A seasoned professor debunks some myths about an entrepreneur's traits and lists those he sees as crucial.
One survey after another claims to be able to identify the characteristics of a successful entrepreneur. Don't you believe it
For 17 years I've watched incoming students in the M.B.A. classes I've run at the University of Southern California Entrepreneur Program and at the University of Houston. And as they buy their reading material, prepare for classes, and launch into the study of that great unknown, entrepreneurship, I get an inkling of who will successfully launch businesses and who won't.
Good ideas are common; the people who can implement them are rare. Passion, choice, and a deep knowledge are the key characteristics behind virtually every entrepreneur's success. Much of what we read about entrepreneurs would have us believe that specific psychological traits or demographic characteristics lead to entrepreneurial success. That's not true. For every risk seeker, I'll show you someone who's risk averse. For every successful first-born entrepreneur, there's a successful last-born or only child. For every entrepreneur who grew up listening to tales of entrepreneurial success at the dinner table, there are those whose parents were military or corporate or absent.
So don't bother taking a test, reviewing your family history, or delving into your psyche to see if you've got the stuff to become a successful entrepreneur. The questions are simple. Are you tenacious? Do you have the technical skills to run the business and produce the product? Do you believe in your own ability? Those are the markers I look for, and those are the characteristics the people who provide the capital for growing companies mention when they describe successful founders.
Successful entrepreneurs don't have failures. They do have learning experiences. They don't spend a lot of time moaning about past losses and grieving over present aches and pains. I have listened to literally thousands of business ideas and continue to hear more every day. The great majority of the people who tell you about them can't turn their ideas into businesses.
The first crucial sign I've learned to look for is passion. When evaluating any new venture, I ask: What's the passion? Does the person speak with confidence, with in-depth knowledge of the market and the industry? Has he or she conducted months and sometimes years of investigation, done due diligence, acted creatively?
Successful entrepreneurs also have imagination, the ability to envision alternative scenarios. I think of it as always having a Plan B. Jim Davis, from Waterford Capital in Houston, says, "Plan for the worst; expect the best." When Custom Looseleaf, one of his portfolio companies, was flattened by a tornado, it was fully insured, but the managers took the rebuilding period to do market research and replan the facility. They knew what to do with downtime and maintained customer satisfaction and product supply by contracting out production until the streamlined, more efficient plant came on line, three months later. They stayed focused on the business and built a better, smaller shop that could produce more.
Imagination means having the ability to recognize opportunity and see where it might apply to your interests. When Brad Scott ran auto shops, he wondered what happened to cars that insurance companies had written off. He talked to as many insurance executives as he could find, mined his contacts in the auto-repair industry, and in 1982 came up with the idea for Los Angeles Auto Salvage. He developed a unique purchase agreement and a proprietary information system that enabled insurance companies to receive vehicle proceeds earlier and also simplified vehicle-processing tracking. The company, with annual revenues of $100 million, is now known as Insurance Auto Auctions and is traded on NASDAQ.
Finally, a crucial sign I look for is self-determination. Successful entrepreneurs act out of choice. They are never victims of fate. When people display uncertainty about their abilities, when they blame the market, the devil, or the weather for their problems, when they talk about who and what done 'em wrong, expect trouble. Productive people know there is always a choice: a choice to succeed, an option for happiness, a decision to see the unexpected as a challenge, not a crisis.
For me, it's a good sign when students know they can succeed, when they exert the effort to learn everything they need to know, and when they apply that passion and knowledge with imagination.
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Jon P. Goodman is director of the University of Southern California Entrepreneur Program.