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The Essence of an Entrepreneur

Derived from the French verb entreprendre meaning “to undertake”, the word entrepreneur was once used in reference to Frenchmen who organised and led military expeditions. Today it refers to a person who organises, operates and assumes the risk for a business venture.

Entrepreneurs are an elusive group of people who inevitably generate interest and evoke strong reactions. Some who’ve made it big on sheer grit are admired while others who’ve allegedly made it with influence or luck are scorned. Either way they can rarely be ignored.

Whether out of mere curiosity or a genuine need to understand this enigmatic breed, everyone wants to know what it takes to be a successful entrepreneur, particularly if one is not born into a family that is already in business or one that is wealthy.

If we look at entrepreneurs around us we see that their backgrounds may be rich or poor, their education from a renowned institution or off the street, their age group young or old, their attitude humble or arrogant, their motivation the identification of a market gap or the pressure of circumstance, their style subdued or flamboyant.... So there is no stereotypical personality that we can just copy and be successful! How then can we go about capturing the essence of this mystery in brief?

Since the differentiating factor of an entrepreneur lies in his thoughts and actions, the answer lies in studying them and finding out if there is a pattern!

Over the years I have worked under several talented entrepreneurs and been fortunate to study their styles and methods at close quarters. I have also experienced the startup and failure of my own business. Reading numerous business case studies & biographies of great entrepreneurs have further assisted me in presenting some of the findings I’m about to share. At the end of this reading however, the conclusions will be your own.

While some entrepreneurs are born, there are many that are made – people who have either no business background or are incomplete entrepreneurs in some way but have taught themselves whatever it takes along the way. So entrepreneurship is something that can be learnt.

Entrepreneurship generally involves shifting economic resources from an area of lower yield to one of higher yield. This translates into the need for 2 abilities:

  1. A Resource Focused Ability that involves availing opportunities in the lower yield area. Resources refer to Money (including Machines and Materials, Men and Time. Let’s not get obsessive about the number of Ms).
  2. A Challenge-Seeking Ability that involves identifying opportunities in the higher yield area.

Based on this concept, the following grid attempts to capture the types of entrepreneurs that exist:

  Resource Focused Approach
Low High
Challenge Seeking Approach High Gambling Entrepreneur
Grabs opportunities with little thought to the resource consequences of his actions. Seems to survive but eventually fails at the end of the startup period.
Rich Entrepreneur
He displays a high degree of ability in both areas and balances risks, resources and rewards though a process of periodic review. He is a risk manager rather than a risk taker, in that he does his homework well and limits his financial exposure. For example he may relinquish even the best client contracts if they seem doubtful on the cash receivable front. This is the most successful type – one that we’d obviously like to study.
Low Non Entrepreneur
Low in both challenge-seeking as well as resource focus areas, they land up opting for “me too” businesses that inevitably fail.
Incomplete Entrepreneur
Too resource focused to actualize business opportunities that come his way. Generally attributes failure to lack of resources. While his caution prevents failure it also doesn’t allow the business to grow. At best he manages to survive.

This grid has been derived from Rajan Chhibba’s “Starting a successful business”.

This model of classifying entrepreneurship on the basis of just two dimensions is rather simplistic, but does offer some sort of framework for understanding the concept.

Some ways entrepreneurs are known to Think

Some ways entrepreneurs are known to Act

Whether or not all of the above thoughts and actions can be learnt or are even necessary for entrepreneurial success is debatable. The fact is that everyone has some or all of these qualities to a varying degree, and can actually practice and enhance them while creating their own successful style.

In a sense everyone is an entrepreneur. In an employer-employee relationship for instance you are in fact selling your time and expertise to a single client, i.e. your employer. One Harvard professor went so far as to say that based on this, pursuing entrepreneurship is actually safer, since you have multiple clients in a business as opposed to just one in a job.

How does one define success in a business? One thousand days is considered a good time frame to assess your business for success. Three criteria to evaluate this include:

  1. At least 40% of your client base is that of repeat customers.
  2. You have commenced using your cash surplus towards asset building, i.e. pumping funds back into the business via investments such as real estate, equipment, training, etc.
  3. You have commenced using your business cash surplus towards personal wealth generation using investment vehicles of your choice.

Before taking the plunge ask yourself if you have the following in terms of willingness and ability:

  1. To operate and make decisions while shouldering all responsibility for the business.
  2. To work hard and make the necessary sacrifices.
  3. Self-confidence and discipline to build the new business and persevere till you succeed.

Talking to successful entrepreneurs, getting some of them to play the role of a mentor (someone who can bring about favourable changes in your thinking and behaviour) and reading some biographies can also be inspiring.

If you are looking for immediate results, think about these words by Ray Kroc: “People are always amazed by the fact that I didn’t start McDonalds before I was 52 years old, and that I was an overnight success. But I was just like so many people in the entertainment business who practice their routine for years with hardly any notice, and then suddenly find themselves in the spotlight to stardom. I did achieve success from one day to the next, that’s true, but my 30 years of preparation were like a long, long night!”

If you’ve been reading this article merely out of general interest, I hope you found it informative. If however you are thinking of becoming an entrepreneur, you need to list out your targeted developmental areas and work on them. If you believe you have it all already, what are you waiting for? After all, footprints in the sand are not made by sitting down.

 


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