22 Qualities of Entrepreneurs Likely to Fail
I'm not an angel investor.
Nor am I likely to be providing venture capital anytime soon. So you would think reading a comprehensive guide to angel investing would be of little interest to me.
In fact, often the best way to approach a situation is from a totally different perspective. Say you want to build a thriving business. You could list everything you think is important in founding, building, and maintaining a startup, and build your company that way.
Or you could focus on what experienced investors look for--not because you want to attract outside capital, but because you want to evaluate the same key qualities an experienced investor looks for when deciding whether a business merits his or her money.
In other words, build a company that has all the qualities a successful angel looks for... and you've probably built a company with real legs.
The same approach can apply to you, the founder.
As David S. Rose, the CEO of Gust and the founder of New York Angels, says in Angel Investing: The Gust Guide to Making Money & Having Fun Investing in Startups:
"The number one thing I look at when making a startup investment is the quality of the entrepreneur. In this, I--and a majority of professional angel investors--follow the old adage: 'Bet the jockey, not the horse.' A great entrepreneur--especially one backed by an outstanding team--can tweak, improve and refocus a business idea as needed, while a mediocre entrepreneur is likely to ruin the promise of a brilliant business concept. If I have to choose between a great business idea and a great entrepreneur, I'll take the entrepreneur every time."
So what about you? Do you have all the qualities a successful angel looks for in an entrepreneur?
There's no need to guess. Although in the book, David describes certain behaviors of great entrepreneurs, he also lists a number of warning signs.
See if any of these apply to you:
- Perceived lack of integrity
- Unrealistic assessment of market size
- Unrealistic assessment of competitive offerings
- Unrealistic assessment of competitive advantages
- Unrealistic assessment of execution challenges
- Unrealistic assessment of execution costs
- Unrealistic assessment of timing
- Unrealistic financial projections
- Unrealistic valuation expectations
- Unrealistic declarative statements
- Unrealistic fundamental business idea
- Lack of execution track record
- Lack of domain expertise
- Lack of technical expertise
- Lack of long-term vision
- Lack of historical knowledge of the market space
- Lack of perceived leadership capability
- Lack of perceived communication skills
- Lack of necessary operational skills on the management team
- Lack of perceived ability to grow with the company
- Lack of perceived willingness to accept advice or mentorship
- Lack of carefully considered go-to-market strategy
Of course, you might say, "Wait. I don't plan to seek investors. So an inability to communicate effectively with potential investors is a nonissue." Of course, you'd also be wrong; although communicating with investors may not be important, communicating with everyone else--employees, customers, vendors, etc.--is definitely important. Any entrepreneur who lacks solid communication skills is working at a huge disadvantage.
The same is true for all the other items on David's list of warning signs. If you can't lead, then your employees can't follow. If you can't grow with your business, then your business can't grow. If you can't identify and leverage your real (not imagined) competitive advantages, then you can't compete.
And although you think you may never be an angel investor, you already are, because you've invested in your business.
Viewing entrepreneurship and your business from a different perspective--especially an experienced perspective--is incredibly valuable, because it can help you identify weaknesses you must overcome...and just as important, strengths you can leverage.
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