Starting your own business can be an exciting and rewarding experience. It offers numerous advantages, such as the ability to be your own boss, set your own schedule and make a living doing something you enjoy. To begin assessing whether or not owning a business is right for you, think about the personal characteristics, traits and qualities that can help improve entrepreneurial success.
The contents of this BizConnect guide will assist you to find out if you have the creativity, confidence and high energy levels that can go a long way in bolstering business success:
What is an entrepreneur?
Pioneers, risk-takers, people with initiative. Those are some of the phrases that come to mind when the word 'entrepreneur' is mentioned. American entrepreneur Victor Kiam defines entrepreneurs as: "risk takers, willing to roll the dice with their money or reputation on the line in support of an idea or enterprise. They willingly assume responsibility for the success or failure of a venture and are answerable for all its facets."
Entrepreneurs recognise an opportunity and pursue it without regard for the resources they have in hand. They are confident that they can succeed, flexible enough to change course when necessary, and have the willpower to bounce back from setbacks. Entrepreneurs do not say: "I don't have the money." Instead, they find creative ways to raise the capital they need to build and grow a business. When Bill Gates founded Microsoft in 1975, he worked from a garage. Anita Roddick opened the first Body Shop (between two funeral parlours) to earn an income for herself and her two daughters while her husband was working in South America.
"When you reach an obstacle, turn it into an opportunity. You have the choice. You can
overcome and be a winner, or you can allow it to overcome you and be a loser. The choice
is yours and yours alone. Refuse to throw in the towel. Go that extra mile that failures
refuse to travel. It is far better to be exhausted from success than to be rested from failure."
- Mary Kay Ash, founder of Mary Kay Cosmetics
Different types of entrepreneurs
Not everyone is destined to be a Mark Shuttleworth, Richard Branson or an Oprah Winfrey. There are a number of different types of entrepreneurs.
The first is the survivalist group. These are people who operate in the informal sector. Street vendors are one example. For them self-employment is usually a last economic resort. According to the South African Social Investment Exchange, (Sasix), the challenge in South Africa is that a large percentage of SMEs tend to fall within the survivalist category and there is no guarantee that these businesses will ever grow sufficiently to realise their potential for job creation.
b) Lifestyle entrepreneurs
The second group are known as lifestyle entrepreneurs. These are people who go into business for lifestyle reasons, as opposed to a desire for financial wealth. They become business owners so they can do the kind of work they want, work the hours they want, live where they want, and spend time with people they like. They judge their success by how much they enjoy their work and their lives, rather than by their status or their net worth. They tend not to work late or on weekends.
c) High-growth entrepreneurs
High-growth entrepreneurs are competitive. The top reason for starting a company according to high-growth entrepreneurs is to build wealth. They want to build businesses with long-term value and usually invest a lot more money and time into their companies than lifestyle entrepreneurs. They also tend to take bigger risks and enjoy greater financial rewards if they succeed. They generate large profits quickly and create new jobs for others. South Africans like technology entrepreneur Ivan Epstein (founder and CEO of Softline, media owner Felix Erken (MD of Junk Mail) and functional art and home-ware designer Carrol Boyes (founder and owner of Carrol Boyes) are examples of high-growth entrepreneurs.
Then there are the revolutionaries - people who seek to change the world by creating entirely new business models. Think of Apple, Amazon, Google and Facebook. These are companies that have disrupted the status quo and reshaped markets. And it's not always about technology. Locally, Raymond Ackerman changed the face of retail when he founded Pick n Pay and Adrian Gore revolutionised the healthcare industry with the launch of Discovery.
e) Serial entrepreneurs
These are people who continuously come up with new ideas and start new businesses. They tend to get things started and then hand over the reins to someone else so that they can move on to new ideas and new ventures.
f) Social entrepreneurs
These are agents of change in society. They tackle social problems like poverty, poor health services, poor educational services and joblessness in ways that are innovative. They use their entrepreneurial flair to bring about solutions for the poor. Their primary objective is to improve social problems through a financially sustainable business model, where any surpluses are reinvested in the enterprise.
"The critical ingredient is getting off your butt and doing something. It's as simple as that.
A lot of people have ideas, but there are few who decide to do something about them now.
Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer."
- Nolan Bushnell, founder of Atari and Chuck E. Cheese's
Knowledge, skills and personality traits
Entrepreneurs need to have a wide range of competencies. These include:
- Management skills - the ability to manage time and people
- Financial management skills - an understanding of the language, tools and techniques of finance is essential in business survival and competitive performance
- Sales - ability to negotiate and persuade clients and prospects
- Multi-tasking - the ability to perform several different jobs or tasks at the same time
- Ability to work independently and as part of a team
- Ability to plan, coordinate and organise effectively
- Ability to network and make contacts
- Ability to take responsibility and make decisions
- Ability to work under pressure
- Ability to research available markets, suppliers, customers and the competition
- Self-motivation and discipline
- Innovative and creative thinking
- Willingness to take risks
The value of partnerships
Partnerships are valuable - especially where objectives are aligned and the skill sets of one complement the other. Partnerships can provide a source of capital as well as other potential benefits. They can take various forms such as joint ventures or product co-development.
A strategic partner could be another firm or organisation - large or small - that sees some benefit in collaborating with your venture, perhaps because of a similar interest in a technology or market.
The partnership can boost a start-up's legitimacy and credibility in the eyes of investors and customers. It may also provide access to existing distribution channels for a new business. Be sure to analyse the purpose for the partnership, and determine whether your goals and your partner's are sufficiently aligned.
What is entrepreneurship really like?
Finding finance for a business is one of the hardest things entrepreneurs ever have to do. Many never find the funding they need to get their venture off the ground. That's where bootstrapping comes in. An entrepreneur is said to be bootstrapping when they found and build a company from personal finances or from the operating revenues of the new company. The good news is that many of the multibillion-rand success stories come from humble beginnings.
Making do with few resources
Be frugal and start your business at home if possible. Use the office supplies you have and consider renting or buying second hand equipment rather than overspending. Remember to start small and work your way up slowly. Keep start-up costs low by finding affordable and creative ways of doing what you need to get done. Remember that in the beginning, the money you save is often more important than the money you make.
Maintaining a positive attitude
The right approach and outlook is key to entrepreneurial survival. It's critical for entrepreneurs to maintain a positive attitude. People who don't always see the glass as half-full should give some serious thought to whether the entrepreneurial route is for them.
Determination and commitment, staying power and an unshakable passion for what you do is critical. This is especially important because starting a business will have a huge impact on your family life and your social activities. You must be prepared to sacrifice your time in order to focus enough attention on your business.
Entrepreneurship is a risky business. A total of 80% of all new businesses collapse within two years in South Africa. Globally, a third of all start-ups fail within the first two years, and almost 60% are doomed to fail by their fourth year. Research shows that failure rates are high because a large number of inexperienced entrepreneurs start businesses that shouldn't be founded in industries that are unfavourable to new companies but offer low barriers to entry.
The problem is that many of these new companies have no competitive advantage. Inexperience and lack of industry knowledge are also responsible for high failure rates. There is also the vexing question of planning and control - many new business founders fail to write business plans, have inadequate financial controls and don't focus on their marketing plans.
Money and wealth creation are obviously the major reward for successful entrepreneurship. But pride and recognition are too. Being an entrepreneur is more than being your own boss. It enables you to have a direct influence on your destiny. You have the flexibility and power to decide how you want to work. It's about you too.
Creating your own business is a great way to fulfil your dreams and to grow on a personal level. By owning your own business, you have a chance to learn new things and become a better person.