Entrepreneurs by nature have different DNA. They are driven by a belief in themselves, a vision for success, and outside-the-box thinking. What characteristics do entrepreneurs have in common? How do those traits come into play when securing business financing? What is it that makes successful entrepreneurs thrive? Here is a closer look.
The Case for Effectual Reasoning
Saras Sarasvathy conducted pioneering research on entrepreneurs. Traveling the country, she met 30 company founders to discover how they took an idea from concept to practical success.
Sarasvathy recorded the leaders’ responses to a 10-question, 17-page problem set. Analyzing the results, the researcher found that entrepreneurs often act quite differently from their business school counterparts.
In MBA programs, students are taught causal reasoning. Under that doctrine, with a pre-determined goal and given resources, business leaders make decisions that optimize speed, efficiency, or economic production. They make choices about where to allocate limited budgets to marketing versus production versus R&D.
Entrepreneurs do think differently, Sarasvathy found. They use effectual reasoning, which does not begin with a specific goal. Instead, they are given a set of resources and allow goals to emerge over time. Imagination and aspiration drive them.
Those resources begin with three assets:
- Who they are, including abilities, tastes, and traits
- What they know, including education, experience, expertise, and training
- Whom they know from their professional and personal networks
These assets are why entrepreneurial companies are so often tied to the talents, drive, and vision of the founder. They often do not use traditional market analyses but bring products, or concepts of products, to the nearest possible customer to gain insights.
They look to build strategic partnerships with other businesses or customers from the onset. They leverage contingencies – opportunities – by turning happenstances or chance encounters into gains.
Entrepreneurs take a different approach to problems, see opportunities where others see obstacles, and have a persistent approach to business. Here are a few of the ways entrepreneurs approach business from a different perspective.
- Obstacles as Opportunities. Entrepreneurs take a challenge, whether it is known going into a business or emerges as a business evolves, to make their companies even stronger. They see obstacles as merely part of doing business, believing that when those barriers are overcome, their employees will be stronger, their messages and solutions more proven, and their company better for having experienced the adversity.
- An Intense Focus. Time and focus are extremely limited resources that can quickly dissipate over the course of the day, week, or year. Successful entrepreneurs tend to be highly organized, able to map out a plan and stick to the most pressing tasks to drive productivity and results. It means not taking meetings that will distract from the business at hand and not being sidetracked by a new, bright, and shiny object that takes away from a focus on the core.
- Money Used To Make Money. Entrepreneurs take a long-term view when it comes to financials. They see a sudden gain in revenue or profits, either via more sales or reductions in operating expenses, as a chance to reinvest and leverage. They find the smartest use for the monetary gain that will benefit the business in the short- or long-term.
- Realistic Positivity. Successful business owners are pragmatic, weighing the hard facts, collecting and using data, and making the best-informed guesses about unknowns before acting. Yet in addition to this methodology, they also are generally optimists, focused on positive outcomes and remaining hopeful during good times and challenging periods. They calculate the opportunity cost of not taking a particular path and move forward after careful analysis and timely pivots.
- Ingrained in Growth. Entrepreneurs are not content with the status quo. They look for new opportunities at every turn, realizing that these opportunities will require them and their teams to stretch, learn new skills, and recruit talent necessary for success.
- Visionary Mindset. Good business owners will create a business plan that articulates a vision for their business. They understand that their products or services need to meet a need or solve a problem for their customers. If they are mocked for that vision, they tend to stick to their guns and take rejection in stride.
- No Excuse for Excuses. Success means not tolerating excuses. It means not running away from problems but instead addressing them head on and as quickly as possible. Doing so allows an entrepreneur to move on quickly, not dwell on the problem, but also learn from it.
- The Questions Are the Answer. Entrepreneurs need to act like dogged investigative reporters. They need to be asking questions constantly of customers, advisors, suppliers, employees, and competitors. That means knowing the right questions to ask, not only of others but also one’s self. Here are a few good questions to ask:
- What problem am I looking to solve?
- How will my idea benefit my customers and society?
- Who is going to buy this product or service and why?
- Am I learning from my mistakes?
- Does my product or service stand out?
- Failure Is a Learning Opportunity. Entrepreneurs who ultimately are successful have taken failures as valuable learning opportunities. Failures are a chance to grow, learn what not to do, and adjust procedures, policies, or processes to ensure that the failure does not happen again.
- Perfection Is a Flaw. Just as failure is an opportunity, perfection is a flaw. It is unrealistic to expect that the business and everything about it will be perfect. Expecting that of yourself or your employees can only lead to frustration and disappointment. Forgive yourself and others for mistakes and move on. Perfect can even stall progress if an entrepreneur spends too much time sweating the small stuff that does not truly matter.
- Competition Equals Research. Every entrepreneur will have competitors. However, those competitors do not need to be perceived as threats. Instead, entrepreneurs should see competitors as a chance to learn about best practices, the industry, and the market. Looking at a competitors’ business model helps you refine your own and see what is unique, which allows you to adjust your marketing to highlight the differences.
- Effort Begets Success. Entrepreneurs are keenly aware that everything about the business requires effort. Whether it is making sales pitches, securing business funding, or developing new products, the entrepreneur knows that hard work and commitment are essential. Shortcuts are helpful, but sometimes there is a need to roll up the sleeves and work hard to achieve success.
- Outside Perspective. No one has all the answers and successful entrepreneurs know this. They find and use a trusted team of advisors to help them gain the proper perspective and insight into the business. These advisors should be people who will speak candidly and honestly about the business plan, the marketing approach, the product, and the entrepreneur’s leadership. The smart entrepreneur takes in all this feedback and uses it wisely.
- Lifestyle Choice. It is important to maintain a balance, whether you are an entrepreneur or not. There will be times when the entrepreneurial life is consuming excessive amounts of time, energy, commitment, and willpower. This means that the entrepreneur and those close to him or her need to be aware of the commitment and challenges that go into this lifestyle.
- Negativity, Drama, and Falsehoods Do Not Help. There is a famous saying that negative people always have a problem for every solution. You do not need negativity in your business, but constructive criticism is a good thing. An entrepreneur needs to learn the difference between the two. Overly dramatic, negative, or insincere people have no place in the organization, whether you are starting up or growing.
- Creativity Is Crucial. Successful entrepreneurs think creatively. It allows the business owner to explore new product ideas, business processes, and markets. Creative people identify patterns where others may only see data points. Strong creativity encourages the entrepreneur to experiment and build on the results.
For entrepreneurs, the ability to think differently, to embrace some or all these traits, puts them on the right path to success. To find funding for small business, resiliency, creativity, drive, and vision all play a critical role.
There are many options for entrepreneurs, from U.S. Small Business Administration programs to private loans to venture capital. However, each of those programs brings with it barriers, bureaucracy, and, in some cases, tight capital markets.
That is why Benetrends has worked for decades with entrepreneurs on a new approach to financing a small business. With Benetrends, business owners can use existing 401(k) or IRA funds to gain access to needed capital within days, not weeks or months.
The Benetrends approach begins with the business structure. We help entrepreneurs establish businesses as C corporations, then roll existing retirement funds into a newly created company. Those funds can then be withdrawn, penalty-free and tax-deferred, to provide much-needed funds to launch new ideas and opportunities.
For more information about how Benetrends can help your entrepreneurial vision become a reality, watch the webinar: How To Use Your Retirement Funds To Buy A Franchise Or Business.