Entrepreneurs need to have the right skills if they’re going to be successful. A little more than 50% of businesses fail within the first four years, with the leading cause being incompetence. Don’t fall into this category because you’ll waste both your time and money.
Let’s take a look at the things that define a successful entrepreneur.
There are only 250 companies started each year in the US that will hit $100 million in revenue. These entrepreneurs are talented, but hard work always beats talent.
The problem with talented entrepreneurs is they tend to have the same attitude talented students have in high school. They coast along and they get great grades but when they hit college and have to work hard they don’t have the work ethic to reach their potential.
You must work hard consistently in business to achieve success. Talent alone is not going to give you a successful business.
How many times do you go to a trade fair and see these new business ideas that are innovative but will never sell?
Go to any tech fair and you’ll find all these incredible gadgets. Three years later they’ve disappeared and are no more than a memory.
Economist and entrepreneur Andrew Charlton says that this is because such products are ahead of their time and don’t fit the needs of the market at the time. The product has to fit the market immediately because entrepreneurs generally don’t have the time or money to wait and see if the market accepts their product.
Great entrepreneurs create a product that fits the needs of the market, with the long-term acceptance of the market in mind.
Few entrepreneurs can make it big overnight and don’t have to worry about how they’re going to fare in their market years from now. For example, the founders of Snapchat Evan Spiegel and Bobby Murphy gained a $3 billion offer from Facebook, which they rejected.
Granted they’re now worth $4 billion without Facebook, but the point is that an entrepreneur that grows this big this quickly is rare. The majority of entrepreneurs need to be in this for the long haul just to make a profit.
Take advantage of trends, but be aware that your product has to be able to fit into the market five years from now. That ability to adapt is what will keep you afloat.
This is not just how an entrepreneur gets started it’s how they continue to adapt, as we just talked about. Entrepreneurs need to be able to put themselves in the shoes of their customers.
Market research tells you what people’s needs and expectations are. This is an ongoing process that tells you how customers are changing and which direction they’re going. Even with a successful product or service it’s never going to retain the same level of popularity forever without changes being made.
Starting your own business is not the path to an easy life. Entrepreneurs work long, unsociable hours that no ordinary employee would ever expect to be exposed to. If you’re not passionate about what you do you’re not going to be able to keep yourself going.
When you do something you’re passionate about it’s less like a job and more like a hobby. Even throughout the hard times if you do what you love it’s not so bad.
Think of passion as the safety cushion stopping you from quitting when things don’t go your way.
By their nature entrepreneurs have to be able to take risks to insert themselves into the scrimmage of their market. To disrupt your market you must take a risk. This doesn’t mean you have to take a reckless risk it means that you must take calculated risks.
Market research is what informs you about each risk. If the research reveals undesirable results you know not to take that sort of risk.
If you’re opposed to any risks at all you’re unlikely to succeed as an entrepreneur.
Think of money as your blood. Without money nothing works and the business eventually shrivels up and dies. Entrepreneurs don’t need to be qualified accountants but they need to make sure they manage money in a way that ensures good cash flow.
In the UK it’s estimated that 90% of companies fail because of cash flow, and we can see similar trends in the US. Cash flow is not how much your business has but how much your business has at a specific time.
For example, let’s say that you need $1,000 to cover your business’s running costs for March. But you’re not going to receive a payment of $5,000 for that job you completed until June.
That means for March and April you don’t have any money to cover your running costs. Unless you can find a loan from somewhere, the business will fold. And even if you do find a loan you’re already on a slippery slope as interest rates start to consume you.
Entrepreneurs have to be able to manage their cash in a way that spreads it out over X amount of months so they can stay afloat. This tends to be the most critical part of money management in the early stages of a business.
The reality is you need all of these things to survive in the treacherous world of business. Without the ability to create a product for your market, without knowing the needs of your customers, and without being able to manage money you stand no chance.
Not every entrepreneur is a business whiz. For the things you don’t know how to do, hire someone either as an independent contractor or as an employee. The expense is well worth it if it saves your business.
Are you ready to start your next business venture?