Strategy Do you have the qualities of a successful entrepreneur?
I am sometimes approached by people thinking about starting a business or going out on their own. Unfortunately some of these folks don’t seem to have the right stuff. So how do you tell – are you an entrepreneur? There are checklists on websites and probably personality tests you can take but I can only speak to my own experiences. Some characteristics seem to work and others don’t.
Are you an entrepreneur? Let’s talk about risk tolerance
I think the critical factor for being an entrepreneur is risk tolerance. In fact, most entrepreneurs I know are so comfortable with risk that they don’t even think about it. They are focused on their business, cash flow, tweaking their business model, new opportunities, hiring, etc. But underneath it all there is a possibility that it could go belly up and they would be penniless and possibly bankrupt. I find that many people considering entrepreneurship are troubled by this risk and worry about it a lot. This is probably a sign that you aren’t cut out to be an entrepreneur.
What about hard work, grit, gumption, tenacity, innovation and all those things? Yes, those count too. However if you aren’t comfortable with risk then that uncomfortable feeling in the pit of your stomach is probably going to make you quit.
A short story about risk tolerance
My first hire was a very talented programmer who was going to work on some consulting gigs with me. I wanted him to be an employee (W2 employee as we call it in the USA) but he insisted on being a 1099 contractor. He was leaving a position as a W2 employee and really wanted to be a contractor to try running his own business. This was concerning because I really wanted his attention on customer work not his taxes, financials, etc. Unfortunately he decided to leave after 6 months for a few reasons but he told me that being an independent contractor was very stressful and he didn’t enjoy it all. His new job was back as an employee again. I think he didn’t have an appetite for risk. He jumped around some employee jobs for a few years and then settled into 1099 contractor mode again. He seems to be doing great now. Perhaps it just took some time to get comfortable with the whole thing.
Is this risk tolerance just the same as gambling?
Maybe. Gambling can be calculated risk like the business world. A successful entrepreneur does everything they can to reduce risk and control outcomes. I think gambling is a little different because you know the odds and then leave it completely to chance to see how things go. There is definitely luck in the real world but most entrepreneurs don’t seem to revel in the chance aspect of things. In fact, they seem to do everything in their power to mitigate it. I don’t care for gambling because the games aren’t interesting enough to me. Also the stakes are usually low compared to something like business strategy where millions of dollars might be involved. I know a successful entrepreneur who likes poker but he treats it as a psychological battle with the other players. In summary, I don’t think gamblers and entrepreneurs are much alike.
Other factors to help you decide – are you an entrepreneur?
Starting and growing a business requires tremendous energy since there will be long hours and usually stressful times. A good sign would be if you require little sleep and tend to have lots of energy when you wake up or late at night or both! I am both a morning person and a night owl. This has served me well when I needed to get HR stuff done before my work day started and allowed me to work with the development team late into the night if a release was running late. Time will be short, energy needs to be high – remember the Law of 1440.
Entrepreneurs are trying to create something new and change the status quo. This means the odds are usually stacked against you – being a pessimist isn’t going to get you anywhere. Entrepreneurs have to be optimists. Being positive is infectious and will help to motivate your team and attract other people to help you realize the dream. This also works well as you manage your growing company. Employees will look to you to set the mood for day to day, for successes and most importantly when setbacks occur. If you are calm and positive during emergencies this will give your team more confidence. There will be times when you feel down but you may need to hide it from your team. On the one hand, it makes you more human if you show emotion but it can cause your team to lose faith in you. I always struggled with that balance. 🙁 In hindsight, being too stoic is probably not advisable – just try to stay positive.
Creativity / Problem Solving / Passion
Entrepreneurs are creative but not usually in an artistic manner. They typically want to solve a problem and make things better. This desire to improve the world in some way is a strong motivator for the entrepreneurial journey. They often like to tinker – might be with their business model, understanding customer needs, pricing, technical details or just a novel approach to something. If your primary motivator is money then entrepreneurship might not be for you. The saying goes “money follows passion, not the other way around”.
There is no 9 to 5
If you want to have a regular workday and turn off at 5pm then entrepreneurship is not for you. It is going to take extreme effort and hard work to build your company. Most entrepreneurs work weekends in the early days and then back off to 12 hour days (say 7am to 7pm) after a few years. They often go years without taking real vacation. Work is going to consume your life to some extent as an entrepreneur. Things may ease up after a few years but the early days are likely to be tough. I heard a successful entrepreneur say recently “You don’t own the business, it owns you”.
Has this list scared you off or are you still nodding your head in agreement? If so, then maybe you have the right stuff.
Good luck on your journey – go change the world! 🙂