Posted on March 7, 2017 in Entrepreneurship, Uncategorized

Getting a Handle on Your Startup Expenses

Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.

Whether you’re bootstrapping, applying for loans, or seeking investors, getting a handle on your startup expenses is a necessity. Understanding the costs of starting a business can help you plan, save, budget, and forecast.

Unfortunately, there are some costs that might surprise you. Setting aside funds for an emergency can help you to survive even when you’ve been blindsided by circumstances.

The following costs are presented for your consideration and planning purposes – so you can make better-informed decisions and reduce your risks.

Common Expenses for Startups

Fees, Permits, and Licenses

Investigate the costs required to operate under your chosen entity name, incorporate, and purchase or apply for any necessary industry licenses. Some of this can be accomplished online. Incorporation may require the assistance of a lawyer, which will, naturally, result in an additional expense.

Currently, the tax code permits business owners to write off some of their startup expenses. The SBA helps to explain which expenses can be written off – and in what amounts – in this useful post.

Insurance

Different industries may require different types of insurance. For example, a software startup may desire insurance against data breach, while a contractor will require general liability insurance. Do your research and determine which insurance policies are necessary to protect your business from the beginning.

Taxes

The types of taxes you’ll need to pay – and possibly collect – differ by industry and geography. Some states don’t require tax on food or clothing sales, some cities levy additional taxes, and some states don’t impose any sales tax. Check with your local and state governments for more information. Remember, you’ll also want to set aside money to pay your Federal income tax, most likely on a quarterly basis. Unless you operate at a loss, chances are that you’ll owe something.

Time

You know the saying, ‘time is money.’ If you’re just starting out and leaving your day job in the process, chances are that you won’t be paying yourself a salary. If you’ve gone the hybrid route, continuing to work while you run your own business, you’re undoubtedly aware that your own time is likely to represent your largest and most precious investment. Spend it wisely.

Capital Expenditures

The amount spent on miscellaneous supplies will vary depending on the type of business you’re starting. If you’re launching a design firm, for example, you’ll probably need some high-end desktops, creative software, and other industry-specific tools to ensure that you’re able to deliver top-notch designs to your clients.

If you’re planning to open a restaurant, you may need to invest in kitchen appliances (if your intended location doesn’t already have them) and lease or purchase an operating space.

Most businesses will also require expenditures on some combination of computers, equipment, furniture, vehicles, and point-of-sale systems.

Many businesses, but not all, require some form of capital expenditure to get started.

Operating Expenses

There are certain expenses you can anticipate on a monthly basis. You should budget for rent, utilities, subscription software, packaging supplies, shipping, marketing, and web hosting – all necessary to keep your business going.

Outsourcing

Entrepreneurs do a lot of things themselves, especially when they’re just starting out. At some point, though, it will hopefully become unwieldy and it’ll be time to pass off some responsibilities. Exactly which responsibilities those are will depend on your business. Two commonly outsourced tasks are digital marketing and accounting.

Wages

If you’re planning to hire staff, you’ll need to consider how many people you’ll need, what you expect to pay them, what benefits they’ll accrue, and how much to budget for unemployment insurance.

Emergency Funds

Having a bit of money set aside for unanticipated circumstances can be helpful, such as having one of your estimates end up on the low side and you finding yourself surprised with a higher bill. It’s also wise to keep extra capital available to cover lower than expected sales projections or the proverbial leaky roof.

Getting Good Numbers

In order to create the most informed business plan or business model canvas, you’ll want to ensure that your numbers are as accurate as possible. This can help you to create the best plan possible as you prepare to embark on your endeavor. Some estimates will change and your budget will require a degree of flexibility, but an informed starting point can help in making better decisions from the start.

In addition to researching costs online, you can also get a good estimate from these sources:

Other Professionals

If you know of others in your field who might be willing to speak candidly with you, set up a time to discuss their experiences with starting a business. They may be able to provide valuable insight into expenses that caught them by surprise or purchases/investments they regret having made. SCORE and networking events can be a valuable resource for meeting other individuals in your industry.

Suppliers

Your own prospective suppliers are often one of the best sources of information Suppliers can fill you in on the cost of their goods, as well as their experience with others in the industry. Sure, they’re hoping to solicit your business, but they may also prove to be a valuable resource.

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Understanding the costs of starting and running a business is an important first step. While watching the numbers add up can be intimidating, don’t let it stop you from following your dream. If something doesn’t look right, however, make sure to take another look and possibly tweak your business plan in order to provide yourself with the best chance of success.

Remember, your business won’t be running in a vacuum. If you can, seek advice and feedback from others, whether they’re professionals in your field or potential clients and customers. Constantly reassess the feasibility of your plan and adjust it as and when necessary. Running a business is an iterative process, so you should plan to incorporate useful feedback from the beginning!

About the Author

Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).

Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.

Most importantly, he is the incredibly blessed husband of one amazing wife and father of six wonderful children. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to www.JoeJohnson.com.

Posted on February 6, 2017 in Entrepreneurship

Avoiding Startup Mistakes on the Path to Success

Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.

No one begins a new endeavor while planning to fail. However, too many entrepreneurs begin their ventures making mistakes that can cost them their chance at success. Here are 12 of the most common startup mistakes to avoid as you carve your path to success. Chances are, you’ll make a few mistakes on the way despite the best of intentions, but this list should help you sidestep at least a few.

12 Common Startup Mistakes to Avoid

1. Failing to Plan

How’s that business plan or business model canvas coming along? What activities do you have planned next week, next month, or six months from now?

Planning is a necessary part of business. You cannot succeed without a plan. Failing to create a workable plan that details your activities, as well as your expected outcome, could put you in a place where you’re making poor decisions because you lack data or a roadmap. Your plan is like your GPS – it can provide you with a path to get you from one point to another using the data that you have. With more input, whether due to a wrong turn, a new shortcut, or information about traffic, you can recalculate your plan to make sure it keeps working for you. In short, a plan can help you reach your destination with fewer detours.

2. Ignoring the Customer

Focusing on your goals, products, and services can be an effective way to get things done, but it shouldn’t blind you to the most important aspect of your business. You never want to shift the focus from the customer or client.

The needs of your target audience are extremely important. They are what keep you in business. Customer feedback is amazingly valuable and can help you to pinpoint issues with your products or services.

For example, if users are finding your app interface clunky or that your proprietary cleaning solution leaves an unpleasant odor, that’s valuable feedback you can use to better your offerings. That’s why the lean startup model emphasizes feedback as a way to provide information for future iterations of products or services. If you’re trying to fulfill a particular need or fix an issue, sometimes the customer is the one who can help you determine how best to do it. Keep your ears – and inbox – open.

3. Poor Goal-Setting

Not setting goals, setting unrealistic goals, and setting unmeasurable goals – these are all symptoms of poor goal setting. If your goals are your benchmarks, you need to be able to demarcate a clear path to get you there. That’s where SMART goals come in.

Your goals should be Specific, Measurable, Attainable, Realistic, and Time-based. Saying that you want to revolutionize the way insurance is sold is not setting a SMART goal. Taking that overarching vision and breaking it down into digestible pieces that can be independently achieved and measured within a particular timeframe can increase your chance of success and provide you with data about where you went wrong.

4. Poor Hiring

Finding the right people can be difficult, especially when you really need to get a position filled or feel like you need the help. Poor hiring can have dire consequences. Hiring talented individuals who aren’t invested in your vision can hurt just as much as hiring individuals who don’t have the right abilities.

Rather than rushing into hiring, consider the experience and qualities you’d like certain roles to bring to the table. When seeking help or interviewing, focus on those skill sets, but continue to keep an open mind. The hiring process may help to reveal other, previously unanticipated, skills you’d appreciate in a candidate. Be upfront about your expectations and your desired level of commitment from candidates so you can make the best choice for you and your company.

5. Spending Too Much or Too Little

There are plenty of tales of companies who blew through their investors’ money by renting lavish offices or building untested prototypes that nobody wanted. Similarly, there are tales of organizations that were so tight-fisted with cash, they didn’t get to market soon enough.

Striking the balance between spending too much and spending too little can be hard. It’s necessary to prioritize expenses and focus on investing in the right things, i.e. the things that will get your brand off the ground. A well-conceived business plan can provide guidance on spending, as can a business model canvas that illustrates the different expenses necessary to make your value proposition a reality.

6. Doing Everything Yourself

Starting a business is a difficult endeavor that requires a lot of time and energy. If you’re trying to do everything yourself, you’ll burn out quickly or lose your passion. That passion, however, is exactly what you need to keep your project going.

Don’t drain your energy on tasks that can be delegated. Whether you hire the right person for the job or outsource, put your energies into what you do best and invest in others who will bring the best to your company.

7. Falling Prey to Fear of Failure

Fear of failure can be healthy in small doses, particularly when it helps you minimize your risks. It can also be a major hindrance. Don’t let fear of failure stop you from trying something new. Rather, approach it as you would any business decision. Enumerate and research your options and then move forward with caution. Get feedback, make changes, and keep moving forward.

8. Working in a Bubble

You aren’t alone in what you’re trying to do. While you may be focused on a particular industry and a particular product, there are plenty of entrepreneurs attempting to launch a successful business. Networking with other entrepreneurs and vendors can help you to advance your goals, get useful feedback, and have a sounding board to provide useful advice.

9. Lacking Flexibility

Setting a plan in place feels good and sometimes it’s necessary to stick to the plan, even when things aren’t falling into place. It’s also necessary to differentiate, however, when it’s time to change course.

A plan cannot be set in stone. It must allow for deviations. An effective plan may even detail when it’s time to consider other options based on results (or lack thereof). Feedback and data can help you determine whether it’s time to pivot or rework your business model.

10. Setting Unrealistic Expectations

Projections should be based on data, right? However, sometimes it’s hard to buckle down and create realistic expectations because we’re enamored with our amazing idea that is going to change (insert your preferred industry or market sector here).

It’s important as entrepreneurs to remove ourselves a bit from the blinding specter of our great idea in order to gain some perspective on reasonable expectations. While a business plan or business model canvas can help with this, it’s extremely important to solicit information from potential customers and clients – your target audience.

Knowing your target audience can help you better determine how they’ll react to your product or service. Additional data about the economy, spending, and competition can also help you to set more realistic expectations. Coupled with SMART goals, your new realistic expectations can help guide your company to success.

11. Intuition vs. Data

Gut feelings are nice, but they aren’t a science.

Steve Jobs had a strong gut feeling about the future success of a transportation device that he believed was set to change the world. He was prepared to invest millions in the company. The product? The Segway.

For Jobs, his intuition worked wonders in the field he understood – computing. When he stepped out of that field, his intuition failed him. Why? Even though he was quite intuitive at Apple, that intuition was based on years of dealing with computers, designers, and more. Intuition is generally only helpful when you already know a great deal about the subject matter.

Data, on the other hand, is invaluable. So long as you can approach data with a clear mind and allow it to paint a picture for you (rather than trying to force data into your preconceived framework), you’ll be able to utilize it to aid in making smarter decisions. Sure, intuition can still play a part, but never omit the data.

12. Not Recognizing or Researching the Competition

You aren’t alone. No matter how ingenious your product or revolutionary your service, you have competition. Don’t ignore them.

While your competition may not be providing the same exact product or service, they may be attempting to meet similar needs or solve a similar problem in their own way. Why should consumers choose you? To be able to effectively answer this question, you have to research your competition and learn more about what they’re trying to do and how.

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Entrepreneurs are humans and bound to make mistakes. However, we can learn from our mistakes and others’ – and capitalize on them. Making a few mistakes won’t inevitably result in failure, but refusing to learn from them most likely will.

About the Author

Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).

Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.

Posted on December 26, 2016 in Entrepreneurship

Getting Heard: Advertising for Startups

Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.

If you build it, they will come – right? Not exactly. Getting heard and seen as a new company will have its issues.

Unless you already have an established brand, a new product or service alone probably will have trouble getting heard and won’t draw the masses to your door. Marketing and advertising are necessary in order to inform your target audience about your amazing new doodad or service. Even a retail location with a giant “Grand Opening” banner can’t be relied upon to draw consistent traffic. You need more.

To draw attention to your startup, you must utilize advertising. Although it needn’t be a thirty-second spot in prime time, you’ll want to ensure that the message you’re crafting will be heard by the right people at the right time and in the right way.

So, what does that mean? Well, it’s complicated. Ultimately, how you approach advertising will depend on your industry and your target audience. Here are some points to keep in mind:

If a startup owner remembers that the sole purpose to business is service, there will be no problem getting heard.

The Goal of Advertising; Getting Heard

Yes, the primary goal of advertising is selling, but, beyond that, it’s about making a connection.

First, your message should highlight your customers’ needs and then, share your solutions. Everything with your company’s name on it must be consistent in message and representative of your organization’s values and goals. You also want to draw new customers to your product or service and retain old ones. So, how do you achieve this? Well, to begin with, you need to answer one question:

Who Are You?

Before you can decide how you’re going to market your products and services, you must have a thoroughly cohesive understanding of your business. What is your brand? How do you engage with your customers or clients? What tone do you use?

If you’re planning on hiring someone else to figure this out for you, that’s fine. However, you still need a general idea of how you want your company to be presented. If you’re planning on doing everything yourself, there’s a lot of good information out there to help you get started. There’s also a steep learning curve to negotiate, but it’s a worthwhile sacrifice on the road to understanding and sharing your brand.

For more information about brand voice, take a few minutes to peruse these two articles:

A Simple Tool to Guide Tone of Voice
4 Steps to Finding Your Brand’s Voice

While both articles were intended to help users of their respective sites, they also reach a larger audience by virtue of being freely available. Not only are they about brand voice and marketing, they are marketing done in a brand voice. They demonstrate that each site cares about its audience and is willing to share tips to help them on their business journeys. That seems like effective marketing to me.

Now, let’s talk about where you’ll be advertising.

Physical or Digital?

There are numerous ways to getting heard or seen, but not every method is right for every business or every customer. If you’re selling luxury goods, a photo of a yacht on a shopping cart probably won’t bring you any new leads.

Physical and print advertising is large in scope. Popular items include business cards, brochures, sell sheets, flyers, mailers, coupons, and more. Other non-digital advertising methods include billboards, bus stop posters, shopping cart signs, newspaper and magazine ads, and radio and television spots. These days, there are even ads on the backs of some register receipts.

Digital marketing is also wide in scope. It includes websites, search engine optimization, social media, pay-per-click campaigns, content marketing, and more. Digital marketing is increasingly important as many consumers search for and vet businesses online.

Many businesses require a mix of both physical and digital advertising. Quality information about your target audience can aid you in making the determination of which ads are right for your business. There are some selections, however, that are useful for everyone. A website is no longer a luxury, but a necessity. Currently, only about half of small businesses have a website – a figure that represents a lot of lost leads.

DIY, Hire Staff, or Outsource?

Once you’ve decided on the sort of marketing you want to do, you’ll need to determine how best to accomplish it. Will you be doing everything yourself, hiring staff to handle it, or outsourcing to a freelancer or agency?

DIY

If you’re determined to handle it yourself, be prepared to navigate a significant learning curve. Marketing isn’t simply a matter of words on paper. It’s about crafting a message to which potential customers and clients will respond in a desired fashion. You’ll need to focus not solely on the words in that message, but on how they’re presented and when. Every aspect from graphics, font choice, and layout can have an effect on how your message is received.

For those going the DIY route, keep in mind that you’ll need a strategy to tie your various efforts together. Take a look at these articles for some inspiration:

The 6 Best Advertising Strategies For Small Business
4 DIY Marketing Tips for Empty-Wallet Entrepreneurs
Moz Academy: Inbound Marketing

Hiring

Depending on your budget, you may consider hiring dedicated staff to fulfill your marketing requirements. The exact format this takes within your company, as well as the many related costs, will vary depending on the options you select.

Hiring a dedicated person (or team) to handle marketing is frequently one of the priciest options. These two articles should help get you started:

5 Tips for Hiring an All-Star Marketing Team
12 Marketing Job Descriptions to Recruit and Hire an All-Star Team

Getting heard first comes with many planning sessions and a few meeting to get your small business startup growing.

Outsourcing

Outsourcing can be a less-expensive option, depending on the agency or freelancer you select. Just remember: more often than not, you get what you pay for.

These two articles will provide some insight into how you might proceed with an agency:

How to Hire an Advertising Agency
7 Tips For Hiring an Advertising Agency

Contracting a freelancer is another way to outsource your marketing needs. Many freelancers offer web-based services such as graphic design, web design, content creation, SEO, and more. For example, a freelancer might help you create a brochure that could be readily produced at your local print shop. Before you get started, however, you’ll need to be clear on your expectations.

Alternatively, you could create your own hybrid solution. One possibility is that you might hire someone to create your website, but write all of the content yourself. The possibilities are endless.

Prepare to Analyze and Reanalyze

How will you know if your campaign is successful?

If you’re working with an agency, they may provide some analytics for you. Many digital marketing agencies function on a retainer and aim to increase certain metrics like pageviews and conversions. In order to do this, they often participate in A/B testing to determine what’s working and what isn’t.

For physical advertising such as mailers and brochures, the inclusion of a unique coupon code will help you track which ones are driving traffic and which aren’t. With digital advertising, you can very easily determine the most effective keywords and learn exactly what people are viewing on your site, among many other metrics.

But don’t stop there. Once this information has provided you with some insight, you’ll want to use it to hone your next campaign and then re-analyze the results. After that? Do it again.

Advertising isn’t just another expense. It’s a necessary investment in and a commitment to the growth of your business. Make sure that the right people are hearing about you and what you can do for them – before you ever open your doors for business.

About the Author

Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).

Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.

Posted on December 12, 2016 in Entrepreneurship

Is a Lean Startup For You?

Joe Johnson, Ph.D.
Entrepreneur. Investor. Startup Expert.

Entrepreneurship and business are replete with associated jargon: value-add, competencies, SMART goals, etc. One term that has been floating around for the past few years is ‘lean startup’ – and it’s no wonder. The phrase is enticing and so are the ideas behind it.

At first glance, you may think that adapting your business idea to the lean startup model is the best path to take. After all, starting with minimal financing seems ideal and you go to market quickly, but is it in your best interest long-term? Also, can lean startup strategies be applied to bring services to market rather than products?

Defining the Pros and Cons of ‘lean startup’ business methodology.

In this post, my goal is not to take a position on your use of lean startup principles, but simply to provide you with information. Once armed with this information, you’ll be able to determine whether the lean method is appropriate for you.

Dr. Joe Johnson stresses that success of a lean startup business comes from following the right process.

What is a Lean Startup?

In 2011, Eric Ries published The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. His goal was to illustrate that there was a quicker, data-driven way to get to market with a product and hopefully increase the chances of entrepreneurial success.

Now, countless companies have popped up to assist those looking to build a lean startup. By assisting with business model canvases, marketing, etc., they’re capitalizing on the popularity of the lean model with business services, conferences, and speaking engagements. However, few thoroughly explain the concepts behind the model and plenty of myths abound in that vacuum.

At its core, the lean startup focuses on data-driven results.

Many articles call it “scientific”, though a better term is probably “analytic”. Entrepreneurs are tasked with identifying a need or solving a problem. They then produce a minimally viable product to take to market for customer feedback. That feedback is analyzed to either hone and create future iterations or to completely scrap the project.

To some extent, the lean startup follows the “fail fast” method.

Get your product out as quickly as possible and determine whether people want it. If not, fix it or close up shop. All of this is accomplished while avoiding large expenses in the research and development phase. While this certainly saves money and time, it may also lead to missed opportunities and insights.

The lean startup proposes an iterative process.

The three general principles mentioned above work in a cycle and drive further development and innovation.

The lean startup process works in a cycle to propel a business forward.

Source: http://theleanstartup.com/principles

Build: Minimum Viable Product

Normally, businesses spend a great deal of time designing, manufacturing, and testing their products before going to market. The lean startup model suggests that entrepreneurs should trim this lengthy process by focusing on the minimum that a product requires to function and sell – the minimum viable product or MVP. Once the MVP is on the shelf, customer feedback can work its magic to let you know how users feel about it.

Measure: Customer Feedback

Customer feedback is a necessity for the lean model to work effectively. Once you have your minimum viable product, it is necessary to take it to market. Customer feedback about features, usability, manufacturing – anything, really – proves to be an essential driver of future iterations. The more feedback, the better.

The basic concept at work here is that customer feedback will inform future product iterations, thereby making it more successful. This is at odds with the traditional product development paths of beta testing and focus groups. Rather than having a small pool of initial users, the lean model serves to broaden the market considerably.

Learn: Analyzing Data

With the customer feedback, as well as your sales numbers and manufacturing costs in hand, you can begin analyzing your data to determine the changes required to make your product more successful. Rather than working in a corporate vacuum with only a few people generating ideas, you’re working with ideas from real users who may be able to pinpoint certain value-adds you hadn’t yet considered.

Not all feedback will be useful or possible to integrate into future iterations, but the hope is that there will be some consensus reached or striking new ideas broached as a result of utilizing this method.

Benefits of the Lean Startup

The lean model has introduced ideas and terminology to the business conversation that have become part of the common lexicon and are now being used by many entrepreneurs, regardless of whether they follow the lean model.

The lean startup model is believed to save time and money. By going to market quickly with an MVP and harvesting the feedback, you’re learning whether people are actually willing to buy your product without spending months (or years) and tens of thousands of dollars on research and development to create an amazing product that you love and no one else wants.

A lean startup can usually be gotten underway with a smaller investment, though that isn’t always the case. While “lean” may imply “low budget” to some, plenty of lean startups require outside starting capital and cannot be bootstrapped. Thanks, however, to the basic concept of getting to market quickly, less capital is required to produce a product when compared with those companies following a more traditional path toward production.

Although the lean startup seems particularly well-suited for internet and software companies, Eric Ries argues that any company can use the methodology to learn more about what consumers actually want in a product. It appears as though the ideology behind the lean startup can even be used to offer services at a local business level, so long as you’re willing to solicit customer feedback and implement any necessary adjustments.

Understanding another person's point of view is imperative in the process for a lean startup business.

Possible Issues with the Lean Startup Model

By relying on a customer feedback cycle, more long-term ideas may be missed.

Consider the device on which you’re reading this article. Had potential customers been interviewed and asked decades ago about the product, what would they have most likely said? Many would’ve had difficulty imagining something like a smartphone, tablet, or laptop and just how integral to our lives those devices would eventually become.

The lean startup model may not be the most appropriate way for certain companies to go to market. Companies that revolutionize particular products or methods must also convince customers that they need those new products or methods and that they provide inherent value. For example, polling consumers decades ago as to whether they’d be interested in buying books online, they might have stated that they could simply go to the bookstore. If Jeff Bezos had listened, Amazon might not exist today.

The lean model seems to apply best to products or services where a market already exists, rather than for revolutionary new ideas.

It’s clear that the lean startup model isn’t for everyone. In fact, it seems more geared toward the tech sector. If the lean startup model seems like a fit for your company and product, great! Go for it! If the entire model isn’t for you, consider that there may be aspects of it which can help you propel your business idea forward. Use what you can and discard the rest.

About the Author

Dr. Joe Johnson is an entrepreneur, investor, and startup expert. He is the founder and principal of GoodField Investments and the GoodField Foundation (www.GoodField.com).

Joe has a Ph.D. in Entrepreneurial Leadership and an MBA. He is the author of the upcoming book on The Science of Why Most Entrepreneurs Fail and Some Succeed.

Most importantly, having one amazing wife and father of six wonderful children make him an incredibly blessed man. He resides in Bradenton, Florida. For more information on Dr. Johnson and his work, go to www.JoeJohnson.com.

It may be quite possible that individuals are born wirth or taught to have critical entrepreneurial thinking.

Posted on August 26, 2016 in Entrepreneurship

10 Critical Entrepreneurial Leadership Traits

By Joe Johnson, PhD
Entrepreneur. Investor. Startup Expert.

Are Critical Entrepreneurial Leadership Innate?

Are entrepreneurs born or is it possible to learn the skills acquire critical entrepreneurial leadership and start major companies? That is the age old question and the subject of many a dissertation (including mine).

The answer is a complex one, but what is known is that successful entrepreneurs often share fundamental leadership traits that enable them to reach great heights in business and achieve their goals.

An entrepreneur needs to have many characteristics in order to be successful. But, I’ve narrowed it down to the following traits that lead to ultimate business success.

10 critical entrepreneurial leadership traits

Often labelled in the academic world as ‘self-efficacy’, confidence in the entrepreneurial context, put simply, means to believe in your abilities and yourself as an entrepreneur. If you believe you can do it, others are more likely to as well.

Self-belief is key to success in business, especially in the cut-throat world of startups. If you’re not a naturally confident person, there are some action steps you can take to build your confidence every day, as outlined in this article by Entrepreneur.

Persistence

Successful entrepreneurs don’t give up when something fails. They look at what went wrong and adjust their approach to ensure a better result next time. In many ways, persistence is intrinsically linked to the confidence and self-belief, in that entrepreneurs know they can achieve their goals and they keep trying until they get there.

A great example of persistence is Bill Gates, who had a vision for Microsoft and worked relentlessly with his team to implement that vision. He did this, despite occasions when ‘first versions’ wouldn’t work out and that persistence yielded extraordinary results.

Innovative and Creative Thinking

Some people are naturally innovative and creative in their thinking and, for others, it is a more learned characteristic. Regardless, it is a key trait of many successful entrepreneurs who continue to look at the world with different eyes.

They identify the problems – the pain-points of consumers, and they formulate creative solutions that have often not been thought of before. But this creativity isn’t only required at the ‘ideas’ stage of business, it’s just as important throughout implementation and in developing competitive marketing strategies.

Measured Risk-Taking

Risk-taking is often thought of as a key characteristic of an entrepreneur, and there is research for and against this view. It’s actually more about measured and calculated risk-taking when it comes to successful leadership.

One such entrepreneur, who has never shied away from risk, is Elon Musk. Recently, Musk has been in the news about Tesla’s bid to acquire SolarCity. Many sceptics, including me, commented on whether the move was a good use of Tesla’s capital, but on 1 August, the deal was announced to create the world’s first vertically integrated sustainable energy company. Musk’s bold approach isn’t going to work for everyone but it’s worked for him so far.

The bottom line is that successful leaders are not afraid to take calculated risks to grow their business.

Team Building Mentality

No doubt a great majority of entrepreneurs begin by flying solo. However, successful leaders know they can’t do everything themselves. Instead, they build, support and effectively manage teams to achieve their business strategies.

Take Jeff Bezos, the founder of Amazon, who like several other entrepreneurs, started his business in his garage. Through building effective teams even with his own personal management style struggles, Bezos has scaled his business to levels otherwise not possible as a ‘solopreneur’. What was once a modest online bookstore has since grown to be the largest online retail company in the world.

Self-Motivation with a High Level of Initiative

Self-motivation and initiative are key characteristics of the world’s most successful entrepreneurs. Effective leaders have a drive and desire to do well. While many people have the ability to identify problems in the world, not everyone is self-motivated enough to find effective solutions like action-oriented entrepreneurs.

Ability to Problem-Solve

The world’s top entrepreneurs are always looking for better ways of doing things. If something goes wrong in their business, they continue to strive to find alternatives and more effective solutions. They understand their target markets and the problems that their customers are experiencing. They build their businesses by continuously improving what they do and they are problem-solvers, adaptable to changes in the business environment.

Personal Growth Mindset

Successful entrepreneurs are proactive learners and they seek out opportunities to further their knowledge. They understand they cannot allow themselves to get stuck in the day-to-day operations of their business without looking at the big picture. They are always striving to better themselves, to learn new skills and knowledge, and to explore opportunities for their personal development. This has been described in Inc. Magazine as the ‘growth mindset’

High Energy and Enthusiasm

Sometimes business is tough, and there are plenty of opportunities to let the negative sides of entrepreneurship get you down. However, successful leaders maintain a high energy and enthusiasm for everything they do. Of course, some days are better (or worse) than others. But having a positive attitude is essential if you want to be an effective leader for your growing business.

Goal Oriented

Successful entrepreneurs are goal-oriented. They think strategically and define realistic goals and objectives. Now, that doesn’t sound earth-shatteringly different to what many others do in business. However, successful leaders have an innate ability to then break these goals down into actionable steps to achieve what they want for their business. Successful leaders don’t just set goals, they live them.

Ultimately, you will develop your own style that works for running your business. You may or may not currently possess all 10 traits that I’ve outlined. Some traits come easier to others (i.e. born), but most can be learned and improved upon (i.e. made).

What really matters is what you do with what you have. Take stock of your strengths and work on your weaknesses. It’s easy to keep working on your strengths but you will see a bigger improvement by working on weaknesses. At the end of the day, you need to be the driver of your own entrepreneurial success.