Why Smart People Make Bad Entrepreneurs
One of the most counterintuitive traits that can hurt entrepreneurs is smarts. Yes, the more successful you are and the more talents you have, the harder it is to run a business.
While you may think that being smart, motivated and talented would logically make someone the best possible candidate for entrepreneurship, unfortunately, this is often not the case.
The 'I'm better than everyone at every task' challenge.
The smart-people problem starts back in school when the dreaded “group projects” are first assigned. Knowing the 80/20 rule for work (80% of all work is done by 20% of the people), what do you think happens in every group project? The smartest and most talented people in each group decide that they are going to do the lion’s share of the work. They don’t want to risk their grade in the class by dividing the work equally and hoping that Timmy (the guy who is absent from class two days a week on average and sleeps through class on the other three days) does his part well, if he remembers to do it at all. In school, there isn’t any benefit in trying to get Timmy up to speed quickly. Forget that -- the smart people just take over and do the whole project themselves.
And thus begins the smart-people work cycle. The smartest people do just about everything better than most everyone else. They write better, plan better and reason better. They are better, until it comes to running a business. Then, they are not better; they are screwed.
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There are only 24 hours in each day and a person does need to sleep, eat, shower and do certain other things. So, each day, this smart person tries to do everything himself, because he can’t stand someone else doing a job badly. Then, he is stuck with the one-man band “job-business” and ends up not being able to grow.
Why slackers can reign supreme as entrepreneurs.
It is interesting, but actually, some of the slackers are better suited for entrepreneurship than the “smart” people. Why? They figured out early on to surround themselves with smart people who would do the work. They know how to delegate and sometimes, how to manipulate other people into doing things that they don’t want to do.
You’re only as smart as you can automate.
Ideally, smart people would just be able to convey their talents to others. But since the smart people are so used to doing everything themselves, they don’t learn the key skills for making their business successful, including automating and delegating as many tasks as possible. As a smart person, you need to use your smarts and talents to boil down their essence in an easy to follow format that anyone can replicate.
Too smart for your own good.
Smart and talented people also often have a flair for the unusual, complicated or different. They don’t like to follow the KISS principle (keep it simple, stupid), which is required to make a business succeed.
If you think of the assembly line in a fantastic manufacturing plant or the global presence of McDonald’s, they both seem complex, but in reality, they are a series of incredibly simple functions. Every single task is broken down into easy-to-follow steps. The assembly line worker repeatedly performs a few tasks that are specifically defined. So does the McDonald’s cook, cashier and drive-thru order taker. There is little input from these individuals, as everything has been standardized for them.
Some of the largest, most successful businesses in the world aren’t staffed in their majority by the smartest people. They are actually staffed in large part by regular, average (and sometimes, stupid) people. These successful entities have just a few people who are smart enough to standardize, automate and delegate the majority of the tasks in a way that can’t be screwed up by their average employees.
So, being smart or talented isn’t going to help you unless you can use those smarts to figure out a way to simplify those tasks that will make a business successful. This isn’t easy, because it goes against everything that you have ever done and is counter to how you were taught to think. However, it is necessary for a business to succeed and why smarts and talent alone don’t predict entrepreneurial success.
Too much to lose.
Another issue with the smart people starting businesses is that they often have the most to lose. The smarter you are -- unless you have the social graces of a wild ape -- the more options you have available to you. You will be able to make a lot of money in a variety of fields and have room in your career to become promoted and make even more money.
This means that when you start a business, you have a lot more to risk than someone who makes less money and has fewer career options. This is often referred to as the “golden handcuffs” dilemma. Because you have more to risk, this means that you need to have a business opportunity that is going to provide an even bigger reward for it to be worth it to you.
If you make $250,000 a year (or have an opportunity to do so), your business is going to have to be five times more successful than the business of someone making $50,000 a year to get the same return. Additionally, it is a lot harder to found a business that will double your yearly profit when you make $250,000 a year than it would be if you make $50,000 a year.
So, with the most to lose, a wide range of other options available and the penchant for more intricate, complex endeavors, don’t be surprised when the person “Most Likely to Succeed” from high school ends up in corporate America and it is one of the more average students that finds success in his or her own business.
This blog is adapted from my bestselling book, The Entrepreneur Equation.
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Carol Roth is the creator of the Future File™ legacy planning system, a “recovering” investment banker, business advisor, entrepreneur and best-selling author. She is also a reality TV show judge, media contributor and host of Microsoft’s Office Small Business Academy. A small business expert, Roth has worked with companies of all sizes on everything from strategy to content creation and marketing to raising capital. She’s been a public company director and invests in mid-stage companies, as well.