Do you have what it takes to run your own business?
What’s the secret of successful startups? The right people working on the right things, I said last week to a group of young people just beginning a multi-week program in business startup. At a time of doggedly high unemployment, a wave of creative entrepreneurship could be Canada’s secret weapon for getting more bright, self-starting youth into the workforce — but running your own business isn’t for everybody.
So what specific personality traits are most crucial to succeeding in your own business? I offered the students the following list:
Character and integrity Your word must be your bond. Trust is the true currency of business.
Market knowledge You need to know your industry and your market inside out. That may come from experience, instinct, or a flair for listening and understanding customers’ needs.
Social skills You must be able to communicate well with others, influence and motivate them and evaluate them and their suitability to meet your needs. It’s best if you genuinely like people, but not essential.
Commitment to innovation You should be a consummate boat-rocker, always looking to offer something new and different; you should strive constantly to do things better, smarter and cheaper.
Organizational skills You must be able to get stuff done on time and to help others do so, too.
Instinctual leadership Essentially, leadership is the ability to get employees, customers and other stakeholders to buy into your vision or dream, usually by consistently demonstrating that you’re looking out for their best interests.
Financial skills Sure, you need to be able to read a profit and loss statement and talk intelligently with accountants and lenders. More importantly, every day you will have to understand contracts, terms, margins and discounts, and be able to follow the key metrics that demonstrate your company’s health and progress.
Of course, everyone’s lists will be different. One entrepreneur with whom I later shared this list asked what happened to commitment and tenacity? I responded that you don’’t need those traits to start a business, just to run it successfully. “Damn technicalities,” she grumbled.
Those key challenges facing most entrepreneurs are:
1. Identifying your competitive advantage. What makes your business different? Why should people buy from you? How do you create more value than anyone else?
2. Communicating your unique selling proposition. Once you understand your competitive advantage, you have to articulate it. Few entrepreneurs do this effectively. My advice is to create a three-part mission statement that clearly describes what you do, who you do it for and how customers benefit from dealing with you. Example: “I’m a technology consultant who helps manufacturers out-compete Asian producers.” When you know your audience and how you can help them, the right people will flock to your door.
3. Raising startup capital. You need a plan. Based on your most realistic sales forecasts, when will you achieve break-even? How much money do you need to survive till then? Do you know how to tap into family and friends, bank lending, or specialized lenders such as the Canadian Youth Business Foundation?
4. Hiring good people, and keeping them. Businesses can only be as successful as their grumpiest, surliest employees allow them to be. Know what constitutes a winning attitude in your business, and seek those qualities everywhere. I know entrepreneurs who will make a job offer on the spot to an attentive waiter or a helpful sales clerk. Keep close tabs on employee culture and engagement; if things turn bad, your best people are usually the first to leave.
5. Pricing your product or service. Know how much to charge for your goods. Do you need to undercut competitors’ prices to gain market share? Or do you have a competitive advantage that lets you charge more?
6. Staying focused. Once their company is running well, many entrepreneurs start looking at new projects and spinoffs. It takes courage and foresight to keep your head down and work on improving your business without getting distracted by the next shiny object.
7. Knowing when to quit. Some businesses have a finite life span; others just aren’t likely to ever thrive. Persistence is good, but you also have to know when to stop pouring good money into bad operations. Giving up too soon is a sin, but spending too much time and money on a losing business idea could compromise your entire financial future. Make sure you have a strong network of experienced entrepreneurs to advise you on next steps. As legendary Ottawa entrepreneur John Kelly, likes to say, “When the horse is dead, dismount.”
Rick Spence is a writer, consultant and speaker specializing in entrepreneurship. His column appears weekly in the Financial Post. He can be reached at firstname.lastname@example.org
National Post |