Do you Have the Traits of an Entrepreneur?
Contrary to conventional wisdom, you don’t have to be a Type A, an extrovert or a workaholic to launch a successful business. Entrepreneurs possess an eclectic variety of complex and sometimes contradictory characteristics, ranging from tenacity and charisma to empathy and humility. But while every business owner is different, entrepreneurs do share some common character traits: some positive, others less so. Before you dive into a new business, it’s important to think about how many of these traits are part of your personality and how many you’d like to cultivate in the future. This guide will help you decide if becoming an entrepreneur is the right calling for you.
Several academic studies have observed that entrepreneurs share a collection of personality traits that seem to play an important role in their decision to strike out on their own. A 2006 study found strong differences between entrepreneurs and corporate managers on five important traits. Similarly, a 2010 study in the Journal of Business and Management identified several traits that distinguished entrepreneur CEOs from professional CEOs. But these traits also hide a dark side to the entrepreneurial personality which is rarely discussed in mainstream media. The boundaries between creative and aberrant behavior can be blurry. There is a fine line between tenacity and stubbornness; between charisma and outright narcissism; between superb time management and micromanagement. This article describes these issues in more detail.
The results of various studies that looked into personality traits of successful entrepreneurs can be summarized as follows:
- Entrepreneurs are achievement oriented, want to take responsibility for decisions, and dislike routine work.
- They possess high levels of energy and great perseverance.
- They are creative, willing to take calculated risks, and comfortable with ambiguity.
- They have strong social skills and can instill contagious enthusiasm and sense of purpose to others in an organization.
- Successful entrepreneurs are experts at managing their time, ensuring that they do everything required to stay competitive.
- Charismatic speakers, they possess superlative relationship skills and are able to size people up very quickly.
- The best entrepreneurs are tenacious to a fault, willing to pursue their dream no matter what existing systems they have to break in the process; they are comfortable being non-conformists.
Traits of an Entrepreneur
A deeper look at the common traits of entrepreneurs
The sections below describe some of the traits have been found to correlate with the likelihood of a person being a successful entrepreneur.
RISK TAKING AND DISDAIN TOWARDS THE STATUS QUO
Entrepreneurs score very high on their propensity to engage in risk taking. This trait usually extends to all aspects of their lives; they are more likely to take risks in business as well as in their personal life.They often engage in rule breaking rebellious behavior during youth. Some studies postulate that this risk taking stems from a desire to seek novel experiences; entrepreneurs appear to be wired to crave novel, complex and unfamiliar experiences.
Entrepreneurs exist to defy conventional wisdom, to do that which the majority of people are not doing. If they did not believe that their way of doing things was in some way superior to the status quo in their chosen industry, there would be no reason for their business to exist. Their ability to see the future before other people means that business leaders often have to deal with naysayers and gatekeepers. For the entrepreneurs with truly revolutionary levels of insightfulness, this can be a lonely, thankless task.
Openness to new experiences, curiosity and being a non-conformist are greater predictors of creative potential than IQ or academic ability. These traits often show up in childhood as rebellious behaviour, which includes things like truancy and playing practical jokes.
Entrepreneurs are hard-wired to identify gaps in the market, which requires high levels of alertness and an obsession with novelty. These traits are consistent with the higher rates of Attention Deficit Hyperactivity Disorder (ADHD) found among business founders. A UK study found a genetic link between a dopamine receptor gene variation associated with ADHD and the tendency to be an entrepreneur. Easily bored with routine, those with ADHD tend to thrive in times of crisis and change. Famous business owners with ADHD include Virgin founder Sir Richard Branson and Ikea founder Ingvar Kamprad.
DRIVE FOR ACHIEVEMENT
Entrepreneurs have a high need for achievement and their behavior is driven by a desire to compete and excel in their interactions with others. This desire for applause and approval can also have a dark side. It can sometimes be a reaction against feeling of insecurity and insignificance. Such entrepreneurs feel that they’re living on the edge and that their success will not last. Yet they also have an overriding concern to be heard and recognized, to be seen as heroes; they need to show others that they amount to something, that they cannot be ignored. This duality can lead to a great amount of personal tension and sadness.
People with “external locus of control” believe that most of the events in their lives result from being lucky, being at the right place at the right time, and the behavior of other powerful individuals. Entrepreneurs have an opposite belief set and believe in an internal locus of control. They believe they can shape and control most events in their life and their surrounding.
Many entrepreneurs have a strong desire to create their own environment. They find it difficult to work in a structured situations unless the structure is of their own making. They experience structure and corporate hierarchies as stifling. Offering the deference a subordinate customarily owes a superior inside a large organization suffocates them.
Some entrepreneurs have difficulty addressing issues of dominance and submission and are suspicious of authority. Often this makes them very poor middle managers. While managers seem able to identify in a positive and constructive way with authority figures, using them as role models, entrepreneurs lack the ability to change easily from a superior to a subordinate role. Even when they are are in a superior role, their desire for control can result in conflicts with their subordinates and “micro-management”.
Closely related to the need for control is a proclivity toward suspicion of others. Some entrepreneurs have a strong distrust for the world around them. They live in fear of being victimized. They want to be ready should disaster strike. This paranoid trait does, of course, have its positive side: it makes the entrepreneur thing about and be alert to any adverse developments. Ability to anticipate allows them to be prepared and meet the adversity successfully.
But such vigilance can also lead a stressful life and the loss of a sense of proportion; entrepreneurs like this may focus on trivial and/or low probability events.
TOLERANCE OF AMBIGUITY
Entrepreneurs are comfortable with ambiguity and often thrive in it. Most humans perceive ambiguity as threatening, whereas entrepreneurs view uncertainty as “an exciting stimulus rather than as a severe threat”. Ambiguity tolerance is also linked with creativity and leads to superior performance on complex tasks.
FORMAL EDUCATION OR TRAINING
The belief that most entrepreneurs are drop-outs who did not get formal eduction is a myth. A typical entrepreneur has a college degree and is often a well-trained expert in her field. Without expertise, it is hard to distinguish between relevant and irrelevant information; between noise and signals. A recent study at University of California, Berkeley’s Haas School of Business determined that “the average founder is 38, with a master’s degree and 16 years of work experience”.
MULTI-TASKING AND TIME MANAGEMENT
Excellent time management skills are a prerequisite to becoming an entrepreneur. Put simply, companies that do not get essential tasks done on time will go out of business. In the early stages of a startup’s life, business owners take responsibility for recruitment, marketing, product development, finances and more! This is extremely challenging to do alone. As a result, some entrepreneurs work with mentors, mastermind groups and partners to make ensure they stay focused. Sites like Micromentor and communities like Tropical MBA have sprung up to meet this need.
In addition to managing your work time well, you’ll also need to structure your free time effectively if you want to avoid entrepreneur burnout. The best entrepreneurs have a regular schedule of meals, exercise, socialising and self-care to ensure that they stay in good mental health. Living in this way is not for everyone. If you’re a first-time entrepreneur making the transition from school, university and/or being an employee, it might come as quite a culture shock to have to structure your own day for the first time.
The dark side to superlative time management skills is the tendency to micromanage that is often seen in the workplace. In the absence of empathy, it’s easy for business owners to judge people who work less effectively than they do. Entrepreneurs like this have an attitude of “if you want something done right, do it yourself” that can make them hard to work with. As top employees do not take well to managers that hover over them, micromanagement leads to high staff turnover and hampers the growth of many small businesses.
The best entrepreneurs manage their time exceptionally well and avoid micromanagement. They understand that humans in general do not take well to having their sense of autonomy taken away from them. The key to becoming this type of boss is having enough self-awareness to know what skills you do not possess and delegate accordingly. If you’re a trained accountant, hiring a web developer who structures his own time well with minimal guidance will give you the space to organise the part of the business that you know the most about.
CHARISMA AND OPTIMISM
Apple’s Vice President of Software Technology, Bud Tribble, coined the term “Reality Distortion Field” in 1981 to describe the charisma of legendary founder Steve Jobs. Few CEOs have Jobs’ ability to capture the imagination of an audience, but the ability to persuade employees, clients and investors that your product will be a success is a key part of running a company. Business leaders share the common trait of being able to bring together a team of people in such a way that the team is motivated to work towards a common goal. This type of storytelling is a skill that can be acquired through practice.
There is more than one dark side to running a startup as a charismatic leader.
As a minimum, business owners are often required to stretch the truth somewhat when marketing a new product or service. In a conversation with investors, this might take the form of exaggerating traction with customers. As no product is perfect, marketing campaigns necessarily play up a product’s strongest features and skim over any weaknesses in order to get the customer to buy. High charisma is an advantage for the business owner in both instances.
This kind of charisma is correlated with narcissism and psychopathy. Clearly, not every CEO has a personality disorder, but there are business owners who see business as a war that they have to win at all costs, one where the end justifies the means. Unhealthy business owners are also highly grandiose. There is a fine line between a culture of corporate optimism and a warped perception that everything you touch will automatically turn to gold. The best entrepreneurs avoid manipulative behaviour and know the difference between confidence and arrogance.
COMMUNICATION AND RELATIONSHIP SKILLS
Successful entrepreneurs think about what they say and how they say it. They are aware that more than half of communication is non-verbal and pay attention to their body language and vocal inflection as a result. They treat employees, investors and clients with respect, avoiding manipulation, threats and aggression and ensuring that the people around them get their needs met. Communication is assertive and needs are stated clearly and upfront, without passive-aggression. If a customer has a complaint, they ensure that it is resolved as rapidly as possible. Client projects and investor term sheets are handed in on time, every time. To the entrepreneur with a sense of integrity, this is a matter of principle.
One thing that individuals with high levels of conscientiousness have to learn is that their needs are also important. If you are constantly working overtime to ensure that customers receive their orders on schedule, you risk burning out. Accommodating every request made by cofounders, employees and investors without thinking about yourself is a bad way to do business.
Emotionally intelligent entrepreneurs understand this and become experts at saying “no” tactfully. They make time for their own relaxation every day and do not enter business relationships that do not benefit them long-term. To quote Warren Buffett, “the difference between successful people and very successful people is that very successful people say “no” to almost everything.”
RESILIENCE AND WILLINGNESS TO FAIL
There are many adjectives for this trait – perseverance, persistence, determination, commitment, resilience – but the ability to continue to persevere in the face of multiple setbacks or failures is a very essential trait for a successful entrepreneur. At its root, their tenacity is undergirded by their strong self-confidence. As an entrepreneur, you are going to make mistakes and go through hard times. James Dyson built 500 failed prototypes before hitting on a winning formula for his eponymous vacuum cleaner. Perfectionists and individuals with a low tolerance of stress should think twice before starting their own business.
Entrepreneurship requires the ability to fail frequently, dust yourself off, learn from what went wrong and try again. This demands incredible levels of tenacity. For Michael Sherrod, entrepreneur-in-residence at the Neeley School of Business, “it all comes down to being able to successfully manage fear.” Many early-stage businesses go through periods when bankruptcy is only a few months away. Persevering when money is tight and clients are irregular requires entrepreneurs to have a tremendous amount of confidence in both their venture and themselves.
This personality trait is not without its drawbacks. It’s very hard to provide the security needed to raise a family in the absence of a predictable income. Unable to relate to the risk tolerance demanded of entrepreneurs, family and friends can sometimes be critical, placing a strain on important relationships.
Additionally, single-minded determination sometimes manifests as stubbornness; there are business owners who refuse to give up on their idea even if the market has rejected it again and again. Successful entrepreneurs recognise that their product will evolve according to market requirements and embrace the process of pivoting as a necessary part of innovation.
How is it that entrepreneurs are able to persist in tough times and work insane hours? It is commonly assumed that business leaders are motivated by money, but more frequently, they persevere because they believe that their mission is worth the struggle. Research suggests that most entrepreneurs are driven by an “unshakeable sense of purpose.” According to business professor Jay Friedlander, most entrepreneurs even believe they are going to change the world. No matter how hard things get, this passion motivates them between paychecks and during all the times when other people tell them to quit.
If entrepreneurs are not careful, the same laser focus that serves them well in their professional life can be their undoing in personal relationships. Entrepreneurs frequently work long hours; this intensity and focus sometimes means that there is no time for partners or friends. In the most extreme cases, entrepreneurs will become blind to everything else in their life apart from their business venture, skipping meals, failing to sleep and withdrawing from socialising. Living in this way is profoundly unhealthy and unsustainable and poses some significant challenges for entrepreneurs and those close to them. Individuals who find themselves at the mercy of this trait can consider taking up mindfulness meditation as a way of gaining control over their focus.
In summary, not everyone is cut out to be an entrepreneur. Starting a business requires emotional and financial sacrifices on a scale that many people cannot relate to, and the entrepreneurial personality has its dark side. However, those that do succeed are some of the most emotionally intelligent, resilient, innovative and organised human beings alive.
For general topics on how to plan and grow your startup, see our Startup Mentor section. For specific details of how to launch and manage your startup in Singapore, see our Launch in Singapore section.