Successful Entrepreneurs
I was recently doing some research for a presentation to a group of entrepreneurs. Since much of my consulting business is to entrepreneurs, this is not the first time I’ve jumped online and to dig up what I could find on what an entrepreneur is and what makes an entrepreneur successful. What I came up with was eye opening and caused me to take pause and examine my own entrepreneurial activities.
Most of the research was sifting through economic census data and reading highly footnoted articles. Despite all of that, I came away with a view that knit together all of the statistical data with the academic analysis, common sense and experience. I don’t think my audience is going to like what I have to say, but people seldom do. In the words of Jack Nicholson, “you can’t take the truth”.
Let’s first look at what a small business is. The SBA has a variety of ways of determining what is and is not a small business. The number of employees, 500 to be specific, measures most manufacturing companies. Most service businesses are measured by revenue, $7 million is the common cut off. Other industries are ranked by as few as 100 employees and up to 1,500 employees. Others ranked by assets and still others ranked by as little as $750 thousand in revenue to over $25 million. Nice to know, but difficult to work with so I will default to the 500-employee cut-off.
Statistically speaking there are no large companies. Of the almost 27 million firms in the United States, less than 0.1% are big businesses. So, for our purposes, they don’t exist unless you want to account for about half the jobs, payroll and revenues. Six million U.S. employers are small businesses. This is somewhat awkward since that leaves us short almost 21 million companies. Underground economy? Nope, they’re the non-employer businesses.
Almost 21 million firms are non-employer companies that are run by the solopreneurs or the partners. The Holy Grail of job creation is making the entrepreneur successful. Not only does each of these firms support at least one entrepreneur, non-employer businesses grow up to be employer businesses. In the process, entrepreneurs learn what it takes to manage future growth and new ventures. From this metamorphosis evolves the serial entrepreneur. In this case, unlike any other word preceded my “serial”, this is a good thing.
What makes these people tick, what about their background, genetic code, life experiences and personality make some entrepreneurs successful while the other two-thirds of them go down in flames. After years of multi-variant analyses, longitudinal studies and countless sociological profiles, nothing of real value has turned up. Or, at least nothing of value that wasn’t shot down by the next fascinating study.
Oddly enough, it is not who an entrepreneur is, but what they do that makes them successful. I searched for a definition that would seem to be an obligatory part of any discussion of entrepreneurship. I was taken by the simplicity of this definition and by its elegance. There is much to read between the lines. Here is a definition of entrepreneurship provided by Harvard University.
Entrepreneurship is the process of creating or seizing an opportunity and pursuing it regardless of the resources currently controlled.
Creating an “opportunity”, we hear a lot about that. The clever entrepreneur, a visionary, seeing what the rest of us fail to see and turning it into a billion dollar empire. Researchers discount this as not including all of the external factors that in large part determine success or failure.
And what about this “seizing” an opportunity? I guess this might have some other meanings, but at the very least, it would suggest that an entrepreneur might use someone else’s idea because they had the determination to make it happen. I would hope that the highly revered entrepreneurial community is not going around stealing other people’s ideas. If not, where do they get them? The same thing with this business of “pursuing” if they don’t have the “resources”, do they steal them too?
Fear not, for some bright people on the west coast at Stanford and Berkley came up with an answer. They decided that successful entrepreneurs are:
Skilled at using their time to develop relationships with people that are vital to the success of their business.
Fascinating! Despite a world where everyone is deafened by their iPod and mesmerized in a texting trance, entrepreneurs find time to talk to other people and learn from them. These people actually share valuable information and creative ideas with others. The entrepreneur calls this networking.
I always thought networking was the process of handing-out, as many business cards as you could to as many disinterested people that strangely enough wanted you to have their business card as well. The networking I know is something akin to a shark feeding frenzy. An event where the conversation can barely be heard above the constant clicking of business cards being peeled off of monstrous stacks held in reserve for the next person that isn’t otherwise occupied trying to make a sale after their elevator speech complete with CSP, USP, key words and call to action.
These crazy entrepreneurs aren’t selling at all. They’re building relationship, establishing their reputation and trying to help others. The fools aren’t even trying to make a sale. Yet, it works. Oddly enough, just like the rest of us mortals, the successful entrepreneur doesn’t go into business with all the answers. They don’t have an A to Z business background, they don’t know everything about intellectual property rights, establishing a corporate structure, product design, marketing, sales, accounting, who the major market movers are, who are potential joint venture partners and the list goes on and on.
Evidently, through these relationships, they learn, what they don’t learn, they find out the names of the people that can help them. In some case, money changes hands, in other cases it’s the free exchange of ideas and information. I must try this out!
By the way, there was one other school that chimed in on entrepreneurial success, Princeton.
The average number of working hours per week of a successful starting entrepreneur is seventy. This catches the typical American dreamer by surprise.
I have always viewed myself as a hard worker. I thought surely I’m putting in enough hours to claim a passion for my business. After adding up my 10-11 hours a day during the week and 6 to 8 hours over the weekend, I’m clearly a 60 hour a week guy, a slacker in the entrepreneurial world. I’m still pondering this one.
Having covered how to be successful, also keep in mind how to fail. Throwing caution to the wind and marching onward into the entrepreneurial fog without taking care of the business fundamentals sends 65% of entrepreneurs to a sometimes mercifully quick and sometimes a prolonged and agonizing death by the 10th year. Passion is no substitute for knowledge. If you don’t know how to plan, organize and manage your business, do what the successful entrepreneurs do and find out who does through networking.
The bottom line for entrepreneurial success is to be social and network tirelessly, not for sales, but for ideas, resources and partners. Work hard and remember the fundamentals, do the proper planning and be prepared for the unexpected.
Richard Gabel
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