The 7 Traits of Successful Entrepreneurs
Enter "entrepreneurial traits" into Google, and the menu of frequent searches will complete the query with "... of Steve Jobs" and "... of Bill Gates," among others. These are the forces of nature that spring to mind for most of us when we think of entrepreneurs--iconic figures who seemed to burst from the womb with enterprise in their DNA.
They inspire, but they also intimidate. What if you weren't born with Jobs' creative genius or Gates' iron will? There's good news for the rest of us: Entrepreneurs can be guided to success by harnessing crucial attributes. Scholars, business experts and venture capitalists say entrepreneurs can emerge at any stage of life and from any realm, and they come in all personality types and with any grade point average.
Contrary to conventional wisdom, you don't have to be Type A--that is, an overachieving, hyperorganized workaholic--or an extrovert to launch a successful business. "Type A's don't take the risks to be entrepreneurs," says Elana Fine, managing director of the University of Maryland's Dingman Center for Entrepreneurship, adding that the same goes for straight-A students. "Very often it's C students who become entrepreneurs."
However, the best entrepreneurs do share a collection of characteristics, from tenacity to the ability to tolerate risk, that are crucial to a successful venture. An analysis of 23 research studies published under the title The Big Five Personality Dimensions and Entrepreneurial Status found that entrepreneurs have different personality traits than corporate managers, scoring far higher on traits such as openness to experience (curiosity, innovation) and conscientiousness (self-discipline, motivation) and considerably lower on neuroticism, which allows them to better tolerate stress.
Starting a business is an ultramarathon. You have to be able to live with uncertainty and push through a crucible of obstacles for years on end. Entrepreneurs who can avoid saying uncle have a better chance of finding their market and outlasting their inevitable mistakes. This trait is known by many names--perseverance, persistence, determination, commitment, resilience--but it's really just old-fashioned stick-to-it-iveness.
"Tenacity is No. 1," says Mike Colwell, who runs Plains Angels, an Iowa angel investor forum, and the accelerator Business Innovation Zone for the Greater Des Moines Partnership. "So much of entrepreneurship is dealing with repeated failure. It happens many times each week."
When failure happens, you have to start all over again. Jett McCandless was a partner in a fast-growing freight logistics operation. But the rapid expansion triggered mistakes, including an invoicing glitch that left the company without enough cash reserves. The business had to be sold for a fraction of its value. McCandless didn't agree to the terms and was fired. He lost the company house and car and wound up moving into his girlfriend's apartment. "It was a very tough time," he recalls. "I came very close to going bankrupt."
He went on 25 job interviews and got offers for logistics positions paying $200,000 and up. But McCandless, who grew up in Section 8 public housing, wondered, Should I take a comfortable, secure job, or could I build something better? "I was afraid that failure could define the rest of my life, and I wasn't going to let that happen," he says.
So rather than accept one of those big offers, he started over, founding a new company, CarrierDirect, in Chicago. Hamstrung by the noncompete contract with his previous firm, he created a wholly new space in the logistics field. Instead of matching shippers with truckers, he switched to consulting, providing marketing and sales for logistics companies. In two years CarrierDirect grew to $35 million in revenue. "I'm glad I didn't take one of those corporate jobs," he says now.
Passion It's commonly assumed that successful entrepreneurs are driven by money. But most will tell you they are fueled by a passion for their product or service, by the opportunity to solve a problem and make life easier, better, cheaper.
"Most entrepreneurs I know believe they will change the world," says Jay Friedlander, a professor of sustainable business who works with entrepreneurs at the College of the Atlantic and at Babson College. "There's an excitement and belief in what they're doing that gets them through the hard times."
Passion based on your company's specific mission is an intrinsic drive that provides the internal reward that can sustain you between paydays. John Roulac is passionate about hemp, which has a host of industrial and food uses and can be grown without herbicide, making it a keystone crop for sustainable agriculture. With a mission of providing a new market for Canadian hemp farmers, Roulac launched his company, Nutiva, in 1999 with a hemp food bar. But he quickly ran into interference from U.S. Customs officials who associated hemp, part of the cannabis family, with marijuana.
"Initially, they tried to harass us," Roulac recalls. "They would say our products couldn't leave the warehouse; then they could. It was very hard to stay in business." Two years later the Justice Department published a rule that put hemp products in the same illegal category as heroin. "It was either go out of business, keep going or go to jail," he says. "It could be bankruptcy or humiliation."
Roulac had more than $100,000 invested in the business by this point. A lot of people told him to quit. Instead, he decided to go on the offensive and sued the Drug Enforcement Administration. With support from the natural-products industry, particularly soap company Dr. Bronner's, he won the suit two years later. Roulac's belief in the power of his mission had prevailed.
"I believed that I was on the side of truth and that there was a government agency trying to prevent something good happening for the country," he explains. "I feel at a core level that this is my destiny to help create a better food system."
Today Nutiva sells a variety of organic products, from hemp protein shakes to virgin coconut oil. Roulac's advice when things get tough: "Dig deeper."
Tolerance of ambiguity
This classic trait is the definition of risk-taking--the ability to withstand the fear of uncertainty and potential failure. "It all boils down to being able to successfully manage fear," notes Michael Sherrod, entrepreneur-in-residence at the Neeley School of Business at Texas Christian University.
He sees the ability to control fear as the most important trait of all. "Fear of humiliation, fear of missing payroll, running out of cash, bankruptcy, the list goes on."
Jill Blashack Strahan knows the fear factor. The founder and CEO of Tastefully Simple, a direct-sales company for gifts and easy-to-make meals, remembers the calls to her bank when she was three months overdue on her mortgage. "That fear that I would lose my house almost controlled me," says Blashack Strahan, who also had to overcome the deaths of her brother and then her husband shortly afterward. "The night after the funeral of my husband, I thought maybe I should give up, get a job and be a mom."
This is where the ultimate entrepreneurial test takes place, on the mental battlefield. You can go with the fear and quit, or push through it. "I said no; this idea is going to work," Blashack Strahan says. "We have the power to control our thoughts. When we commit mentally, our action follows." She made a conscious decision to push through the fear. Her company had sales in 2012 of $98 million.
While many would feel powerless in the face of such adversity, "the entrepreneur looks at the situation and knows he has some control over the outcome," says Jonathan Alpert, a psychotherapist and author of Be Fearless: Change Your Life in 28 Days.
One of the defining traits of entrepreneurship is the ability to spot an opportunity and imagine something where others haven't. Entrepreneurs have a curiosity that identifies overlooked niches and puts them at the forefront of innovation and emerging fields. They imagine another world and have the ability to communicate that vision effectively to investors, customers and staff.
Many people would be satisfied with a couple of successful businesses, but Eldad Matityahu saw beyond his two thriving frozen-yogurt stores. He'd been reading about the fiber-optic space and decided he wanted in on the technology sector that surrounded him in Silicon Valley. So he sold his yogurt shops and his Harley and got into a field he knew nothing about. He took a job with a fiber-optic company to learn the business and discovered his niche there.
Customers told him they were frustrated that they couldn't have access to see who was on their networks--important for security. "I realized there was no solution on the market addressing this pain point," Matityahu says. "I took the time to figure out why."
The products Matityahu created made activity on the network easily visible and also protected the system. He bootstrapped his company, Net Optics, with $100,000--the proceeds from his two yogurt stores and Harley (along with a small investment from family members)--turning down venture capitalists along the way. In October 2013 he sold the company for $190 million.
"Entrepreneurs often face naysayers, because we see the future before the future plays out," Matityahu says. "You have to be several steps ahead of the market."
Self-confidence is a key entrepreneurial trait. You have to be crazy-sure your product is something the world needs and that you can deliver it to overcome the naysayers, who will always deride what the majority has yet to validate.
Researchers define this trait as task-specific confidence. It's a belief that turns the risk proposition around--you've conducted enough research and have enough confidence that you can get the job done that you ameliorate the risk.
"You have to have a lot of self-confidence. Be willing to take a risk, but be conservative," says Jason Apfel, founder of FragranceNet.com, an e-commerce site for beauty products. Apfel didn't know anything about the beauty world when he started the company, but he believed he could create a solid website to sell such products. "I thought selling a commodity online at the most competitive price would work," he says. His company has outlasted well-funded competitors and sees $145 million in annual sales.
Business survival, like that of the species, depends on adaptation. Your final product or service likely won't look anything like what you started with. Flexibility that allows you to respond to changing tastes and market conditions is essential. "You have to have a willingness to be honest with yourself and say, 'This isn't working.' You have to be able to pivot," says Colwell of Plains Angels.
While still a student at Babson College, Matt Lauzon wanted to digitize the process of designing personalized jewelry. After raising $500,000 from Highland Capital Partners, he launched a custom jewelry design platform for retailers in 2008; however, a year later there was no payoff in sight.
"In theory, it was a perfect match, but in practice we found that we simply couldn't change the jewelers' focus on selling the expensive inventory they had sitting in their display cases," Lauzon recalls.
He reached out to his jeweler customers to solicit feedback. "One of them actually said, 'You have built something so amazing, with so much potential, you should let people use it directly,'" he says.
Lauzon decided to do exactly that, and with additional rounds of financing, relaunched the Boston-based company as Gemvara.com, selling the custom jewelry experience directly to consumers. He won't disclose sales, but he has raised $51 million to date, including additional millions from Highland Capital, which backed his initial concept. He has even hired away executives from the jewelry world's biggest retail force, Tiffany & Co.
Entrepreneurs exist to defy conventional wisdom. A survey last year by Ross Levine of the University of California, Berkeley, and Yona Rubinstein of the London School of Economics found that among incorporated entrepreneurs, a combination of "smarts" and "aggressive, illicit, risk-taking activities" is a characteristic mix. This often shows up in youth as rebellious behavior, such as pot-smoking. That description would certainly hold true for some of the most famous entrepreneurs of recent years.
In fact, simply starting a business breaks the rules, as only about 13 percent of Americans are engaged in entrepreneurship, according to a Babson College report. Doing what the majority isn't doing is the nature of entrepreneurship, which is where the supply of inner resources comes in.
Are these traits in you? There's only one way to find out.