Lesson: 1. Is Small Business for you?

2. The Entrepreneurial Personality

What is an Entrepreneur?

En·tre·pre·neur - noun
From Old French; entreprendre; to undertake. One who organizes, manages, and
assumes the risks of a business or enterprise.

In our first lesson we discussed the importance of entrepreneurs in a free market economy. It is entrepreneurs, pursuing their own self-interest, who decide where to send capital, labor, and raw materials. In the process, society benefits by having the greatest number of goods and services to choose from, at the best possible prices.

So who are these people, and what are they like?

Take the following quizzes to see if you have some of the characteristics shared by entrepreneurs.

http://liraz.com/small-business/quiz.htm

http://www.stateless.com/savell/success.html

Isabel Isidro has written an analysis of the entrepreneurial personality that can be found at:

http://www.wordscapes.net/entrepreneurial-personality.htm

Why do people start companies?
There are also motivational factors that drive some people to become entrepreneurs. In the following article – “Why do people start companies?” – the author talks about how certain personality traits that are common to entrepreneurs may make them difficult employees. In fact, many of these individuals are driven to start their own businesses simply because they can’t work well with others!

http://www.morebusiness.com/getting_started/primer/d943458564.brc

The down side of positive traits.
These entrepreneurial personality traits can even create difficulties as the new business grows, because the entrepreneur has difficulty delegating responsibilities even when the business has grown too large for one person to handle.

In many cases the biggest problem facing entrepreneurs stems from their greatest strengths – they are independent and self-confident. They have difficulty believing that they might be wrong, and an even greater difficulty delegating responsibility and decision making to subordinates. The following column speaks about this entrepreneurial “dark side”.

THE ENTREPRENEURIAL PERSONALITY - A Pathological Condition

Details
The typical entrepreneur is usually very intelligent. Unfortunately, pride tends to follow intelligence. It causes the entrepreneur to be impatient. He can't wait for the business world to see how brilliant his work is right now. Therefore, he needs to be involved in each and every detail of the new venture and put his imprimatur on every event. It is not even sufficient to be involved in every detail, but all involved must be engaged in seemingly endless debates until they are convinced that, indeed, the entrepreneur, as the Prime Mover, is correct and yes, brilliant. (The entrepreneur is convinced of his own infallibility.)

Friends and Yes Men
As a corollary to the above, since the Prime Mover needs constant affirmation regarding his brilliance, he tends to surround himself with friends and acquaintances whose appreciation for his brilliance has already been established. This leads to the hiring of not the best people available for the venture, but the best people for the Prime Mover's ego. (The entrepreneur will not take advice, and will not delegate.)

Pride like Cancer
Once the venture has experienced some modicum of success, a most dangerous phase may ensue. Ego, once left unchecked, has now stifled all dissension. The venture is often left without adequate legal protections. The Prime Mover thinks that his handshake is more powerful than the law and the adoration of others makes contracts not only superfluous, but even offensive.

The love of the product or invention takes on mythical proportions. Obviously the product should be the most expensive in the market. The product is a value proposition that causes the world to turn on its axis. Therefore, the market will have to wait for a price change, or license arrangement with third parties or a partial sale of the business for raising capital.

These events usually are followed by a total deception regarding the uniqueness of the product. The Prime Mover sees whole market distinctions that no one else can see. Because of this all-knowing approach, the Prime Mover sees no reason to respond to any outside force or person. Letters go unanswered. Telephone calls go unreturned. Email sits in the inbox. (The entrepreneur is convinced that everyone will want his product – no matter what.)

I’m the King of the World
The Prime Mover may next enter the "fun" phase. This phase allows the entrepreneur to get involved in only the most enjoyable aspects of the venture, e.g. giving interviews, attending conferences, meeting with marketing gurus. The details of running a company are left to flounder. No need to worry about patent protection, legal issues, cash flow, tax issues, personnel needs, quality certifications, or customer demands. Those issues are not fun.

Often, the Prime Mover is so taken with himself, that he thinks himself to be above the normal constraints that inhibit other mere mortals. He may start to have personal failings. His marriage may suffer because his ego does not fit into the home setting anymore. He may have affairs, drink too much or suffer health problems. Others will see this although the Mover will not. (The entrepreneur is overwhelmingly more convinced of his own infallibility.)

Decline
By this time, the friends who were hired earlier are starting to talk behind the Primer Mover's back. Morale in the company really starts to suffer. The prime mover tends to display a curious lack of basic social skills. He lies. He is impolite. He just does not understand that the commercial world buys a product for what it can do – not because it loves the inventor of the product. Soon, the company can get a reputation for having a good product, but it is too expensive. Customers begin to view the company as "they"; "they" are hard to deal with and "they" will not license on reasonable terms and "they" don't return calls anyway.

In the final stages of the venture, assaults on success are coming from within and without. A split may occur in the company. Employees may take the technology and start their own venture. Competitors who were denied licensing arrangements may produce the product in house and enjoy eating the Prime Mover’s lunch as they remember their unreturned emails.

Time Enough for Repair?
If the venture is fortunate, the Prime Mover may start to realize that the business is in real trouble. However, instead of listening to voices inside the company, the Ego at the helm may find himself only able to be influenced by an outside consultant who will expensively advise on all sorts of issues and never, for political reasons, flag the one salient wart of all - the personality traits and ego of the entrepreneur himself.

The important thing to remember is that no amount of positive personality traits can ensure success. Business success comes from hard work and planning, along with self-confidence and a willingness to take risks.

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