Entrepreneurship can be very rewarding if things go well, but it also involves a great deal of risk. Because there is a lot at stake in starting a business, entrepreneurship tends to attract a certain kind of person. There is no magic formula to turn someone into the next Jeff Bezos or Richard Branson, but there is a particular set of traits that an entrepreneur usually needs to be successful. Of course, building a business requires a sound strategy based on business and financial knowledge, but certain personal characteristics can help an entrepreneur succeed.
Successful entrepreneurs possess an insatiable curiosity, perpetually seeking new opportunities and challenging established norms. Entrepreneurship is a process of discovery, where thinking outside the box and setting your own rules is integral.
Jim McKelvey, cofounder of Square described the process of creating his business as a continuous re-evaluation of every process. He said in an interview with Foundr, “Everything had to be reinvented. But ultimately, it turned into this thing that performed a miracle.” This constant curiosity and exploration fuels continuous learning and drives innovation.
Risk Management and Tolerance
Entrepreneurs actively manage the delicate relationship between risk and reward, positioning their companies to benefit from the upside. According to Harvard Business School, “Successful entrepreneurs are comfortable with encountering some level of risk to reap the rewards of their efforts; however, their risk tolerance is tightly related to their efforts to mitigate it.”
Successful entrepreneurs display a calculated approach to risk, understanding that it is inherent in the entrepreneurial journey and taking steps to minimize its impact. The other side of this coin is an inbuilt sense of optimism and confidence, which allows them to keep going even with the possibility of failure.
Successful entrepreneurs are likely to have at least one failed business idea in their past, but they view failure as an opportunity to learn and grow. In fact, 66% of new businesses fail within their first 10 years, according to research by the Small Business Administration.
Despite the potential for setbacks, entrepreneurs show persistence and resilience in their endeavors. They ask questions, evaluate their own successes and failures, and learn from experiences in order to grow.
Entrepreneurs tend to be proactive, taking the initiative and pursuing their goals without waiting for approval from someone else. Because they are their own bosses, they have to do whatever needs to be done rather than being guided by a superior. Harvard Business School explains, “As a leader, they’re responsible for guiding the trajectory of their business, including every aspect from funding and strategy to resource allocation.”
Furthermore, entrepreneurs need to be able to take the initiative to find opportunities for their businesses to expand and succeed. The ability to sell the business idea to potential investors, promote the product or service to customers, and market themselves as leaders is important.
Successful entrepreneurs exhibit self-awareness, recognizing their strengths and weaknesses. Research shows that the most successful leaders are ones who can understand themselves and build a team with complementary talents.
Building and managing an effective team also requires strong people skills. Understanding others and communicating well with a variety of personalities is a valuable asset, as a diverse team can harness collective strengths.
Entrepreneurs must be able to look at the big picture in order to stay focused on their goals through all the ups and downs. Investopedia warns that “one of the main risks an entrepreneur faces is the risk of emotional instability” driven by the stresses of the unexpected. These everyday emotional crises can be moderated by taking a broader perspective.
Cultivating a long-term vision and consistently aligning actions with long-term goals not only helps entrepreneurs stay focused but also contributes to sustained growth. This involves a disciplined approach to decision-making, ensuring that every step taken is in sync with the broader vision, ultimately propelling the business toward success.
Entrepreneurship is a challenging but rewarding journey that involves a delicate balance of risk and innovation. Successful entrepreneurs should lean into their insatiable curiosity and innovative thinking, employing a “closer over more” strategy to achieve the success they are looking for.
It’s also important to remember the delicate relationship between risk and reward that entrepreneurs manage echoes the principle of seeking opportunities with asymmetric upside. Successful entrepreneurs not only embrace risk but also strategically seek opportunities where the potential rewards significantly outweigh the risks involved, ensuring a skewed risk-reward ratio that favors their business growth.
Finally, entrepreneurs' resilience and ability to view failure as an opportunity for growth align with the understanding that every decision has infinite trade-offs. It's about recognizing the long-term implications of choices made today and adopting a strategic mindset that carefully weighs options to ensure the sacrifices made today lead to substantial gains tomorrow.
It's about harmonizing personal characteristics with strategic principles, ensuring that every step taken is not just towards immediate success but is part of a calculated, long-term strategy aimed at sustained growth and resilience in the ever-evolving business landscape.