I have been exploring the characteristics of successful entrepreneurs and wondering what makes a great entrepreneur.
First, we have to define an entrepreneur. Many people immediately envision the likes of a Henry Ford, Bill Gates, Donald Trump, Martha Stewart or Warren Buffett. However, I want to focus on the millions of lesser-known self-employed Americans and the characteristics that make some of them truly great entrepreneurs.
As we know, most small business ventures fail, while others struggle, and far fewer truly succeed. What are the traits that successful business people possess, and if we don't currently possess these skills or characteristics, can we develop them?
The dictionary defines a self-employed person as "one who works for oneself." Yet an entrepreneur is defined as "one who is willing to take risks in order to make a profit." There is a critical difference in these definitions. One states nothing of the conscious willingness to take risks. Does the willingness to take risks help the self-employed person become more successful?
Michael Gerber, an internationally recognized authority on building successful small businesses and author of The E-Myth states that this conscious willingness to take risks is critical to success, yet it is a common misconception that all small businesses are started by entrepreneurs risking capital to make a profit. Gerber argues that this is the entrepreneurial myth, ergo the E-Myth.
Kevin Poland, a consultant who uses E-Myth strategies to advise financial planners, elaborates that most businesses are started by people who choose self-employment primarily or entirely because they don't want to work for someone else. The main reasons to work for yourself include keeping more of the profits you produce and having more control over your work and personal life. These are extremely valid objectives, and they are common to self-employed people and entrepreneurs. However, they are not characteristics of successful entrepreneurs. You may not want to work for someone else, but you also may not be aware of the risks involved, how to minimize, manage or react to them.
As financial services professionals, we are all familiar with the relationship between risk and reward. The greater the risks we take, the greater the opportunity for reward. We also know that everyone's definition of and tolerance for risk and desire for reward are different. For example, "many people view working for a large corporation as more risky then becoming self-employed," says Robert Wilgos, president of Laurel Financial Consultants in Langhorne, Pa. "The corporation does not provide the security it once did."
So, what is the entrepreneurial spirit exactly? Is it a behavior, an approach, an attitude? Can we acquire or enhance entrepreneurial traits for ourselves? Absolutely! We can begin by becoming aware of the characteristics of great entrepreneurs and then honestly critiquing ourselves.
Tom Sturiale, the president of Sturiale Financial Planning, a fee-only financial planning firm located in Framingham, Mass., shared his insights from many years working both in corporate America and as a small-business owner. He stressed that the entrepreneurial spirit comes from deep inner strength and drive. Entrepreneurs have an inherent need to create, build, explore and discover. They are willing to take on all of the risks associated with self-employment in exchange for the freedom to never have to work for someone else; but they are also able to fulfill their inherent need to create something that is truly better, different and needed in the marketplace.
Successful entrepreneurs have unusually strong confidence in their ability to succeed. Failure is not an option. They have the vision and faith that they will find solutions. The business and the self become one. Entrepreneurs will take on much greater sacrifices than those faced by all self-employed people. Remember, most small businesses fail, yet failure is not an option for entrepreneurs.
Let's return to our list of famous entrepreneurs. Years after they became self-made millionaires, they each continued to pour their hearts and souls into their work, even though they no longer needed the money. So the profit motive alone is not what makes a great entrepreneur. Nor is it just the need for power or control. Successful entrepreneurs view their work as their passion, not their job.
All have taken on significant risks and made lots of mistakes along the way, but that did not deter them. They are driven nonconformists, rather than meandering nonconformists, like many of their competitors.
Another feature that distinguishes entrepreneurs is persistence. Neither talent, genius nor education can take its place. Little is more common than unsuccessful people with talent, or even genius. Persistence and determination are omnipotent.
The Kauffman Foundation of Entrepreneurship defines an entrepreneur as someone who is willing and eager to create a new venture in order to present a concept to the marketplace. Kauffman defines entrepreneurship as a process of pursuing opportunity, leveraging resources and initiating change to create value. Thus, an entrepreneur is one who creates and manages change by acting with passion for a purpose.
The Hay Group, one of the world's largest consulting firms in human resource management, lists these qualities that entrepreneurs need to succeed:
Integrity: Entrepreneurs stick to their principles, even when it is difficult to do so.
Initiative: Entrepreneurs engage in long-term planning--more than a year in advance.
Commitment: Entrepreneurs have a tremendous capacity for hard work.
Drive and determination: Entrepreneurs are motivated by a need to surpass standards of excellence.
Confidence: Entrepreneurs have an infectious self-belief.
Self-direction: Entrepreneurs usually focus on areas they find exciting and do not dwell on failures.
Salesmanship: Entrepreneurs use their energy, enthusiasm and vision to persuade and sell to others.
Leadership: Entrepreneurs focus on the ability to identify talent and inspire others to share their vision.
The website of the Kauffman Foundation, www.kauffman.org, is full of resources planners can use to counsel clients and develop their own entrepreneurial skills. One article of note is "Opportunity Meets Preparation," by Terry Gold, cofounder, CEO and president of Gold Systems, a software company that specializes in computer telephony technologies.
Gold believes in the axiom that "luck is where opportunity meets preparation." Among the steps required for building a successful business is developing the right mindset. If you're not committed to building a business, don't waste your time or anyone's money, he says. Make sure that your vision and passion are expressed clearly and simply in every document, presentation and conversation.
Clients may need help developing their vision to maintain focus and channel their energies to fully realize their visions. To achieve the appropriate balance between vision and execution, help clients surround themselves with smart, good people. Many of them could benefit greatly by hiring a business coach. I have personally worked with a number of coaches, including Kevin Poland, Mary Lacey Gibson and Kip Gregory, who have been pivotal in my success.
Entrepreneurs should align themselves with people who share their values and understand your passion. Besides coaches, these might be employees, colleagues, clients, mentors and family. Being self-employed can get lonely; it requires hard work and long hours. Maintaining a strong network will provide support through the rough times and companionship for celebrating the good times. But more important, a network can hold you accountable to yourself. With the right attitude and mindset, I believe that any self-employed person can become a great entrepreneur, whether those skills are innately theirs or they develop them over time.
Sheryl Garrett, CFP, is founder of The Garrett Planning Network (www.garrettplanningnetwork.com). Her turnkey business model for financial advisers and novel approach for reaching untapped client markets have attracted significant media attention since the network's inception in 2000.
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