Anyone can start a business. Who isn’t an entrepreneur at some point in their career? Numerous proud and industrious individuals do, and many succeed. Recently, as many as 25 million Americans were starting or operating a new business in the United States. However, it’s important to note that not all businesses become successful. A business is successful if it’s A) sustainable B) profitable and C) scalable. The Small Business Association says that 20% of small businesses fail in their first year. By year five that number increases to 50%. But, on the flip side, that also means that half of all businesses are succeeding and growing.
Successful companies like Apple, however big they are now, once had small beginnings. Bill Gates dropped out of college to start Microsoft. Steve Jobs and Mark Zuckerberg did the same to start Apple and Facebook, respectively. Subsequently, all three companies changed the way people work and interact. And in the process made their founders fabulously rich.
So, what drives successful entrepreneurs to build profitable, sustainable, and scalable businesses? Read on to discover the qualities of the successful and long-term business owner and how these factors can change with time.
The Entrepreneurship Breakdown
An Entrepreneur’s Education and Experience
The fact that some captains of industry succeed without completing their university education inspires many would-be entrepreneurs. With their success, it appears as if education is irrelevant. More independent business owners lack a college degree than those who have completed university education. However, even though that number sounds low, at 44%, it is still ahead of the general population with only 1 out of 3 Americans with degrees.
A college education may give entrepreneurs an added edge in business. In addition to knowledge, education can also provide access to connections. Moreover, it creates networking opportunities, funding, and even possibly a place within a university incubator program. And having that degree to fall back on might be a smart Plan B.
A lot of factors can turn off would-be entrepreneurs. For instance, the thought of putting up initial funding. Likewise, not having a steady cash flow or paycheck. Managing all aspects of the business may seem daunting. But many who venture out on their own without a formal education prove their can-do attitude and willingness to take a risk. Unlike non-entrepreneurs who value security and a congenial work environment, entrepreneurs may forgo classroom structure and congeniality for autonomy and power. Entrepreneurs strive to be in charge of their own time. Their love for ownership drives them to build successful businesses.
According to Autumn Adeigbo, founder and creative director of the eponymous women’s wear label, entrepreneurs have something to prove. These “system busters” want to be on the front lines of changing the world. As if to verify her point, a Myers Briggs study, “Type and Entrepreneurship” led to findings that “the entrepreneurs in the group showed a significantly higher orientation for creativity, risk-taking, impulsivity and especially autonomy, than the non-entrepreneurs.”
A majority of self-employed individuals tend to have one of these five personality types: ENTPs, ESTJs, ENTJs, INTJs, and ISTJs.
- “Extraversion” or “Introversion”, with E and I, respectively;
- “Sensing” or “Intuition”, with S or N, respectively;
- “Thinking” or “Feeling”, with T or F, respectively;
- “Judging” or “Perceiving”, with J or P, respectively.
If these four categories feel limiting, take the Harvard Business Review quiz: “Assessment: Identify Your Entrepreneurial Personality Type”. Turns out, I’m a Transformer with Star Qualities. Snazzy! Even if you don’t believe in online quizzes or set personality types, the quiz is sure to be an ego booster.
Environmental Factors Affecting an Entrepreneur
Cultural differences can influence individual behaviors. In some countries, entrepreneurship is perceived as the only option left for those who cannot gain employment. While in more economically powerful countries, business owners with a “start-up mentality” are looked upon favorably. Germany is ranked as the country with the most enterprising citizens, followed by Japan and the United States.
Mark Zuckerberg was born into a comfortable and well-educated family. Mark’s father ran a dental practice while his mother worked as a psychiatrist. On the other hand, when Warren Buffett was asked for some of the motives for his success, he cited picking the right spouse and residing in Nebraska rather than relocating to New York City.
Necessity – the Mother of Entrepreneurial Invention
In developing countries with a lower level of social security and a higher unemployment rate, individuals may start their own micro-enterprises to earn the minimum necessary to support their families. However, in other countries, a family’s financial position and the country’s economic development can be a supportive pillar allowing the freedom to take risks.
Apart from the necessity to earn a living through entrepreneurship, some entrepreneurs are driven to build successful enterprises via frustration. New entrepreneurs are born when someone sets out to solve a problem that is frustrating in their everyday life. Finding it overly difficult to set up online payments for their companies, John Collison, the youngest self-made billionaire on earth, and his brother Patrick, started the online payment company, Stripe.
Many entrepreneurial ventures today are developed from the need for social change. Innovators are focusing on more than personal frustrations. That is to say, they are putting their ingenuity into solving problems for a community or the global population. Entrepreneurs are making a name for themselves by developing products and services to clean drinking water, create renewable energy and assist less-abled individuals to live a more quality life.
Don’t Show Me The Money?
A study of over 60,000 individuals at Stanford University, conducted by INSEAD Assistant Professor of Entrepreneurship, Hongwei Xu, found out that non-pecuniary motivations, such as autonomy and fulfillment, are more significant than monetary motivations for people looking to establish a new venture.
Xu warns would-be entrepreneurs against creating companies with the intention of making money. The Entrepreneurship process is very painful and uncertain with lots of ups and downs. According to the professor, creating a successful company depends on the passion of the entrepreneur to pursue their vision and change people’s lives. While lots of money might come from your entrepreneurial journey, it should not be the only impetus.
Changing Motivations as Your Business Grows
As businesses grow, founders may need to adjust their motivations. For example, with the need for funds, a board of directors may be set up to oversee company decisions, significantly changing the solo-owner structure.Also, founders must be cognizant of the fact that their employees may not be driven by motivations similar to theirs. An entrepreneur may take a decreased or no paycheck, but cannot expect employees to sacrifice for the cause.
In addition, certain driving factors that were imperative at the start of the business, like a strong sense of adventure and an individualized sense of autonomy, may need to shift to accommodate a growing staff and customer base. Qualities such as these become more important:
Empathy – A focus on the growing number of employees.
Learning and listening – Opening yourself up to new ideas from your expanded workforce.
Sharing – Being able to delegate certain aspects of your business to other people.
Don’t forget, at the early growth stage and to maintain the momentum, successful entrepreneurs will need to work with various partners such as a reliable SaaS technology company to help build scalable systems that can be used to motivate employees to support their vision.
Do you have what it takes to be a successful entrepreneur? You’ll only find out by trying!