A good starting point might be to define what do we mean by Entrepreneur
I would define an entrepreneur as someone who manages a business or enterprise where they have part or whole personal financial responsibility for its success or failure. I believe that the personal financial risk is the key element to true entrepreneurship.
I have interviewed many entrepreneurs who have been very successful and many who have been very unsuccessful and whom I have coached to mitigate their losses and close the business.
From the experience I have captured the key elements that are the strongest determinants for ensuring financial success. So, let’s assume that each one here this afternoon has decided to go it alone and set up a business. You have had enough of this corporate stuff where you have to carry out tasks which are pointless, deal with colleagues with a lazy attitude and agree to a boss’s self-indulgent, self-opinionated speeches which are normally just an ego boost
As MBA executives we know that our preparation and approach must primarily be commercially sound and justified, not just an emotive reaction to exit the large corporate political arena but a positive move which matches and meets sound criteria.
One thing you can be certain about in today’s global environment is change. The business profile from its infancy to three years’ trading will be almost recognisable and how you adapt to and manage that endemic fluidity will be critical to the success of the business
I would define an entrepreneur as someone who manages a business or enterprise and who takes part or whole personal financial liability for its success or failure. I believe that the personal financial risk is the key element to true entrepreneurship. If the business makes an amazing profit, you are a financial star and if the business fails, you may owe a large debt.
I have interviewed many entrepreneurs who have been very successful and many who have been very unsuccessful. From this experience, I have captured the key elements that are most important for ensuring financial success.
I have developed and refined this experience and apply it when I am coaching entrepreneurs in managing their businesses. Change is always present. Markets change, people change, their outlook and their personal circumstances change. Government policies change and societal values change. Whether you view change as ‘riding the storm’ or reacting to a challenge will depend on your personality. Whether you go for risky expansion or safe consolidation will depend on your personality. Whether you find people or situations more difficult to manage will depend on your personality. Here, I am highlighting a factor that is most often omitted when we review the important issues of entrepreneurship – you.
I thought that an entrepreneur had to be good at all activities. After all, they have the ultimate responsibility for accounting, marketing, selling, designing and managing.
This is a good analogy as you will find out why, if you are an expert accountant, selling will not be your forte and, if you are an amazing designer, then you may have to delegate the marketing function.
Still want to be a successful entrepreneur? This is how you do it
There are five key elements to success:
- Your market.
- Your motivation.
- Your personality.
- Your preparation.
5 Your Leadership
Today’s work climate
The present working environment, whether it is a commercially focused corporation or a not-for-profit organisation, is demanding and has a short-term cycle. It will be influenced by the short-term trading culture that is so prevalent in today’s market.
Influencers such as global markets, off-shoring, employee mobility, technology growth, interest rates, booms, recessions, credit crunches, wars and global warming collectively and interactively create an ongoing and dynamic change in world economies.
A significant new development in today’s commercial environment is the fact that work or the task takes priority over the people factor.
Your motivation is a transient characteristic and can change with your circumstances. I know entrepreneurs who were very successful, became financially self-sufficient, retired early and now relish their freedom. These entrepreneurs could not wait to spend more time playing golf, sailing, cooking and generally socialising without the daily commercial pressures. I know entrepreneurs who are equally successful, but cannot contemplate retirement. They view it as a void in their life and have no substitutable meaningful activity.
Make more money
Be my own boss
Unique market opportunity
Imagine you are funding a new start-up and you are seeking an entrepreneur to take total responsibility for the new venture. You draw up a job description listing the soft and technical skills required, and then describe the duties and responsibilities.
The job description should differentiate and demarcate between those skills that are critical for the successful conduct of the role and those that are not absolutely necessary but advantageous.
The critical soft skills outlined in your job description may include one or more from this sample lexicon:
Interpersonal and general communication skills, analytical, creative, organised, determined, resilient, commercial, adaptable, ambitious, energetic, work well under pressure, able to multitask, industrious.
Now list the technical skills for the job description. It is important in terms of competence that the entrepreneur matches the dominant technical skill. If the business is an accountancy service, they must be an accountant. If it is an IT service, they must be expert in that skill. If it is a design business, they will need to have experience in the chosen sector. They can bring in peripheral skills through contractors and freelancers.
So far, we have looked at the market choice from a general perspective. By describing its dynamic and then by benchmarking our skills against the entrepreneur’s role, we can see how well our competencies match the job profile.
Motivation is our next stage to review. What are your goals or objectives for being an entrepreneur? It can be a positive or negative choice. Positive might be: ‘I would love the freedom.’ Negative might be: ‘I am frustrated with constantly having to carry out other people’s bad decisions. I know I can do better. I am now prepared to take that responsibility working for myself.’
Let’s see what motivates you…
There is no such thing as the optimum motivation. If you think that your motivation is compliant with your market, personality, preparation and management, then there is a strong chance that it is robust and resilient enough to carry you through the tough periods.
Your motivation is a transient characteristic and can change with your circumstances. I know entrepreneurs who were very successful, became financially self-sufficient, retired early and now relish their freedom. These entrepreneurs could not wait to spend more time playing golf,sailing, cooking and generally socialising without the daily commercial pressures. I know entrepreneurs who are equally successful, but cannot contemplate retirement. They view it as a void in their life and have no substitutable meaningful activity.
Make more money
Be my own boss
Unique market opportunity
These are all credible individual reasons for making the ‘big leap’.
Motivation will be very personality dependent, and you will be able to test your motivation against your personality type in the next section.
Motivation will have both a rational and emotive component. This process of reviewing the five components listed earlier on page XX will ensure that there is a marriage of the two – that you have sensibly chosen a known market, developed a sound efficacious business plan and adopted a management style that capitalises on your particular personality strengths. If you can ‘tick all these boxes’, you will be excitedly motivated.
The next section is probably the most exciting and revelatory and its goal is not ‘can I?’ but ‘how do I become a really successful entrepreneur through the identification and application of my particular personality strengths?
In this next section I have described the four dominant personality types and what that means to you as an entrepreneur.
We looked first at the commercial market generally. Is it in recession or trading buoyantly? You will have identified a product or service you would like to promote. You will have asked the questions: ‘Why do I want to set up my own business?’ and ‘What is my best choice of product or service?’ You will have reviewed your personality and will feel confident that you have a better understanding of how, using your dominant traits, to be a successful entrepreneur.
Now you need to write it down in the form of a business plan.
My choice is always to use simple terminology or, practising what I preach, replace complex terminology with simple terms. For ‘global’ substitute ‘worldwide’; for ‘strategy’, substitute‘plan’. This way you will more readily identify with your plan as being a help and a guide in the conduct of your business. The overuse of terms such as ‘global strategy’ creates a plan that sounds impersonal and too formal.
Your business plan will include
product or service
first year profit
You will find many templates for business plans on bank internet sites, though I would advise that you compose your own. The generic templates can be too elongated and you may feel that many of the sections are not relevant to your circumstances.
The construction of your business plan will be dependent on your personality type in terms of how much detail you include and how realistic, pessimistic or optimistic it is in composition.
The case and advice you take at this point to ensure that your business plan is robust, transparent and professional, will later repay itself in dividends when you know your plan is working and you are meeting your goals.
The Influencer must pay close attention to detail and curtail their natural optimism with realism.
The Supporter should refrain from referring to too many third parties or taking advice that can be contradictory and cause confliction. Make it your plan – you can always change it. All business plans must be flexible and allow for change.
The Creative will construct a detailed and commercially focused business plan. Creativity as a product or service is difficult to define and ring fence and, therefore, their approach will need to be more client reactive rather than product or service specific.
The Analyst is good at detail and adopts a realistic approach and should ensure that they also build in the flexible element.
On my own or in partnership?
Do I go it alone or do I partner with a colleague whom I have known for a long time and with whom I have had many conversations when we enthusiastically discussed setting up business together? We are a good team. We share the same values and know each other well. We are realistic about our strengths and weaknesses. We could grow the business faster and being in partnership we would share the risk. It would be good for holidays and it would alleviate the endemic worry of own business – what if I am sick or injured and need time off
Supporters and Influencers will be inclined towards partnerships. They will enjoy the companionship and support and will feel more confident on this journey into unknown commercial territory.
The caveat, though, is that partnerships have a high incidence of failure and most often the cause is not poor sales results but disagreement as to the future direction of the company. A common scenario is where the company makes a significant profit and one partner considers it critical to reinvest the capital to accelerate growth, whilst the other partner may wish to cash-in profits in dividends so that they can buy that sailing yacht or new car, or join that expensive golf club they have always promised themselves and which has been outside their financial reach.
Previous familiarity does not help here, as the association was within a different environment and did not reflect the tensions you find within the business arena. Shareholding distribution is also important when you are partnering a business. 50/50 means equal authority in decision making. 75/25 means one party has a majority shareholding and, in effect, has the ‘final say’.
However, if the minority shareholder disagreed fundamentally with an important decision, it is difficult to imagine how that will not disrupt a meaningful working relationship. If you are the majority shareholder and you mentally decide that your colleague should leave the business, the severance compensation may be too onerous for the business to survive. Business disagreements, like divorces, are not always amicable and can involve irrational demands.
I have been elaborate in terms of discussing the pitfalls of partnerships and deliberately so. I have seen too many businesses set up with too much emotive content whereby the ‘what if?’ scenarios were not seriously discussed.
The golden rule is: go it alone, if you can. If you must go into partnership, concentrate on the ‘what ifs?’ as real possibilities rather than rare events.
The fifth and final element in the next section looks at how you should manage your business on a day-to-day basis. Reviewing your personality management style will help you to adopt the most effective approach, and reviewing the other styles will help you to empathise more sensitively with other personalities when you are in a meeting or a negotiation.
You are now highly motivated. You know your market and yourself. Your business plan looks great and you can’t wait to practise that management style.
Yes, you can be an entrepreneur.