Seven characteristics of a successful entrepreneur
19 August 2016
By Deniz Ucbasaran
Entrepreneurs come in all shapes and sizes: some are driven by wealth creation, others by the desire to make a difference; some create new businesses from scratch, while others are entrepreneurial within large organisations. What then is common across these entrepreneurs? Here I reveal the seven characterstistics research has found:
1 Look before you take the plunge
Many successful entrepreneurs consider a range of opportunities before they select one. First, they look for fit by asking “is this an opportunity for me?”
That is, does the opportunity allow you to build on your strengths and interests? If not, it is difficult to add value and stay motivated.
Second, they ensure they are moving into a market which is growing or where trends suggest it will grow. It sounds obvious, but one of the biggest mistakes made is to move into a static or declining market.
2 Focus on what you can afford to lose
How do you decide if an entrepreneurial opportunity is worth investing your time and money in? While some make endless financial projections about what financial gain they might receive, these projections can be very unreliable when entering new or volatile markets.
Instead of focusing on the upside potential of an opportunity, highly experienced entrepreneurs focus on the downside. Think through what is the worst thing that can happen? It makes it easier to decide if it is worth taking the plunge.
If you do decide to take the plunge and it doesn’t work out, having set a limit on your loss can make moving on easier, both financially and emotionally.
3 Think lean
We hear of the rags-to-riches stories, but there are good reasons why successful entrepreneurs start lean. First, starting on a shoestring budget provides focus and discipline; you will only spend money on things that will add value.
Second, all entrepreneurs make certain assumptions at the onset, but not all entrepreneurs question and re-evaluate those assumptions as the business develops. A lean operation forces you to do that.
Also, when seeking external investment you need to prove you have a viable product or service before investors will look at you. If you have done this on a shoestring, it gives investors confidence.
Third, you are more likely to attract people who are committed to your cause when you start lean. Finally, it makes it easier to walk away – the best entrepreneurs know when to pull the plug and move on.
4 Select business partners carefully
One common mistake made when selecting a partner is to select someone who is like you and who you naturally like. Successful entrepreneurs look for partners who will complement them.
A second mistake is not doing enough due diligence; you need a courtship period where you really get to know each other.
While you want different skills, knowledge and perspective in your entrepreneurial team, you want alignment in terms of core values and what you want to get out of the business.
The last thing you want is a partnership where one of you wants a rapidly growing business, while the other wants a lifestyle business.
5 Do your homework when looking for an investor
We hear about investors doing due diligence, but why not the other way round? Investors vary considerably in terms of how they evaluate business proposals that come their way as well as how they work with businesses they invest in.
For example, some are much more hands on than others. Ask yourself, what you want from an investor? Is it just the money or is it more?
If you want more, are you ready for this kind of relationship? Walk into an investment relationship with your eyes wide open.
6 Think about your support network
Even highly experienced entrepreneurs have mentors or individuals who support them on their journey. Who will you turn to when things aren’t going as planned?
A key issue in searching for and selecting mentors is to ensure you have a good match. This will involve you thinking carefully about what you need or will need in the next few years.
7 Value your intuition
Although making decisions on the basis of your gut feeling isn’t considered scientific, research shows that intuition is often based on your prior experience.
Having said that, the latest thinking suggests that intuition does not have to come at the expense of more rational analysis. Intuition can be a valuable gatekeeper, acting as a signal for you to steer clear or explore further.
Deniz Ucbasaran is Professor of Entrepreneurship.