WHAT DOES IT TAKE TO BE AN ENTREPRENEUR
4/28/20254 min read
"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did. So, throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover." - Mark Twain
What does it take to be an entrepreneur?
People often ask, “are entrepreneurs born or made?” This question has long been debated with little agreement. Stephen Spinelli and Robert Adams have summarized research on entrepreneurial characteristics. The entrepreneurs they describe as having and exhibiting “desirable and acquirable attitudes and behaviors” fall under the following six descriptors.[1]
1. Commitment and Determination – Tenacious, decisive and persistent in problem solving.
2. Leadership Abilities – Self-starters and team builders who focus on honesty in their business relationships.
3. Opportunity Obsession – aware of market and customer needs.
4. Tolerance of Risk, Ambiguity and Uncertainty – Risk takers, risk minimizers and those who can tolerate uncertainty.
5. Creativity, Self-Reliance and Adaptability – open minded, flexible, uncomfortable with status quo and quick to learn.
6. Motivation to Excel – Goal oriented and aware of personal strengths and weaknesses.
Is there a specific psychological profile?
Successful entrepreneurs have something in common. In fact, according to organizational psychology research, they share at least four personality traits[2]:
1. They're generalists rather than specialists.
A 2013 Swiss-German study found that while employees are specialists, entrepreneurs are generalists. Founders have a diverse set of skills - after all, they have to manage the many tendrils of a business. Plus, they tend to have a diverse network of relationships, one that they can call upon when launching companies. "It is the jacks-of-all-trades across a whole portfolio of individual resources and not the masters-of-one who are likely to become entrepreneurs," write authors Uschi Backes-Gellner and Petra Moog. "The mere social butterflies or the mere computer nerds are not likely to become entrepreneurs because they are both too imbalanced and thereby less likely to be successful as entrepreneurs." Stanford University economist Edward P. Lazear first proposed the "jack of all trades" theory. He found that Stanford MBAs who took a broader range of classes and had held a wider range of jobs were more likely to start their own thing. A follow-up German study replicated those results.
2. They're outrageously self-confident.
A third of American small businesses collapse within their first five years. Two-thirds fail within 10. According to Nobel Prize-winning psychologist Daniel Kahneman, it takes a special breed to take on that kind of risk. "A lot of progress in the world is driven by the delusional optimism of some people," he told Inc. "The people who open small businesses don't think, 'I'm facing these odds, but I'll take them anyway.' They think their business will certainly succeed." The data backs this up: In a 1988 Purdue University study, 33% of 3,000 entrepreneurs thought that they're businesses had a 100% chance of success. A 1997 University of Houston study found that entrepreneurs are biased to think they can prevent anything bad from happening to their businesses. A 2013 study from Erasmus University Rotterdam found that entrepreneurs think they will live longer than everybody else.
3. They're disagreeable.
In his book "David and Goliath," Malcolm Gladwell argues that innovative people are disagreeable: They don't really care what other people think of them. He argues: Innovators need to be disagreeable. They are people willing to take social risks - to do things that others might disapprove of. That is not easy. Society frowns on disagreeableness. As human beings we are hardwired to seek the approval of those around us. Yet a radical and transformative thought goes nowhere without the willingness to challenge convention. He provides compelling examples: Steve Jobs didn't sweat stealing the graphic user interface from Xerox PARC, and IKEA founder Ingvar Kamprad gladly outsourced from Sweden to Poland while the countries were hostile to one another. It's redeemed in the research. A University of Illinois-University of Pennsylvania study found that disagreeable people are better at declining requests on their time, giving them better control of calendars.
4. They're conscientious.
In a 2003 study led by Pennsylvania College of Technology management professor Mark Ciavarella, researchers asked 111 people that had started their own businesses between 1972 and 1995 to take personality tests. The researchers were looking for any founders' personality traits that correlated with companies making it past the "adolescent" stage, or over eight years.
The only "significant predictor" was conscientiousness, or the propensity to plan, organize, and take care of responsibilities. "The results suggest that an entrepreneur needs to evolve into a manager to shepherd a new venture to long-term survival," Ciavarella and his colleagues write. But conscientiousness isn't just good for founders: The trait is linked with earning more, feeling more satisfied with your job, and living longer.
Essential traits to be a successful entrepreneur aren’t exclusive and in fact are prevalent amongst most people from all walks of life and fields of work. Though some entrepreneurial traits may be more pronounced than others, they’re common to many professions. It all depends on the psyche, acquired skills, a wide experience, deliberate planning and execution. Uncertainty, discouragement and failures have to be addressed with resilience, determination and flexibility. Having said that, new entrepreneurs have to rely on their skills and character traits.
[1] Justin G. Longenecker, J. William Petty, Leslie E. Palich and Frank Hoy, Small Business Management: Launching and Growing Entrepreneurial Ventures, 18th ed. 1-3 Entrepreneur Qualities page 9.
[2] https://www.businessinsider.in/strategy/psychologists-say-successful-entrepreneurs-have-these-4-personality-traits/articleshow/46508640.cms