A Research Paper By John Rezaiyan, Entrepreneurs, Innovators, Business Executives Coach, UNITED STATES
Entrepreneurship Definition
The Oxford Dictionary defines entrepreneurship as the activity of setting up a business or businesses and taking on financial risks in the hope of profit. Others define it as the process of developing, organizing, and running a new business to generate profit while taking on financial risk. The World Book Dictionary defines entrepreneurship as the state of being an entrepreneur. The latter definition focuses on the person creating or setting up and running a business rather than the activity or the process of creating a business. It is the entrepreneur “the person” who creates entrepreneurship. So, who is an entrepreneur, and what characteristics does he/she possess that make him/her successful?
Those leading a successful not-for-profit business are also entrepreneurs, but their profit is not measured by financial return but rather by economic and social return — improved mental health, feeding the hungry, and taking care of their neighbors.
An entrepreneur is an innovator – a business owner, an executive, an inventor – bearing most of the risk and enjoying most of the reward for implementing a new idea, procedure, or system; providing a new service; or inventing a new product or technology. Entrepreneurs are constantly looking for ways to improve the services or products they provide and face many challenges ranging from mental health challenges to cash flow and staffing and many fail to realize their dream. Many publicly available literature sources discuss the causes of entrepreneurs’ failure. However, I found it more important to review and investigate what makes entrepreneurs successful, what are the characteristics of successful entrepreneurs, and whether these characteristics inherited or developed over time (i.e., can be learned). After all a key factor in succeeding in any endeavor is to focus on the positives and remain positive and hopeful – keep the dream alive and make it a reality.
Characteristics of Successful Entrepreneurs
Most successful entrepreneurs agree that being passionate and getting paid for the job they would do for free is the key to their success. But not everyone who is passionate about what they do succeeds as an entrepreneur. The following are some of the characteristics, other than being passionate, that most successful entrepreneurs have in common.
Entrepreneurs are: |
|
Versatile |
Flexible |
Resilient |
Focused |
Communicator |
Money Savvy |
Business Smart |
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Not all entrepreneurs are born with these traits. These skills can be learned. |
These characteristics are not genetic or inherited, they can be learned. Successful entrepreneurs are versatile, flexible, resilient, focused, communicative, money savvy, and business smart.
Versatile
The versatility of an entrepreneur is paramount to his or her success. An entrepreneur needs to know when to hold on to certain business activities and when to let go. When starting out is important to be hands-on and personally handle marketing, client interactions, accounting, and do the work. I used to say, “I am the chairman of the board and chief office cleaner.” Initially, being personally involved in every aspect of the business is essential but as the business grows successful entrepreneurs train employees to handle the day-to-day activities of running the business and empower them to do the work. Personally, answering the phone, interacting with all clients, and getting feedback about the market and product may be possible when starting a business but it is impossible when the business expands.
An entrepreneur needs to know when to hold on certain business activities and when let go.As the business grows, successful entrepreneurs train employees to handle day-to-day activities of running the business and empower them to do the work.
Some of today’s most successful businesses started as a small business and demonstrated the required versatility in order to grow their entrepreneurship and succeed as an entrepreneur. Adolf “Adi” and Rudolf Dassler brothers, funders of Adidas and Pumabegan made shoes in their mother’s washroom and managed to survive through World War II. Adi was a cobbler with the goal of standing out in the market by gathering feedback from athletes about what they looked for in a shoe, how they felt about his shoes, and how they thought Adi’s shoes could be improved. Rudolf’s focus was more administrative and sales. When supply was short, Adi searched the countryside for army helmets and bread pouches to supply leather for soles and parachutes to supply silk for slippers. After the war, the brothers went their separate ways. Adi’s versatility and the ability to adapt to new circumstances and change its product based on the feedback he received from athletes led to his success in in1954 when the German national football team won the World Cup final against the Hungarians—while wearing the new model of Adidas cleats. In today’s market and the age of artificial intelligence hearing a human voice is a sure way to attract new customers and make existing ones feel appreciated.
Flexible
Successful entrepreneurs are flexible. They rarely have a perfect solution or product straight out of the gate. The first Apple computers or smartphones were very different than today’s computers or cell phones. So were the first automobiles, jet engines, solar panels, and wind turbines. One of the most successful biomass-to-liquid technologies I know started as a new coal-to-power technology. Ideas morph over time. Former Starbucks CEO, Howard Schultz, initially played Italian opera music at Starbucks thinking it would accentuate the Italian coffeehouse experience. But customers saw things differently, so he changed the music and provided comfortable chairs instead.
A perfect product design, a highly desirable restaurant menu, or a successful coffee shop requires entrepreneur’s flexibility and trial and errors.
Resilient
Successful entrepreneurs are resilient. Running your own business including a coaching business is extremely difficult, especially getting one started from scratch. It requires a lot of time and dedication. When faced with rejection or failure successful entrepreneurs keep pushing forward. Starting a business is a learning process that comes with a learning curve and frustration, especially when money is on the line. It’s important not to give up through the difficult times.
Starting a business is a learning process which comes with a learning curve and frustration, especially when money is on the line.
Adi Dassler was resilient. He didn’t give up his dream of making the best possible show during World War II and all the supply shortages and difficulties that the war brought about. So was Melanie Perkins, the creator of Canva, a global multi-national graphic design platform that is used to create social media graphics and presentations. Her idea of creating a simple, affordable, online design tool was rejected by over 100 investors. It took three years before Canva received its first investor.
Focused
Successful entrepreneurs stay focused. They eliminate the noise and doubts; believe in their instincts and ideas; and don’t become sidetracked. They always remind themselves why they started their own business; do not lose sight of the end goal; and stay on course to achieve their goal. However, they do not surround themselves with people who only tell them what they want to hear.
Communicator
Successful entrepreneurs are effective communicators. Communicating successfully is important in almost every facet of our lives, regardless of what we do, but it is paramount to the success of entrepreneurs. They must convey their ideas and strategies to investors; share their business plan with their employees; negotiate contracts with suppliers; and let their potential customers know how the services or products they offer can help their customers. Successful entrepreneurs are not only the chief operating officer and the chairman of the board, no matter how small or large their business is, but they are also the chief person and cheerleader for their organizations.
Successful entrepreneurs are not only the chief operating officer and the chairman of the board, no matter how small or large their business is, but they are the chief spoke person and cheer leader for their organizations.
Money Savvy
Cash flow is the lifeblood of any successful business and successful entrepreneurs are money-savvy, ensuring positive cash flow. The key to staying in black is rigorous and regular cash flow management – projecting revenue and expenses and developing contingency plans to overcome any potential shortfall. It is essential to keep personal and business funds separate, not to dip into business funds to cover personal expenses or dip in your personal funds to cover business expenses without proper accounting. It is important that entrepreneurs pay themselves a realistic salary. This can have significant tax implications depending on where the business is registered and if the business provides profit sharing and retirement benefits even if an entrepreneur is the sole business owner. Related but important is communicating all money matters with those loved ones who may be impacted.
Successful entrepreneurs monitor and evaluate cash flow, the business life blood, constantly and develop mitigating strategies to overcome any potential projected shortfall.
A few months ago, a client who has been running two successful businesses, a for-profit, and a not-for-profit business, for years came to a coaching session overwhelmed and stressed that she was using her personal funds to float her for-profit business. She loved doing the “work” but not working on the business. She loved the not-for-profit business because it was based on donations and annual fundraising which was fun and hated her for-profit business because she had to confront clients who were not paying their invoices. After some exploration, it became apparent to her that since her partner had exited the business about a year ago no one had been managing the cash flow. After some discussions, she decided to assign one of her employees to follow up with the delinquent clients and have her outside account develop annual revenue and expense projections that are updated monthly for review. The next time we met all was well, the clients were paying their bills and the bleeding had stopped.
Business Smart
Knowing how to manage money and understanding financial statements are critical for anyone running their own business. Knowing your revenues, your costs, and how to increase or decrease them, respectively, is important. Making sure you don’t burn through cash will allow you to keep the business alive.
Being business smart not only is critical to the day-to-day operation of a business but also to the long-term planning, business valuation, and attracting investors when is time to scale-up, produce products to meet demand, or build the first-of-the kind commercial plant.
Implementing a sound business strategy, and knowing your target market, your competitors, and your strengths and weaknesses, will allow you to maneuver the difficult landscape of running your business. Being business smart not only is critical to the day-to-day operation of a business but also to the long-term planning, business valuation, and attracting investors when is time to scale up, produce products to meet demand, or build the first-of-the-kind commercial plant.
References
Challenges Faced by New Entrepreneurs and Suggestions How to Overcome Them; Eng Yi Fong, MohdKhata Bin Jabor, Abdul Halim Zulkifli, Mohamad Riduam Hashim; Faculty of Social Sciences and Humanities, Universiti Teknologi; Malaysia; Atlantis Press; Advances in Social Science, Education, and Humanities Research, volume 470; P. 223.
The prevalence and co-occurrence of psychiatric conditions among entrepreneurs and their families; Michael A. Freeman, Paige J. Staudenmaier, Mackenzie R. Zisser, and Lisa Abdilova Andresen; Small Business Economics, May 11, 2018.
The 10 Biggest Challenges Every Entrepreneur Faces (And How to Conquer Them), Alejandro Cremade, Forbes, May 2, 2019;
https://www.deluxe.com/blog/10-challenges-entrepreneurs-face/
11 Challenges Entrepreneurs Face and How to Overcome Them, Published October 21, 2021, updated November 30, 2022; Indeed Editorial Team;
8 Challenges Entrepreneurs Face (and How to Overcome Them)
Entrepreneur: What It Means to Be One and How to Get Started, Adam Hayes, March 16, 2023, Investopedia
4 Entrepreneur Success Stories to Learn From, Catherine Cote, Jan 20, 2022, Harvard Business School Online