"To Entrepreneur or Not To Entrepreneur"
by Ronald C. Reece, Ph.D.
"I lost my job!"
Robert was 38 years old when his position as senior loan officer was eliminated. After years of hard work and consistently good performance reviews, he had no job. How could this be? You guessed it. Robert's employer was gobbled up by one of the big guys, and his position was eliminated. Now what?!?
Angry and confused Robert looked around, talked to himself in the mirror and said, "I'll show them and everyone else." He then began his journey into the world of the entrepreneur. After all, he had helped many business people with financing and had listened to their stories over and over. His father had owned and managed a grocery for many years where Robert had worked during his high school and college years. Surely he had learned something. Does he have the right stuff? Will he make it? Only time, effort and results will tell.
Many people enter the world of business ownership after being displaced from a "corporate" job. However, there are also those who choose to entrepreneur from the beginning or are born into that arena via a family business. Whatever the avenue, entrepreneurs are admired as gutsy "I can do it myself characters", the business heroes. The profile of the successful entrepreneur standing tall and proud is one of the great American dreams. It suggests that he has achieved some of the most valued goals in our society: independence, control, career satisfaction and wealth.
Each year in the United States, more than 500,000 new businesses are started. Every one of these businesses begins with an entrepreneur's basic idea that must be translated into a concrete plan of action. Most often, these businesses are characterized as "small" because they have annual sales of less than $1.5 million and fewer than 100 employees. Small they may be, but they make up ninety-eight percent of the 22 million businesses in the US and provide sixty percent of the jobs in the country. Such owner managed and entrepreneurial organizations have typically been the realm of men. However, women have joined in increasing numbers and within the next ten years are expected to own one half of all private businesses.
So, who is this person? What is his or her makeup? Are entrepreneurs born or made? Numerous definitions have been composed. Webster defines entrepreneur as, "the organizer of an economic venture, especially one who organizes, owns, manages, and assumes the control and the risk of a business."
In John Miner's 1996 book "The 4 Routes to Entrepreneurial Success", he describes four primary types of entrepreneurs. Achievement Entrepreneurs are personal achievers: self-starters, competitive, driven individuals who identify the business as their life. People-Oriented Entrepreneurs are super salespersons: people who need people, who seek to build relationships rather than empires. Hierarchical Entrepreneurs are real managers: growth specialists that shine in large ventures as corporate leaders. Innovative Entrepreneurs have a love of ideas and originality and are often labeled as dreamers. Miner also identifies a Multi-skilled Entrepreneur style individual who combines elements from two or more of the four basic types. These persons seem to be able to "do it all" and therefore, increase their chance of success.
Successful entrepreneurs are in good health, resilient and generally deny themselves the luxury of illness. Being their own boss is paramount. That need to control and direct comes not so much from a basis of power, but a desire for freedom to initiate necessary actions to get the job done. High energy and drive for accomplishment enhances the belief of being able to do the job better than anyone. They also believe "where there is a will, there is a way". It could be said that the entrepreneur has freedom, but is never free. Twelve to fifteen hour work-days are the norm, often seven days per week with no regular paycheck.
In that environment, self confidence, a sense of urgency and a comprehensive big-picture awareness must abound in the entrepreneur. If Robert has these and other traits such as low need for status and high achievement motivation, good financial backing, and a little luck he may become one of the Wall Street Journal's business icons. Certainly, business skills are a necessary part of this picture, but many business owners say they learned them along the way. This is a risky on the job training that, based on business survival statistics, more often fails than succeeds.
Over half of new businesses fail within the first two years. Learning as much as possible in the beginning about legalities, government regulations, marketing, cash flow projections, balance sheets, etc. would improve the odds. However, how many people do you know who read the owner's manual on a new car before driving off?
Maybe Robert will do his homework. He began by answering the following questionnaire.
The Makeup of an Entrepreneur - Answer YES or NO these Questions
Do you reconcile your bank account as soon as the monthly statement comes in?
Did you earn money on your own from some source other than the family before you were ten years old?
Did you take part in competitive sports in school and do you continue to do so?
Do you remember people's names and faces well?
Were you good in the "hard" subjects - mathematics, biology engineering, accounting and so-forth in school?
In school, did you pretty much stay away from such organizations as scouts and student government?
In courting the opposite sex, did you tend to go for one person at a time as opposed to playing the field?
Do you get up early in the morning and find yourself at work before others are out of bed?
If you smoke cigarettes or do not smoke, give yourself a yes here.
Do you tend to trust your hunches rather than waiting until you have a lot of information on hand?
Do you keep new ideas in your head instead of writing them down?
Do you close deals with handshakes rather than insisting on written contracts and guarantees?
Do you bet on long shots rather than favorites?
Do you devote considerably more time and thought to work than to other activities such as hobbies?
In scoring your answers give yourself 10 points for each YES answer. The total of these scores is your entrepreneurial quotient. Total Score________
If you score:
130-140 your chances are excellent
70 & below poor- Don't do it!
When Robert completed the questionnaire, he scored 110, indicating that he has many of the qualities he will need. This questionnaire is just to get you started thinking. There is much more to consider and there are many good resources available to the hopeful entrepreneur. Whether launching a business or strengthening an existing one, a good independent business consultant, an accountant, and an attorney can prove to be essential. Organizations such as the Small Business Development Council, Service Core of Retired Executives and the Chamber of Commerce are ready to help as well. However, Robert will not truly know the entrepreneurial excitement or angst until he has to "make payroll". Good luck and good business.
© Reece & Associates, P.A.