Characteristics of a successful entrepreneur....easy to know, difficult to master

I came across a new magazine the other day called Ambition, which after reading I presume is focused on entrepreneurs but is relevant for all small business owners, entrepreneurs and freelancers. Let me first start by saying that it was a great magazine to read with a good mix of relevant, interesting and informative articles in a market already crowded with entrepreneur focused material.

Anyhow, back to the reason for this blog. One of the articles was titled "What makes a true entrepreneur"? Now there's been a few of these articles recently with the main focus of the conversation focusing on whether entrepreneurs are born or whether the required competencies can be learnt. I don't agree fully with the author when she says that entrepreneurship cannot be learnt because to be honest the word entrepreneur has morphed from what it once was and thus the competencies required have also changed. An entrepreneur no longer has to be an inventor or innovator in the pure sense of the word so what was required to be labeled an entrepreneur 20 years ago is different in today's business environment. I could go into more detail on this now but will leave for another time. Rather let me focus on some of the characteristics of the entrepreneur that came out of a MIT study, albeit 25 years ago (you would think that there is something a little more recent and thus relevant?). However some of these were;

- drive and energy
- internal locus of control
- low fear of failure
- clear goal setting
- self confidence
- moderate risk taker

These are some of the examples but the point I want to make is this. If you are an entrepreneur how do you go about identifying, developing, measuring and learning these characteristics. Whilst easy to read and talk about it is not so easy to assess and increase your own abilities in these areas. Even if you do, the article fails to mention 'how much' drive and energy, self confidence and internal locus of control you need. What is meant by 'moderate' in respect to risk taking? With so many ambiguities this list of characteristics tells you a lot and nothing at all. However it is important to note that the list did not mention that most successful entrepreneurs were the ones with the best business plans. Whilst implementing an effective business strategy is important the message that entrepreneurial success is people characteristic centric appears time and time again.

So what does this tell you? If you're an entrepreneur who wants to be successful focus on your personal and professional development; seek advice from those who can assist you in these areas such as business psychologists because in reality no other professional has the experience, training or education to effectively provide you with the tools, frameworks and support needed.

And for all those freelancers out there, take note. The characteristics listed are some of those you'll need to transition to a 21st century freelancer.

The principles behind increasing your income

If there is one thing entrepreneurs and freelancers should be focusing on this is it - how to increase your income or of more use how to increase your productivity. It amazes me how many startups and self-employed focus on aspects of their business, that whilst important to some degree, fail to concentrate on the drivers of income creation (note I say 'income' not 'revenue').

When consulting to clients there used to be the question of how to charge for work performed. That is, charge per job or charge per hour. Of course you may still charge per hour is required but your preference should be always per job. Why? Because you could (1) complete the job in fewer hours than the budget and therefore increase your per/hour rate of income or (2) give the job to a qualified associate for 80% of what you are receiving. Five such jobs will see you earning 20% more than what you could have as an individual.

But what I really want to communicate is that the wealthy do not sell hours - they sell knowledge. A motivational speaker does not speak to a single person if they can speak to hundreds. A website will not provide information to just one person - rather the same 'valued' information is presented to hundreds, thousands and millions of customers. This is the leverage of knowledge.

This is not an option for everyone but many careers and businesses can utilize the concept. Not only consulting, motivational speaking and certain web-based advice business e.g career and investment advice. However those in a trade can certainly also leverage their knowledge so they are not handicapped to work for only a particular rate per hour.

However just as important is that you have to recognize that you cannot just know something and expect huge success if no one else values that knowledge as much as you. This is the fallacy that many professionals believe to be true - that once you have a professional qualification then you're set. Unfortunately this is not the case. Firstly you have knowledge but probably cannot utilize it effectively within a working environment. Secondly many other people also have the same knowledge. So it appears the secret to business and career success is just not having knowledge and leveraging that knowledge. It's about applying the knowledge in such a way that (1) not many others can copy (2) how the knowledge is applied is valuable and (3) you can leverage across many people.

Why small businesses and entrepreneurs fail

What is failure and why do so many business startups fail? Failure could be classified as not achieving goals such as working more hours than planned, lack of enjoyment and satisfaction, too much travel - however in vast majority of cases failure of a business is due to financial reasons. That is not making enough money to cover costs.

Why does this occur and so freqently? I have met a lot of entrepreneurs, both who have succeeded and failed in business (some many times over), and the one thing they have in common is intelligence and drive. So if this is what you think you need to have to succeed then think again. The difference between success and failure is decision making. The basis of decision making is information and insight and I believe the two go hand-in-hand in ensuring the most appropriate decision is made.

Thus failure in business is due to poor decision making because there was incorrect, lack of or inappropriate information used and that the insight of the entrepreneur was wrong. Insight itself is a cognitive process and basically a interpretation of external stimuli - so in fact decision making, both directly and indirectly, is correlated to the quality of information received.

Failure is due to making a wrong decision many times over because no effort is made to assess the decision making process. Working with a performance coach or psychologist is useful in understanding the basis for decisions made and making changes in your decision making process. If you fail once and don't assess the process for making decisions then the chances of making the goals or targets you have set are very low. You cannot assume you know how to make a right decision and the warning signs should not be ignored. Thinking you know how to make a right decision is one of those as you will not be open for change.

Small business also fails because the entrepreneur in charge of the business is not made out to work in such as environment. Making a decision to start a business is the first important decision you have to make and one of the most critical. If you get this wrong then your business may already be on the path to failure.

Starting a new business

Our world is a lot different then it was 20 years ago. Well I say different but perhaps it was the same on a larger scale...in particular I want to focus on what it takes to startup a new business these days.

Of course business startups happen all the time but even 20 years ago it was more commonplace to look to an established organisation for work rather than consider starting up your own business. However over the past twenty years it has definitely evened out, with it becoming a cultural norm to start your own business - either from the start of a career or in the middle of an established one.

That being said, when you go to start a new business these days it's like trying to find a domain name that hasn't been taken. It is EXTREMELY difficult to come up with a business idea that hasn't already been thought of or already put in place. New ideas will mostly come from extreme creatives or from people who have been impacted by an extreme event that leads them to an idea - the originality of the event is the driver of this. So where does this lead us?

I would say there are two good paths to contemplate when considering whether to startup your new business. One, can you do something more effectively then what is already being offered out in the market and two, can you operate a business that supports existing businesses? My thought is that if there are more and more businesses being started up, all of varying sizes, industries and substance (online or bricks and mortar) there is greater opportunity to start a business that supports these. One example is Crunch Accounting (www.crunchaccounting.co.uk) which was setup to service freelancers and contractors in the UK. Why was that? Because the market for independent freelancers is continuing to increase because organisations want to reduce their fixed overhead costs. These freelancers need accounting performed and Crunch provides an effective online platform. Now would this business have worked 20 years ago? No way...and probably not even 10 years ago. I'm a little surprised it has taken so long to kick-start but it is one great idea.

So when it comes to starting your new business, don't try to beat them or even join them. Perhaps it makes more sense to support the new businesses being created everyday.

Change your focus from 'job searching' to 'job creating'

The hard, cold truth is here...some jobs will disappear and never to return. In some industries this reduction will be greater than in others but nevertheless where we are now is the start of a resource reallocation shift.

I've just read an article on CNBC that mentioned that many financial jobs will not be able to be supported simply because of the reduction in leverage in the market. The same is happening in London and every major financial centre around the world. In property the same is happening where the drying up of bank credit will not only reduce the volume of property transactions but the revenues available to real estate agents. Same for retail, if the focus is consumer discretionary due to credit drying up and the consumer cutting back.

But for all those thinking doom and gloom this is an event that had to occur. This is not only going to re-create a balance in our society but give many of us the opportunity to do things we want to do but never had the courage to start - for one reason/excuse or another.

If your job is gone create one instead

I speak with many recruiters and job seekers these days and am amazed at the fact that many hundreds of CVs are submitted for each job...Presidents going for VP roles and MDs going for Director roles. It's almost desperation to find something or anything. Is this the approach to take? Humans are creative and amazingly resilient in times of adversity and now is the time to see this come through. Rather than send your CV for the one role that is similar to what you used to do, but is competing against 500 others, look at your skills and consider about how to apply them to another area of the economy. This may be in role that already exists or better still, be entrepreneurial and apply your skills to something you think is missing in the market. You may never get this chance again.

The way to look at it is this. If we are going through a huge resource reallocation then jobs will not reappear. Hoping for your job to reappear is not going to help - get in control of your destiny and create demand for your skill instead.

What are the key things entrepreneurs need assistance in?

Entrepreneurs are a strange bunch.....I say this tongue in cheek as I have a lot of respect for this group of people who often risk everything in the belief that their service or product will be a success. I am not talking about business owners here per se but those who start a venture from nothing, create the possibility to bring something new or improved to our society. The best entrepreneurs have loads of confidence and self belief, have a great vision, focused and lots of determination and perseverance. Ideas may be sensible, slightly crazy or completely off the wall but in all cases they often have a reason for pursuing their particular venture. The vast majority of us would not be successful as entrepreneurs - even though some of the competencies of an entrepreneur can be taught a lot has to do with personality traits. This is not something that can be taught.

However taking into account all of this I have seen many entrepreneurs fail and some of my clients are entrepreneurs - thus I have seen the same patterns over and over again. Entrepreneurs are great at kick-starting a project but they do run the risk of expending lots of energy with little return even though they may have a high degree of focus. Entrepreneurs are often not able to operate as a business, rather they often operate in the 'new product development' or R&D sphere, which is great to begin with but is not sustainable. What entrepreneurs need to be aware they need assistance in is business strategy, financial management and funding and most important, self health and well-being.

So why have I selected these particular areas? Entrepreneurs are all for pushing a product or service to market, but often they have no concept of how to move past the creation and innovation stage. Do they have experience in market entry, competitor analysis, market analysis? Maybe, maybe not but I am a believer that you cannot do everything well. Even if you think you can do everything your performance will suffer at some point due to your inherent limitations (due to genetics, your experiences and knowledge). Many entrepreneurs are not experts in finance or fund raising and this is one reason that many entrepreneurs go to venture capitalists for assistance and guidance. Lastly, and perhaps most importantly, entrepreneurs are not experts in mental strength and well-being. No entrepreneur will experience success if they are continually stressed, distracted and mentally fatigued. Entrepreneurs, more then most, will face problems that need to be addressed and these cannot always be solved by one's self. There is a need for external guidance and support.

So my advice for entrepreneurs is two things. Firstly recognise what competencies it will take to be a success - not just in the creation of whatever you are involved in but getting it to market. Secondly, assess your own competency gaps and don't be too proud to ask for assistance. Know your strengths and recognize it is a strength to know when to do it yourself and when to delegate.

Do you have the qualities of an entrepreneur?

I came across an interesting article in the Institute of Directors 'Director' magazine the other day. Interesting to me at least because it is an area in which I work in quite a lot. The article was debating whether you can teach people to become entrepreneurs or whether it takes a certain type.

Now before summarizing the debate itself I wanted to address a few points on this matter. Being an entrepreneur is not the same as being the owner of a business. The concept of entrepreneurship revolves around creating and building a business from nothing. It is about bringing a new idea or the new execution of an idea to market. This debate will become more mainstream for a number of reasons. Firstly the nature of the workplace is not only encouraging but requiring people to become more innovative and to consider working for themselves rather than being employed by organisations. Secondly, many universities are teaching entrepreneurial programs with the view that this information can be used and applied, either as an entrepreneur or an advisor I'm not sure, but from what I understand these classes are in high demand. Thirdly, our culture now regards entrepreneurs as more mainstream rather than unique.

Back to the debate....

YES you can teach people to be entrepreneurs

- common knowledge can be taught around key entrepreneurial components; opportunity identification,resource acquisition and new venture startup.

- marketing and selling skills can be taught and have been successfully for many years

- the innate entrepreneurial spirit and ability has developed within our society making this more of an inherent ability due to culture norms.

NO you cannot teach people to be entrepreneurs

- sure you can teach the theory but entrepreneurs are usually a certain 'type' with the energy and passion to start a business. This cannot be taught.

- it is not possible for everyone to create wealth...and this is the basis of being an entrepreneur

- No one actually knows what makes an entrepreneur successful. Whilst the components are quite easy to understand it's the survival instinct and drive that is the unknown element and contributor


So before heading off to become an entrepreneur consider in detail the pros and cons. Know yourself and be clear as to what your goals are in life. Though personality assessments are guidelines only they are useful in that they provide a reference point from which you can start to know and develop yourself. As I say, "how do you know the path to your destination if you do not know where you are starting from?"

Why "awareness'' is critical to you achieving what you truly value

The word 'awareness' has come to my attention recently and in fact the more I think about it the more I am beginning to appreciate the importance and benefit of paying attention to what it actually means. The context in which I want to approach 'awareness' is that of recognizing where you are today, where you want to be in the future and ensuring you are undertaking the correct actions to make that happen - and not get lost in the complexities every day life brings. Some might even want to call this 'self awareness' but what I'm talking about isn't really about being aware of your identity...it more about being aware of your actions and are they congruent to your goals.

Why do I choose to write about this today? Well it's been on my mind for a while and I've come to the conclusion that whilst many of us have goals, or seeing as we're at the start of 2009, perhaps a resolution I would predict no many of us know how to achieve that goal, whether it is the right one for them considering their current position or whether knowing what it would take to achieve the goal be prepared to undertake the commitment. Such as saying you will go to the gym 4 times a week for an hour when your current schedule would only allow 2 or by saying you'll save 25% of your income when your budget is tight at 15% savings limit - these are all good goals but there are non-considered hurdles in between to take care of. You might say "Daryl, but I'll just clear my schedule or ask for a pay rise...this will take care of those hurdles". Great, but what is the cost of clearing your schedule and what do you have to do to ensure the pay rise?

From my perspective the importance of awareness is that to clearly understand what is probable, possible and not possible at any point in time and to focus on the first two to enable the latter to be achieved as well. Being aware will prevent you from wasting time, money or emotion on actions that are not going to permit you to achieve your goals and may perhaps take you further away. It is also of great importance to be aware of what those goals mean to you...even if you do achieve it then what? If you 'just go' to the gym 4 times a week then what? If you save 25% of your salary what does that mean for you? If you get promoted in your work what position does that put you in?

Being aware is critical in career and business management - particularly at the early stages of each. Pretty much everyone I know is excited during the interview stage of a job and even more so when the job is offered. However if that job does not turn out right then only a short time later that excitement is replaced by disappointment. Same goes with a business, where everything in the startup phase is exciting but the reality hits home once you are running the business. Being aware will allow you to make better informed and objective decisions which should create more optimal results for you.

So my advice is do not live life on automatic. Achieve a state of awareness of where you are, why you are where you are and where you want to go. Ensure that you are taking the necessary steps to head in the direction you want to go and if you remember one thing, don't assume everything will just work out. You need to take control.

The need to be aware of where you are and what you are doing

The word 'awareness' has come to my attention recently and in fact the more I think about it the more I am beginning to appreciate the importance and benefit of paying attention to what it actually means. The context in which I want to approach 'awareness' is that of recognizing where you are today, where you want to be in the future and ensuring you are undertaking the correct actions to make that happen - and not get lost in the complexities every day life brings. Some might even want to call this 'self awareness' but what I'm talking about isn't really about being aware of your identity...it more about being aware of your actions and are they congruent to your goals.

Why do I choose to write about this today? Well it's been on my mind for a while and I've come to the conclusion that whilst many of us have goals, or seeing as we're at the start of 2009, perhaps a resolution I would predict no many of us know how to achieve that goal, whether it is the right one for them considering their current position or whether knowing what it would take to achieve the goal be prepared to undertake the commitment. Such as saying you will go to the gym 4 times a week for an hour when your current schedule would only allow 2 or by saying you'll save 25% of your income when your budget is tight at 15% savings limit - these are all good goals but there are non-considered hurdles in between to take care of. You might say "Daryl, but I'll just clear my schedule or ask for a pay rise...this will take care of those hurdles". Great, but what is the cost of clearing your schedule and what do you have to do to ensure the pay rise?

From my perspective the importance of awareness is that to clearly understand what is probable, possible and not possible at any point in time and to focus on the first two to enable the latter to be achieved as well. Being aware will prevent you from wasting time, money or emotion on actions that are not going to permit you to achieve your goals and may perhaps take you further away. It is also of great importance to be aware of what those goals mean to you...even if you do achieve it then what? If you 'just go' to the gym 4 times a week then what? If you save 25% of your salary what does that mean for you? If you get promoted in your work what position does that put you in?

Being aware is critical in career and business management - particularly at the early stages of each. Pretty much everyone I know is excited during the interview stage of a job and even more so when the job is offered. However if that job does not turn out right then only a short time later that excitement is replaced by disappointment. Same goes with a business, where everything in the startup phase is exciting but the reality hits home once you are running the business. Being aware will allow you to make better informed and objective decisions which should create more optimal results for you.

So my advice is do not live life on automatic. Achieve a state of awareness of where you are, why you are where you are and where you want to go. Ensure that you are taking the necessary steps to head in the direction you want to go and if you remember one thing, don't assume everything will just work out. You need to take control.

A business or career begins with a dream...but succeeds from a solid foundation

I'm not sure if it's due to the recent economic crisis...actually let me say economic events as I don't want to be another conveyor of doom and gloom, but I have been reassessing my own skills and personal resources recently. Purpose? To discover what I actually know and what value I provide to society. What I have found in fact is a bit of a wake up call in that whilst I do know certain things I perhaps thought I know more than I actually do.

I'll be the first to admit I have some great career goals in respect to the businesses I want to develop. Lots of goals and objectives supported by motivations but the one thing I needed to do was assess whether I had the ability, knowledge and experience to achieve the goals I wanted when I wanted. Let me tell you it's an interesting exercise to undertaken, particularly when you are brutally honest with yourself.

Let's take for example you want to run a consulting business and you think you know enough to succeed. Can you answer the following questions in a positive way:

1. Do you know more than 80% of competitors?
2. Have you validated the knowledge you need to know to succced?
3. Have you confirmed the above with your potential customers?
4. You might have 'consulting' knowledge but do you have 'financial performance' management knowledge? (that is, the knowledge to run your company finances)
5. Have you undertaken a risk assessment on the impact to your business of negative events e.g. economic downturn. Has this been validated?

See the thing is, it doesn't matter if you are smart as a 'subject matter expert' and have a great dream to go out on your own - if you don't build a solid business foundation behind you then you will not succeed. Likewise, you definitely need a great dream to succeed but it is only the start. Failure is achieved by being under-prepared and it is not hard in this fast-paced world to indeed be caught short.

Why small businesses fail

What is failure and why do so many business startups fail? Failure could be classified as not achieving goals such as working more hours than planned, lack of enjoyment and satisfaction, too much travel - however in vast majority of cases failure of a business is due to financial reasons. That is not making enough money to cover costs.

Why does this occur and so freqently? I have met a lot of entrepreneurs, both who have succeeded and failed in business (some many times over), and the one thing they have in common is intelligence and drive. So if this is what you think you need to have to succeed then think again. The difference between success and failure is decision making. The basis of decision making is information and insight and I believe the two go hand-in-hand in ensuring the most appropriate decision is made.

Thus failure in business is due to poor decision making because there was incorrect, lack of or inappropriate information used and that the insight of the entrepreneur was wrong. Insight itself is a cognitive process and basically a interpretation of external stimuli - so in fact decision making, both directly and indirectly, is correlated to the quality of information received.

Failure is due to making a wrong decision many times over because no effort is made to assess the decision making process. Working with a performance coach or psychologist is useful in understanding the basis for decisions made and making changes in your decision making process. If you fail once and don't assess the process for making decisions then the chances of making the goals or targets you have set are very low. You cannot assume you know how to make a right decision and the warning signs should not be ignored. Thinking you know how to make a right decision is one of those as you will not be open for change.

Small business also fails because the entrepreneur in charge of the business is not made out to work in such as environment. Making a decision to start a business is the first important decision you have to make and one of the most critical. If you get this wrong then your business may already be on the path to failure.