What do academics and business coaches say about the characteristics of a successful entrepreneur? Their traits, backgrounds and circumstances? To find out, we canvassed the literature to help you determine how likely it is that you’d succeed when starting a new venture.
Of course, not everyone’s cut out to be an entrepreneur, nor do they need be. Valuable members of society come in many shapes and sizes: from neurosurgeons, steel welders, school teachers and others without whom there’d be nobody for entrepreneurs to serve.
Characteristics of a Successful Entrepreneur: Traits
The word “entrepreneur” is derived from old English and French roots for “to take in hand” and “to catch hold of or seize.” As far back as the 15th Century the term was associated with an “adventurous disposition, readiness to undertake challenges, spirit of daring.” One of the first academics to study entrepreneurs, Frank Knight, described as them people “willing to act in the face of uncertainty.” Is that how people would describe you?
Passion and Drive
Successful entrepreneurs are passionate about their businesses and stubbornly driven to succeed. They have a “calling.” They’ll work over long weekends and into the night, give up luxuries, and press on through severe disappointments. For a quick illustration of this dedication see this video.
While entrepreneurs can expect to face numerous obstacles on their journey, not all will find a way around them. Those who do demonstrate resilience by finding ways to keep coming back despite dead-ends, hairpin turns and stomach-churning roller-coaster rides.
It’s not only persistence and resilience that account for their eventual triumph. They’re adaptable too, meaning they are among the first to recognize — and learn how to exploit or defend against — rapidly-changing markets, technologies, and consumer preferences. Some examples:
- The shift to cloud computing required expensive, top-to-bottom revisions of stand-alone software applications. Many of those who failed to adapt to this requirement lost market share, were acquired, or simply closed shop.
- As the economy drifts and may fall into recession, many Silicon Valley tech companies face funding shortfalls and falling sales. Some have responded by cutting back bulky overhead and firing employees. Others have yet to respond, hoping instead that things will soon turn around, a risky bet.
You may feel like you’re on your own when it comes to finding growth opportunities but research shows that networking can be one of the most powerful survival tools in an entrepreneur’s go bag.
In fact, a study quoted by Forbes found that 78% of start-up managers attribute their success to networking. Building networks can open doors with prospective investors, mentors, employees, clients and jobs. You’ll find particularly rich networking opportunities within school alumni groups and professional associations.
However, ‘working the room” at these events requires strong communication skills, creativity, and follow-up. See this Science of People blog for some tips along those lines.
Whether at networking events or otherwise, the pressures under which entrepreneurs operate can tempt some to shade the truth when “selling” others on their venture’s merits. See this interesting Harvard Business Review article about why and when enthusiastic promotion edges over to misrepresentation.
Successful entrepreneurs make judgement calls under pressure and don’t wait for complete information before doing so. When dealing with complex, dynamic situations:
- They use data analytics (KPIs) to extract as much objective information about the situation as possible in an attempt to minimize reliance on intuition.
- They take a structured approach. They’ll literally take out a ruled paper pad and thoughtfully weigh the pros and cons before choosing a course of action.
- However, in the end they’re prepared to commit quickly, before it’s too late.
Financial Management Skills
Speaking of KPIs, a major source of them is financial metrics. Knowing how to interpret their meaning allows the entrepreneur to plan for the future (i.e., to budget), manage day-to-day cash flow needed to stay afloat, and attract funding. While a marketing piece, NetSuite’s blog does a good job explaining the basics of managing through financial statements,
Successful entrepreneurs must convince investors, customers, partners, or employees about the value of their vision. To hone this skill, find opportunities for public speaking and debating. Look into Dale Carnegie. It sounds old-fashioned but there’s a reason it’s been around for over 100 years.
Pessimism and stress prevent people from seeing solutions. Their world is dominated by obstacles. They get locked on the trees and don’t back away to see the forest. Because of their risk-averse and even dour attitude, they have a difficult time attracting employees, investors and family support. In a word, successful entrepreneurs are happy warriors.
Skills to Match Company Stage and Industry
Higher-Risk Ventures Need Strong General Managers
Entrepreneurs entering a novel industry or otherwise risky venture need the attributes of a general manager. They include:
- Leadership: Can inspire and motivate others towards a common goal.
- Visionary thinking: Sees the big picture and anticipates future trends.
- Risk-taking: History of taking calculated risks in pursuit of long-term goals.
- Flexibility: Quickly adapts to changing circumstances.
In these situations, having a deep understanding of the specific industry may be less important than the ability to manage people effectively while navigating uncharted territory. Think special ops platoon leader.
Lower-Risk Ventures Need Specialized Knowledge
In contrast, lower-risk ventures that operate within established industries where innovation is relatively scarce demand more specialized knowledge about the field itself. In this case, the entrepreneur relies on deep expertise in areas like marketing, supply chain management, etc. Think VP of marketing at a timber company’s specialty paper division.
In sum, successful entrepreneurs exhibit traits like passion, resilience, adaptability, optimism and persuasiveness. They are also skilled in networking, rapid decision-making under pressure, and financial management. Finally, they have the right mix of management style versus specialized knowledge to fit the nature of the venture.
Characteristics of a Successful Entrepreneur: Circumstances
The Ideal Age
Winners at the entrepreneur game are on average about 42 years old according to MIT Sloan School of Management. That said, each age range brings certain advantages and disadvantages:
- Younger individuals typically possess high levels of energy, enthusiasm, and adaptability. These are, as we have seen, all valuable entrepreneurial traits. However, they may lack the necessary industry knowledge or connections.
- Mid-age managers tend to have more professional experience and financial stability than their younger counterparts, an advantage when launching a new business. Yet they may retain much of the energy and enthusiasm of youth.
- Older players usually bring extensive expertise and good judgement. As Will Rogers said, good judgment comes from experience, and a lot of that comes from bad judgment. They also tend to have well-established networks. Yet they may not as energetically tackle the day’s challenges, fail to keep as current with tech developments, and adapt less rapidly to change.
Therefore, if you’re in the younger or older group, consider whether you are protected against the relative weaknesses associated with each – inexperience and small networks on the one hand, less energy, adaptability and currency on the other.
Your marital status may determine how much time and energy you have for entrepreneurial pursuits. A supportive partner can be a valuable asset that way, providing emotional support, suggestions, encouragement, and even practical assistance with tasks like bookkeeping or marketing.
But if family members don’t buy into your aspirations (for instance, the risk or lack of financial security makes them uncomfortable), then juggling personal duties, tension at home, and business requirements can make for a stressful, exhausting time. In a word, you owe it to your loved ones to share your dreams with them in advance and seek their feedback before pressing ahead.
Family support in another way is important as well– parental encouragement. Research shows that another characteristic of a successful entrepreneur is having parents who enriched their child’s environment by introducing them to novel experiences, sharing knowledge about how things work, encouraging curiosity, and helping set up little money-making endeavors like lawn mowing, painting, car detailing, etc.
Education & Experience
College education isn’t a prerequisite for entrepreneurial success. See Bill Gates, Elon Musk, Richard Branson, Mark Zuckerberg, Steve Jobs, Michael Dell and Larry Ellison, none of whom graduated. (Makes you wonder if going into thousands of dollars of debt for a liberal arts degree is worth it.)
However, another kind of education — knowledge and experience in the industry you plan to enter – often proves invaluable. For example:
- Keeping an eye on that superstar salesperson at another company comes in handy when looking for the right person to join your team in that capacity.
- Prior experience in managing a small profit center in a larger corporation gives you some idea of what to expect when striking out on your own.
- Knowing which suppliers offer the best raw materials for the best price makes avoiding major vendor mistakes when you can least afford them less likely.
Before launching your venture, you may therefore find it useful to attend courses and workshops and join industry associations, not only for their networking potential but also because they can equip you with the relevant specialized knowledge.
These endeavors on your resume also make you more attractive to potential investors since they believe it reduces the chances you will fail.
You want to have enough savings set aside to cover the projected negative cash flow of your start-up as well as living expenses till things turn around. Or until you prove the concept to the point where it attracts funds.
Why is this level of self-sufficiency ideal? Because you want to be able to quit your job and give your new venture your best shot while still being able to afford at least Ramen dinners. Working full-time 9-to-5 then moonlighting to get a new business off the ground isn’t impossible but doing so doubles the stress while diluting your efforts.
It also makes raising external funds nearly impossible since few angels or VCs relish the idea of you working part-time on something in which you’ve asked them to invest. Simply put, most people just don’t have the time or focus to juggle both responsibilities effectively.
Therefore, if you’re going in, it’s better to commit whole-heartedly. That means you’ve got the cash you need. The successful entrepreneur can afford to become one. But avoid burning bridges as you leave the 9-to-5 world in case you need them later to go back.
A perfect alignment of the entrepreneurial stars would be an age of about 40, supportive family, relevant education and/or experience, and enough money to produce at least a “minimum viable” product or service while meeting life’s necessities.
How Do You Measure Up?
Now that you’ve got an understanding of what it takes to be a successful entrepreneur, let’s see how well you fit the job description.
Print out the list below and give yourself a score on each item from 1 to 5, with 5 being strong. Even better, also ask someone who knows you well (spouse, close friend, etc.) to score you. Then average both scores for a more accurate assessment.
|1) I spend time thinking about how to improve the potential of my business idea|
|2) People would describe me as being persuasive and clear both verbally and in writing|
|3) I can point to instances of adjusting quickly and appropriately to changing circumstances|
|4) I’m energized by the thought of the entrepreneurial lifestyle and seeing how my ideas fare in the marketplace|
|5) People who know me think I’m generally optimistic|
|6) I have a broad network of friends, associates, mentors and others to call on for support|
|7) I make decisions efficiently, weighing both quantitative and subjective factors, and I can make decisions with incomplete data|
|8) If I launched a new venture, I’d have the my family’s support|
|9) I have the financial resources to weather a protracted period of reduced or no income|
|10) I have the experience, connections and education relevant to my venture|
|11) I am open to feedback and criticism, and as a result can make the necessary mid-course corrections|
|12) I try not to make the same type of mistake twice. Said another way, I make a point of learning from my mistakes|
|13) If I’m not the ideal age for an entrepreneur (mid-forties), I know what the downsides are and can consciously manage them|
|14) I’m good at finding productive team members and delegating tasks to them|
Scores totaling of 55 or more (out of 70) bode well, though a very low score on any individual item bears a close look.
Successful entrepreneurs are different. They take leaps into the unknown despite the fact that they may return with nothing to show for it but the experience. Some even leap again and again before finally prevailing… or not.
It’s an exciting and demanding lifestyle and obviously not for everyone. We hope this article helps you figure out whether it’s for you.
For some entrepreneurial ideas currently attracting funding, see our blog Who’s Getting Fintech Funding Now? Or if you’ve already founded a company, read our blogs on how to enhance its value with “quick fixes” and longer-term “infrastructure renovations.”
We admire entrepreneurs for their courage and effort, win or lose. When they win, their products and services give us things like the Industrial Revolution, the Space Age, all the richness of the Internet, and AI (for better or worse).
That’s why for years we’ve specialized in serving their growth needs. To learn more about what we do for entrepreneurs, click here.