I’ve always admired entrepreneurs, something about building up a living in the business community without having to join an existing business started by someone else strikes me as very competent.
But anyway, what actually makes a good entrepreneur? Lots of people have college degrees in business or finance but they for the most part don’t seem particularly competent at it. Meanwhile lots of people whose educations are unrelated to these fields are competent.
Has it been studied? How do some people just have a natural talent at business? Is a lot of it just luck (being in the right business at the right time)?
There are probably so many factors involved here that it would almost define the complex system in chaos theory.
That said , it’s not quite accurate because one huge factor actually is where you start.
The more resources one starts with the more likely they are to succeed or at least not end up in the poorhouse.
Knowing your livelyhood doesn’t depend on it can also make one willing to take more risk. Which can lead to massive successes, where people who’s livelyhood depends on it are likely to take lower risk and get lower reward.
How did you get involved in running real estate as a way to earn a living?
I really don’t understand why some people can start with no training in business, no family connections, not a ton of money, etc and still become successful entrepreneurs. I don’t know what traits it takes to do that.
For me it was just opportunity. A family member lived in a mobile home court, the owners expressed interest in selling it to her but she didn’t have the means. I just did the basic math, got a loan and that was it.
I’ve always wanted to be an entrepreneur though. I’m always inventing things and that leads to selling them. Though I’ve not been what I’d call successful in any other avenues.
I get state contracts for public artwork occasionally but that hasn’t flourished.
So I’m Ill qualified, as an unsuccessful entrepreneur in that regard to really have much else to offer.
There are many factors, but as a person who started and is running his own business, I’d say that there are two qualities that are important.
The first is a lack of desire to ever work for anyone else again. Sure, your customers are your bosses, but you can take the clients you want to take (all of them), and you don’t have anyone breathing down your neck because you did something the way you thought was the best way, rather than the way they told you to.
The second is a lack of desire for any personal life or free time whatsoever, or at least, less of a desire for leisure than for accomplishing that first aspect. If you complain about 40 hour weeks, being an entrepreneur is not for you. If you get tired at 50 hour weeks, you may want to try something else. If you think that 60 hours a week is excessive, then things may not go too well. If 70 hours a week is daunting…, yeah, you probably know where I’m going with this. Oh, and you don’t get to call off, ever, for anything.
After that, it is just determining what you are good at, or what you can become good at, and doing that.
Not having any great need for an immediate financial return is a plus as well. Every dollar you can keep in your business is another dollar to help it grow.
Probably good to be good a communications and public relations, as you are going to need to be doing that yourself. Need to be organized and motivated enough to maintain records and bookkeeping in case of audits.
Drive, persistence, and conscientiousness are biggies.
A serviceable IQ is also helpful. Nothing is more predictive of success than IQ, but having the above-mentioned traits will compensate for a more average IQ. You don’t need to be Einstein to open a coffee shop or successfully run an auto repair business or to have a prosperous real estate business.
It depends on how well you accept risk for yourself and your assets, while recognizing that you will have to deal with rules and taxes and other stuff that is not fun. There is no big corporation that keeps you cushioned from the realities of the business cycle, and nothing but your own devices that will keep you from failing if times get tough.
If I had to guess, I would think that someone who owns a small business has a very self-reliant nature and confidence in their ability to do things well. Of the ones I know, they always knew they wanted their own business. When they were working for someone else and building some startup money, the jobs they worked always seemed to be the type where they had some measure of independence.
Then there’s the other type of entrepreneur. If you’re super creative and super intelligent and always coming up with new ideas and new ways of looking at things, then you’ll probably move from one project to the other very quickly because your brain moves at a rapid pace. In that case, you will be completely unsuited to drudge work, so you need to hire other people to handle that for you.
In that regard, you either need angel investors or venture capitalists, already have a pile of money in reserve, or hang in there long enough to build the capital you need to free yourself from those mundane tasks that are anathema to your nature.
While I don’t know any super genius creators of the Bezos/Gates/Jobs ilk, I know quite a few business owners who have done very well for themselves over the long haul. They are all conscientious, persistent, energetic, and very dedicated to the idea of working for themselves.
Being a good entrepreneur starts with being a good salesman. You have to be able to convince people to do business with you instead of any number of already established businesses. That’s a skill many people do not possess, and that’s why so many new businesses fail. You need customers; without that nothing else you do will matter.
Don’t forget that there’s also a healthy dose of luck. Which is not to say that smarts and determination don’t enter into it, but I think you need all three. Which is why entrepreneurs are fairly rare.
This was me - I worked full time from age 16, moved out while still in high school, then eventually started my first company as a broke college student, with $2k I saved while working my way through college, and bootstrapped from there.
I’ve since done a number of other startups / businesses, all but two in different industries. Most of them failed, one succeeded, another is ongoing.
When you’re an entrepreneur you end up meeting lots of other entrepreneurs. Since getting into the entrepreneur biz, so to speak, I’d say if you wanted to split the population there’s two broad personality types that recur frequently:
The high-energy, creative, “idea guys” who can execute (or reliably attract talent who can execute). These are your Steve Jobs, Richard Branson, Paul English, Chip Gaines, and Elon Musk types. Bigger than life, charismatic, extraverted, brilliant in at least one and probably multiple areas, great at selling pretty much any random person on their vision, often suspected of being ADD or bipolar.
The unstoppable Frank Grimes types who just grind their way to success through sheer persistence and hard work and never giving up, who also have a big peak of intensity in some other specific area that’s useful to startups - like they’re a 10x coder, or they’re good at selling other folk on their vision, or they’re legitimately visionary and can see where the world is going before other folk do, or they’re just flat-out hugely ambitious. These guys rarely end up running globe-spanning high-profile businesses so it’s hard to give a lot of immediately recognizable examples like for the first type, but Bill Gates sort of fits the mold, Steve Wozniak might fit the bill if you squint. If you know any small business owners, there’s a lot of folks who fit this mold.
So what traits do you need? I’ll agree with k9befriender: the single most important trait is to have a burning desire that burns with the heat of ten thousand suns to do a startup / not have a boss, followed by the ability to absorb nigh-infinite amounts of work-week punishment while still executing at a high level across a lot of different skillsets.
The burning desire is to help you get through the second part, because the second part is what you’re signing up for. Forget work-life balance. Forget seeing your spouse and kids every night if you have them, or dating or any kind of social life if you don’t.
In the immortal words of Charles Montgomery Burns: “I’ll keep it short and sweet. Family, religion, friendship. These are the three demons you must slay if you wish to succeed in business. When opportunity knocks, you don’t want to be driving to the maternity hospital or sitting in some phony-baloney church…or synagogue.”
It’s an exaggeration with a kernel of truth, but you get where we’re going here. I’m doubling down on k9’s excellent points, because people think of “doing a startup” as being like Entertainment 720 in the show Parks and Rec, but it’s more like the having to run 3 marathons back to back while picking at least 20 locks per marathon.
In terms of the factors most crucial to startup success, if you could only pick two it’s capitalization and having the right people.
So let’s recap, personality traits like being:
[ul]
[li]Extraverted and good with people [/li][li]Charismatic[/li][li]Able to sell your vision to other people[/li][li]Risk-taking to the point you’d gamble half of everything you have and years of your life for something with a 90% failure rate[/li][li]Being visionary in the first place to HAVE the vision to sell[/li][/ul]
All help you with both of those key factors. These are probably essential, either in you or your cofounders.
Then in terms of executing successfully amongst the sky-darkening hail of arrows your young company will face as it starts out, that’s where you need personality traits like:
[ul]
[li]A bottomless appetite for pain and long work weeks[/li][li]Being able to wear a lot of different hats well[/li][li]Being able to think strategically and make a good decision even while everything around you is on fire[/li][/ul]
For any readers, if that’s you, maybe entrepreneurship is for you! If it’s not, and you prefer to just be one or a few of those things, find cofounder(s) who are those things, because it will help. The failure rate will still be 90%, though, because luck is a huge part of it, as Chronos rightfully pointed out.
Attention to detail. There are a lot of details to sort out when running a business. Financial details, logistical details, legal details, and so on. The more details you let slip by, the sloppier your operation, and the greater the risk of failure.
Analytical thinking. Some problems you encounter will be complex, and you’ll need the ability to pick those knots apart and understand what’s happening. Example, you can’t eyeball a particular aspect of your operation and say “I think this is probably profitable”; you need to go through it piece by piece to understand what the material costs are, what the labor time/costs are, what the overhead is, how much gross revenue comes in for it, and so on. This goes hand-in-hand with attention to detail.
A problem-solving mentality. You need a basic optimism that the problems you encounter can be solved if you focus on them. You can’t put your head in the sand and hope that troubles go away on their own.
Communication ability. Most business ventures will require working with other people, either business partners or employees. If you can’t communicate clearly and diplomatically, things will go badly. If you will be seeking to attract investors, you will need the ability to communicate clearly, diplomatically, and with professional bearing.
A willingness to subvert other parts of your life, at least temporarily, to get your venture up and running. Other parts of your life may include platonic and professional relationships, recreation, and maybe even your health. Venture capitalist Paul Graham mentions the point at which a startup becomes “ramen-profitable,” which is to say it’s finally bringing in just enough money to pay your basic living expenses; it’s not yet a runaway success, but it means you don’t need to go see a bankruptcy lawyer in the near future.
Finally, there’s that quote attributed to Calvin Coolidge:
You’re going to have problems, setbacks, and major frustrations along the way. Pressing onward in spite of them does not guarantee success, but giving up in response to them absolutely guarantees failure.
Hanging around the computer world for decades I am constantly surprised about how little attention is paid to luck.
In a given market one company is probably going to end up dominating. A series of random events quite often makes many of the decisions as to which one it is.
The 2nd most common element of success I see is being a total and complete jerk but with a basic veneer of “niceness”. The veneer can be onionskin and it will still work.
I ran a full time business for about 10 years. I only worked it full time for 6 of those and had the wife running it after 2pm the first 4 years. I have had part time businesses throughout my life that usually produced more income than my job. Besides a total commitment time wise I believe responsiveness was my strongest attribute. There were no unresolved issues that drain my soul and kill motivation. I had a theory that at any given time at least 1 out of ten potential clients would be upset with their vendor at any given time. I made sure I was always visible and it paid off. My downside was I continually added new businesses or major lines to my existing business and I was not the greatest at recruiting and training people to take my place as I continued to stretch myself further. I seem to have a mindset of making about $150,000 a year instead of sky is the limit.
I would say two essential qualities are ambition and an appetite for risk. Both of which I lack.
I was recently in a client’s workplace, struggling over some issues we had with a product we’d been importing from Europe. A product that would be fairly easy to manufacture locally. It would take some work, though.
The owner of my client company stopped in, saw what I was doing and rolled his eyes. He picked up one of the pieces, looked at it and said “You should just find a way to make those yourself. Start a company. I’ll finance you.”
This would be a good day for many people. People not like me. I mentally ran through what it would entail and became exhausted just thinking about it. “I’m too old for this.”” Maybe if this had happened ten years ago.” “I just don’t feel like putting in the work without a guarantee”. “I can’t afford to lose”.
Basically, I just shrugged off the opportunity and hoped no one ever mentioned it again. Without a second thought. I am not an ambitious person.
ETA: I’ve owned my own business for years, selling established products. Which I never saw as risky, I’m good at sales.
I have the two qualities that make me an anti-entrepreneur: I’m lazy and I have sort of a disdain for things financial. All the entrepreneurs I know have that drive and desire to achieve that others have mentioned. They have discipline and long-term vision.
I just want to pay my CC bills this month and watch TV.
“All the drive, persistence, luck and ambition in the world is useless without the underlying raw talent and skill.”
-Me
There seems to be this constant narrative that all one has to do to be successful is either “will” themselves or “Gladwell” themselves there with 10,000 hours of repetition and practice. Almost as if everyone starts out identical. Will and practice are critical, but you still need to have the raw skills IMHO.
I’ve become a bit cynical of the lore about so-called “startup / entrepreneur culture”. In part, because of the constant noise of black swan Silicon Valley success of people like Mark Zuckerberg, Bill Gates, Elon Musk, Jeff Bezos and so on, popular shows like Shark Tank, the constant prattling of social media figures like Gary Vaynerchuk, even my own business school education at a school known for “entrepreneurship” and experience in several “startups”. They have created this “hustle culture” that celebrates devoting your entire life to getting some “world-changing idea” off the ground. To some extent, I think that mentality has also led to de-valuing the “employee” as somehow less valuable because they didn’t have the “guts” to go out and try and get struck by lightning.
The fact that so many startups fail within the first 5 years (50%), let alone every become big names almost makes any advice anecdotal at best.
That said, I do know a number of people who have started businesses. Some have been successful. Most of them had worked extensively in their field for years, even decades, before starting their business. In fact, I read several studies that most successful startups are actually founded by people in their 40s, rather than 20 year old geniuses.
Littleman is also correct about a lot of it having to do with where you start. It’s difficult to start a business if you have to worry about a roof over your head or where your next meal is coming from. Gary Vaynerchuk, for example, took over his families $3 million a year wine business at age 23, after having been working in it since age 14. Even back in 1998, it would not have cost that much to set up an ecommerce site for an existing business and it would have been very low risk. Not that it still didn’t take skill and business acumen. But I don’t think he was selling wine out of his apartment to make rent.
Personally, I also think it’s about more than just “one guy”. You need a competent team of people who collectively have the necessary skills for running a business - product, sales, marketing, operations and technology, accounting, financing, human capital, legal - plus having an overall vision and strategy for the future.
