Assessing Your Entrepreneurial Profile

By BNET Editorial published on BNET.com 2/28/2007

Now that you are thinking about starting a business, you will need to think about your own role in it. Are you the type of person who can make a success of a new venture? Being an entrepreneur may sound very exciting, but not everyone has the aptitude. And it is important to realize that there is nothing wrong with not being an entrepreneur. The world would not function well at all if it were peopled solely with entrepreneurs. Successful entrepreneurs do, however, share a number of general personality traits. If the following list seems to describe your personality, you may have what it takes: • I am persistent, with a great deal of drive and stamina. I see problems as opportunities. I have a good intuitive sense and thrive on new ideas. • I tend to rebel against authority. I want to be my own boss. • I am positive, communicate well, and enjoy working with people. • I have a strong need to succeed, financially and otherwise. • I am not afraid to make mistakes, and I learn from them. What You Need to KnowHow can I know that I’ve got what it takes? Before you quit your job and use your savings to start a business, you owe it to yourself to approach your entrepreneurial venture with some practicality. Take an in-depth personality test and talk to small business advisers—often available at no cost through business associations, community colleges, and organizations such as SCORE (Service Corps of Retired Executives). Also speak to people in business already, as they will be able to give you a no-holds-barred account of what day-to-day life is like as an entrepreneur. How much money will I need? Starting a business depends on knowing the numbers, whether your plan is to buy an existing business, purchase a franchise, start your own company, or merely offer services to others from a home office. People in the same or similar business are a good source of information—ask them tactfully where they got the funds to start their business and how much they needed to get started. If it becomes clear that they do not want to disclose this information to you, thank them and look for another source. Other sources include trade associations, franchise organizations, business articles in magazines and newspapers, Internet research, and business consultants. Besides having good ideas, what else do I need to be good at? Success in a new enterprise depends on dedication and the consistent application of good business principles—such as being good with money; being good with people (investors, suppliers, employees, and so on); being good at promotion (marketing, sales, PR); and being good to yourself. Many

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entrepreneurs burn out before their businesses have a chance to succeed. Pacing yourself and your business is important. What to DoDo Your Research You think you have a great new idea. First, you must define your market: who will be buying your product or service—will it be of value to your customers at a price at which you can afford to sell it? Then you need to analyze the competition. If your objective is to enter a field with established competitors, you have to know your own strengths and weaknesses, as well as those of your competition. Be sure that you can provide a better product or service for a competitive price. In other words, you must first do a thorough job of market research if you expect to succeed. Develop a Business Plan A well-considered and systematic business plan is key to building a successful business. It allows you to recognize problems as they arise in time to take the necessary corrective action. The plan should be a living document, flexible enough to adapt to changes in the marketplace and your industry. It should include sections on every facet of your business—whether you are a sole proprietor or the executive director of a new manufacturing venture. Finance Your Idea Take your ideas and business plan to a variety of people, starting with family, friends and supporters. Be prepared for critical feedback, and be flexible. Take the inevitable first few knock-backs as opportunities to fine tune your next presentation. One of the characteristics of an entrepreneur is the ability to regroup, rethink, and reach a goal in another way. Seeking publicity for your business is a way not only to notify potential customers but also to get the attention of potential investors. The more people who know about your idea, the better the chances that you will attract the right investor. Be prepared to share a portion of the company with the right partners, but be wary of investors who want full control, or the lion’s share of the proceeds. You could also think about entering into a joint venture with another company, or you could consider taking your business plan to your bank to see if you would qualify for a government sponsored loan program. Network Being entrepreneurial does not mean being a lone ranger. Success often depends on networking effectively with potential customers, suppliers, new investors, other business people, and even those in government who promote and control economic development in your area. Plan Your Marketing and Promotion Strategy An integral part of your business plan is a marketing plan—how you intend to create the demand for your product or service. While market research tells you the “what” and “where” of your opportunities, the marketing plan outlines the steps to follow to attract potential customers and convince them to buy from you. Networking, advertising, and PR (public relations) are all forms of marketing and promotion. Make Sure of Your Financial and Management Support

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Most entrepreneurs are better at ideas than at managing budgets, business operations, and employees. Anticipate your capital requirements and build in some slack. Do not spend beyond the company’s means. Make sure at the start that you have a network of trusted and experienced advisers to help you keep the proper perspective and cover the things you are not naturally good at. What to AvoidYou Set up Equal Partnerships Entrepreneurs often share the start-up responsibilities with a partner or partners. However, sharing 50–50 or by thirds or quarters is a mistake. Conflicts will inevitably arise that need someone outside the partnership who has the authority to make a final decision. Choose (or hire) a C.E.O.—someone with the experience and skills needed for success—and give that person a greater decision-making authority and a bigger salary—even if it is only bigger by a small margin—than you or your partners have. You Have Inadequate Skills and Planning Many businesses fail because the people in charge lack the managerial qualities or strength to cope with the challenges. In addition, stress can put a strain on personal relationships and make the challenges even harder to deal with. Personality assessments can determine if you are cut out for a managerial position, and managerial training can prepare you for your new role as an executive. Without thorough market research and a solid business plan, a business is more likely to fail. The more preparation you do, the better your chances of success. You Rely Too Heavily on One or Two Customers Having too few customers makes your business vulnerable, because it ties your future to the decisions of other organizations. If their businesses falter, your business is at risk. Having lots of customers, even though none of them is gigantic, is healthier in the long run than relying on a few large customers. You Have Insufficient Financing While some people succeed at jump-starting their own enterprise with little or no outside investment, they do so by being fortunate, being modest in their spending, and by plowing profits back into the business. The majority of businesses, however, do not deliver the projected first-year sales volume. It is better to overestimate your need for capital resources at the beginning and to underestimate your projected sales figures. It is better to be pleasantly surprised at your success than to lose the business and your house because there was no money when you needed it. When contemplating an expansion of your business, account for spiraling costs. If you are in a cyclical business, or one vulnerable to recession, be sure to calculate your expenses carefully—and develop “Plan B” well before you need to implement it. You Fail to Admit Mistakes Entrepreneurs are sometimes reluctant to admit that their idea no longer has the sparkle it once had. Having advisers that you trust is important. Cut your losses and move on if your advisers agree that

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you should. If you move quickly enough, you may be able to take advantage of other opportunities and save the company. You Underestimate the Competition Once you have demonstrated your competition’s weakness in the marketplace with your product or service, expect them to move quickly to plug the hole and try to outflank you. Your business and marketing plans should anticipate how to deal with new initiatives from your competition. If you conduct ongoing research, product and service evaluations, and marketing campaigns, you should always be able to stay one step ahead of the competition. Where to Learn MoreBooks: Kushell, Jennifer. A Young Entrepreneur’s Edge: Using Your Ambition, Independence and Youth to Launch a Successful Business. New York: Princeton Review Series, 1999. Stolze, William J. Start Up: An Entrepreneur’s Guide to Launching and Managing New Business. Franklin Lakes, NJ: 5th ed. Career Press, Inc., 1999. Web Sites: Ewing Marion Kauffman Foundation: www.emkf.org Kaufmann e-venturing: www.eventuring.org Venture Capital Institute: www.vcinstitute.org SCORE (Service Corps of Retired Executives): www.score.org Entrepreneur: www.entrepreneur.com

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