Entrepreneurs creating companies to solve a problem they've encountered themselves is nothing new. In fact, it's how most companies are started. What is interesting is how powerful it is when someone tells us a personal story that relates to his or her business.

We love hearing the stories of entrepreneurs overcoming huge obstacles to get to where they are today. Not only can these stories wow the audience, they also help entrepreneurs build a brand for themselves. If you understand the power of using your personal experiences, you'll unleash amazing benefits. You'll be a better speaker, and you'll be able to impress more investors and customers. Finally, you can use personal experiences to recruit talent and motivate your team. Here's why your own stories hold so much power.

1. They help build your reputation

Our images of others are created by the powerful stories we hear about them. One example that has always stuck with me is Will Smith. When he was on 60 Minutes, he told of his experience laying one brick at a time with his older brother to build a wall. At first the task seemed impossible, but by staying consistent and dedicated, he did it. He ends the story with his dad telling him, "Don't ever tell me there's something you can't do."

While there is an inspiring lesson here, this story also leads us to see hard work and drive as a feature of Will Smith's reputation. Like Smith, you can build your reputation by relating your personal experiences. If you want to be known for your charisma, do you have a story about a time you wowed the audience? What do you want to be known for and what in your past helps that mission?

One story I've always told entrepreneurs is how, in the early days of Alumnify, my co-founder and I slept in a car. I've used that experience to convey to others an image of myself characterized by grit and positivity. Once you find one or two stories that help you reveal what you stand for, your reputation will grow faster and stronger.

2. They build your credibility

"Why should you be the one to solve this problem?" This is a common question we all get. When you're a first-time founder, it's tough to prove yourself with early wins when you've never had a startup before. Even worse is when you don't have much experience in the market you're attacking. This is where telling your personal story can come in handy. Why are you the right person? Because you've faced the problem firsthand. You are your company's customer. How can you argue with that? Is someone going to tell you that you don't have the problem that you have? Also, it helps you explain the problem you're solving when you tell your own story of encountering it.

One person who takes this to the extreme is Tim Ferris. He's built a strong base of loyal fans by self-experimenting to prove that his advice works. Readers give him their trust because he is willing to risk his own life before asking his fans to try his methods and because of the results his self-testing have produced. The idea has made him a best-selling author. Think it's impossible to learn a language in six months? Ferris proves you wrong. Want to get in shape? Ferris did it himself.

By talking about how your company has helped you personally, you create a powerful amount of credibility. Your story sounds more authentic, and backs up why you're the right person for the job.

3. They bring out your passion

Amy Cuddy's TED Talk about body language is one of my favorites because of the emotion she displays. Toward the end of her talk, she describes a story about teaching a girl about body language and starts to cry on stage. To every person who's ever seen that talk, there is no doubt about Cuddy's passion for her work. What was so powerful is that her personal story brought out emotion in the audience. It's those kinds of tales that cause listeners to become emotionally engaged. When you share a personal experience that means a lot to you, you'll display your devotion without even trying.

Published on: Nov 11, 2014
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.