other business leaders, don’t get do-overs.
What about your physical and emotional stamina? Do you have enough for 12-hour workdays six or seven days a week? Can you survive a quickened heart rate and night sweats?
How will the business affect your family? The first few years of a business startup can be quite hard on family life. Even after decades of success, the time commitment of being "the boss" can be brutal. Can you find the right people®€ƒand trust them to run the business in your stead?
Beginning entrepreneurs may have to adjust to a lower standard of living or put family assets at risk in the beginning, so they really need the full-fledged support of their families.
How to Improve
It is important that you recognize the qualities necessary to be a successful entrepreneur and take steps to strengthen those in which you are weak. Here’s how:
To improve your leadership, enroll in seminars and read relevant books. To boost your business smarts, consider going back to school. Many colleges offer specific entrepreneurship degree programs, and more than 1,500 colleges offer some form of entrepreneurial education. If you don’t feel up to classrooms, consider online options.
For the high energy and health required of an entrepreneur, start a regular exercise program. Eat right, quit smoking, and if you drink, do so only in moderation. Stay active and perhaps get involved in sports.
For that self-confidence so critical to the entrepreneur, join a club or even run for public office. Give speeches whenever you have an opportunity, read books on a subject and listen to motivational tapes. Be a leader in all you do.
Three Traits to Beware
What should you beware of in your own personality regarding entrepreneurship? Three characteristics can doom you, according to Leadership Consulting Group in Belmont, Mass. First is arrogance, which may prompt you to think your business concept is so good it will sell itself.
While usually not arrogant, most entrepreneurs are extremely confident. One university study shows that most small-business entrepreneurs credit their successes to their own efforts or talents but blame failures on bad luck or hard times.
The second major flaw to beware of is being impulsive, dashing into business decisions while ignoring the market or obvious problems.
Finally, pessimism can destroy you and your business. Tough customers, uncooperative or unreliable employees, and long retailing hours can make anyone a pessimist. As the ancient Chinese proverb says: "Man without smiling face should not open shop."
A Genetic Predisposition?
Does entrepreneurship run in families? The answer can be "Yes" and "No."
From the offspring of John D. Rockefeller Sr. to that of Sam Walton, we have seen a host of entrepreneurs who begot entrepreneurs. Rockefeller offspring included a real estate developer, a banker and a cattle breeder. Among Walton’s children were a boat builder, a newspaper publisher and a venture capitalist.
Note that the businesses they chose varied widely from their parents’. And, in today’s tire business, fewer children are looking to take after their tire dealer parents.
Perhaps there’s a gene that turns on, prompting one to start a business. One study shows that half the people trying to start a business had at least one parent who was a business owner.
So, whether you’re just starting out or already operating a booming dealership, remember: A good entrepreneur can turn around a bad business, but a good business does not create a good entrepreneur.