The Oxford Dictionary defines an entrepreneur as: “a person who sets up a business or businesses, taking on financial risks in the hope of profit.”
Essentially entrepreneurs are more than just business people. They are people who risk their own capital in business ventures. Here we look at what makes a successful entrepreneur.
Taking calculated risks
As we have seen above, entrepreneurship involves a degree of risk. This is not a course of action for naturally cautious individuals.
However, reckless risk-taking is hardly a recommended strategy for an entrepreneur either. Some gambles of this type might pay off, but the law of averages tells us luck will run out. Entrepreneurship is about taking calculated risks. Strategies that are adopted by a businessperson should have a reasonable chance of succeeding, and where a careful analysis of the benefits and downsides of that course of action have been carefully considered.
Market analysis skills
Many of the best entrepreneurial decisions have involved launching a new product or service, or delivering an existing service in a new and improved way. Entrepreneurs are unlikely to be swayed by arguments from others along the lines of ‘we’ve always done it this way, and it’s worked, so we’re not changing it’. They need to have the skills to identify gaps in the market, and to know who the most likely people to buy the product or service are, and which marketing approaches these potential buyers are most likely to respond to. That said, not all product launches by entrepreneurs are successful. When Sir Clive Sinclair launched the C5, or Lord Sugar’s Amstrad unveiled the E-mailer (a phone that could send and receive emails) they both must have thought it was a good idea at the time!
As we have seen, being an entrepreneur involves taking risks. We have also looked at how any risks that are taken should be calculated risks. But there is no getting away from the fact that taking a risk by definition means that things could go wrong. Expecting instant success is also unrealistic, given it may take time to persuade people that what is being offered is viable. A good entrepreneur must be able to brush off the inevitable setbacks, hopefully learning from their experiences. “So much of entrepreneurship is dealing with repeated failure. It happens many times each week,” commented Mike Colwell, who runs Plains Angels, an angel investor forum in Iowa, USA.
Many entrepreneurs will have worked extremely long hours over an extended period, perhaps even for years, to try and make a success of what they are offering.
Decisions need to be carefully thought through, as we have seen above. But entrepreneurs must still have the confidence to make bold decisions. As their business empire grows, the number of layers of management underneath the figurehead will increase, and the entrepreneur will have more people to delegate to, and more people to assist them in making their decisions. However, in many cases, the buck will stop with the entrepreneur, and the final decision will still be theirs.
Belief in what is being offered
Entrepreneurs must passionately believe that what they can offer is good. When speaking about or marketing their offering, they must come across as being passionate about it.
It is important to get this positive message across, not just to potential customers, but also to potential partners. For example, in order to sell an innovative product, it might be necessary to persuade a number of rather sceptical retailers that the rather odd thing being presented to them will in fact sell in large quantities. This skill is of course tested to the limit for Donald Trump and Lord Sugar’s candidates on ‘The Apprentice’ TV show.
“Most entrepreneurs I know believe they will change the world,” said Jay Friedlander, a US-based professor of sustainable business. Although most entrepreneurs will not change the world, of course, it can be an asset to believe that they can.
Willingness to seek help
Entrepreneurs are sometimes perceived as ‘lone wolves’, and in the sense that they risk their own capital and take decisions themselves, in some ways they are. But many entrepreneurs have interests in many different industry sectors and, while they may have taken time to research all of these industries themselves, they are unlikely to be experts in every field they go into. Seeking expert advice from people who know these industries inside out can be invaluable, and sometimes entrepreneurs engage these advisers as their business partners.
Entrepreneurs need to have the skills to deal with other people and build relationships, such as the examples mentioned above regarding marketing. That said, they may not be the sort of person who would fit easily into a normal company as a regular employee. And not all entrepreneurs are easy people to work for; firstly because their personality may be radically different from that of their staff, and secondly because the company means something very different to them than it does to its employees.
Ability to change course
However, whilst belief in what they are offering is vitally important as an entrepreneur, so is the willingness to recognize when things haven’t worked. They cannot keep talking up their product or service when all the available evidence suggests it has failed.
Any successful entrepreneur will end up employing a large number of staff. Lord Sugar started out running his own market stall, and now has a very large number of people working for him in the various parts of his business empire.
There are a number of things that any manager can do to try and improve employee motivation, but a visionary entrepreneur has one additional weapon – inspiration. The best entrepreneurs can inspire their staff to achieve their vision; indeed some staff may aspire to be like the entrepreneur.
The skills required to be a successful entrepreneur may be something that we are either born with or we are not. There is certainly a low correlation between intelligence and academic qualifications and entrepreneurial success. Sir Richard Branson and Lord Sugar have few academic qualifications between them.