Characteristics Of Entrepreneurs

While the prospect of becoming your own boss and raking in a fortune is alluring to entrepreneurial dreamers, the possible downside to hanging out one’s own shingle is vast. Income isn’t guaranteed, employer-sponsored benefits go by the wayside, and when your business loses money, your personal assets can take a hit; it’s not a corporation’s bottom line. But adhering to a few tried and true principles can go a long way in diffusing risk.

The following are a few characteristics required to be a successful entrepreneur.

1. Versatility 

When starting out, it’s essential to personally handle sales and other customer interactions whenever possible. Direct client contact is the clearest path to obtaining honest feedback about what the target market likes and what you could be doing better. If it’s not always practical to be the sole customer interface, entrepreneurs should train employees to invite customer comments as a matter of course. Not only does this make customers feel empowered, but happier clients are more likely to recommend businesses to others.

Personally answering phones is one of the most significant competitive edges home-based entrepreneurs hold over their larger competitors. In a time of high-tech backlash, where customers are frustrated with automated responses and touch-tone menus, hearing a human voice is one surefire way to entice new customers and make existing ones feel appreciated—an important fact, given that a significant percentage of business is generated from repeat customers.

Paradoxically, while customers value high-touch telephone access, they also expect a highly polished website. Even if your business isn’t in a high-tech industry, entrepreneurs still must exploit internet technology to get their message across. A startup garage-based business can have a superior website to an established company valued at $100 million. Just make sure a live human being is on the other end of the phone number listed.

2. Flexibility 

Few successful business owners find perfect formulas straight out of the gate. On the contrary: ideas must morph over time. Whether tweaking product design or altering food items on a menu, finding the perfect sweet spot takes trial and error.

Former Starbucks Chair and CEO Howard Schultz initially thought playing Italian opera music over store speakers would accentuate the Italian coffeehouse experience he was attempting to replicate. But customers saw things differently and didn’t seem to like arias with their espressos. As a result, Schultz jettisoned the opera and introduced comfortable chairs instead.

3. Money savviness 

At the heart of any successful new business, is steady cash flow, which is essential for purchasing inventory, paying rent, maintaining equipment, and promoting the business. The key to staying in the black is rigorous, regular cash flow management. And since most new businesses don’t make a profit within the first year, by setting money aside for this contingency, entrepreneurs can help mitigate the risk of falling short of funds. Related to this, it’s essential to keep personal and business costs separate, and never dip into business funds to cover the costs of daily living.

Of course, it’s important to pay yourself a realistic salary that allows you to cover essentials, but not much more—especially where investors are involved. Of course, such sacrifices can strain relationships with loved ones who may need to adjust to lower standards of living and endure worry over risking family assets. For this reason, entrepreneurs should communicate these issues well ahead of time, and make sure significant loved ones are on board.

4. Resiliency 

Running your own business is extremely difficult, especially getting one started from scratch. It requires a lot of time, dedication, and often failure. A successful entrepreneur must show resilience to all the difficulties on the road ahead. Whenever they meet with failure or rejection they must keep pushing forward.

Starting your business is a learning process and any learning process comes with a learning curve, which can be frustrating, especially when money is on the line. It’s important never to give up through the difficult times if you want to succeed.

5. Focus 

Similar to resilience, a successful entrepreneur must stay focused and eliminate the noise and doubts that come with running a business. Becoming sidetracked, not believing in your instincts and ideas, and losing sight of the end goal is a recipe for failure. A successful entrepreneur must always remember why they started the business and remain on course to see it through.

6. Business smarts 

Knowing how to manage money and understanding financial statements are critical for anyone running their own business. Knowing your revenues, your costs, and how to increase or decrease them, respectively, is important. Making sure you don’t burn through cash will allow you to keep the business alive.

Implementing a sound business strategy, knowing your target market, your competitors, and your strengths and weaknesses will allow you to maneuver the difficult landscape of running your business.

7. Communication skills 

Successful communication is important in almost every facet of life, regardless of what you do. It is also of the utmost importance in running a business. From conveying your ideas and strategies to potential investors to sharing your business plan with your employees and negotiating contracts with suppliers—all require successful communication.

Questions For Entrepreneurs 

Embarking on the entrepreneurial career path to “being your own boss” is exciting. But along with all your research, make sure to do your homework about yourself and your situation.

A few questions to ask yourself: 

• Do I have the personality, temperament, and mindset of taking on the world on my own terms?

• Do I have the required resources to devote all my time to my venture?

• Do I have an exit plan ready with a clearly defined timeline in case my venture does not work?

• Do I have a concrete plan for the next “x” number of months or will I face challenges midway due to family, financial, or other commitments? Do I have a mitigationplan for those challenges?

• Do I have the required network to seek help and advice as needed?

• Have I identified and built bridges with experienced mentors to learn from their expertise?

• Have I prepared the rough draft of a complete risk assessment, including dependencies on external factors?

• Have I realistically assessed the potential of my offering and how it will figure in the existing market?

• If my offering is going to replace an existing product in the market, how will my competitors react?

• To keep my offering secure, will it make sense to get a patent? Do I have the capacity to wait until I receive it?

• Have I identified my target customer base for the initial phase? Do I have scalability plans ready for largermarkets?

• Have I identified sales and distribution channels?

Questions that delve into external factors: 

• Does my entrepreneurial venture meet local regulations and laws? If not feasible locally, can I and should I relocate to another region?

• How long does it take to get the necessary license or permissions from concerned authorities? Can I survive that long?

• Do I have a plan for getting the necessary resources and skilled employees, and have I made cost considerations for the same?

• What are the tentative timelines for bringing the first prototype to market or for services to be operational?

• Who are my primary customers?

• Who are the funding sources I may need to approach to make this big?

• Is my venture good enough to convince potential stakeholders?

• What technical infrastructure do I need?

• Once the business is established, will I have sufficient funds to get resources and take it to the next level?

• Will other big firms copy my model and kill my operation?

By Adam Hayes in Investopedia. Reviewed by Natalya Yashina. Fact checked by Michael Rosenston.