“I thought I was a pretty smart guy, so I tried to do everything myself. Marketing? It can’t be too challenging, I’ll figure it out and I’ll handle that. What I learned was I couldn’t handle that, I needed to find somebody who was extremely talented in marketing so I could focus on the things I am good at.”—Bill Gates
As someone who has been the founder or CEO of five companies and has worked with hundreds of startups around the world, I’d like to share a few ideas about what I think it takes to be a successful entrepreneur.
First, it is very hard work. I mean a ton of work. Lots of entrepreneurs joke that they quit their 40-hour a week job to start their own 80-hour a week job. Startups take a lot of care and feeding, long days, long nights, weekends and holidays; you must be prepared to dedicate a large portion of your life and possibly your life savings to building your own company.
Also, if you want to be an entrepreneur you’ve got to be great at sales. There are two sides to this coin: at least in the early stages of your business the owner must be an enthusiastic and professional salesperson for the product. This means going to networking meetings, making cold calls, sending hundreds of emails, negotiating and closing deals. If you don’t like sales, you might want to reconsider your entrepreneurial path.
In addition, you must have people that want to buy your product. In Jim Collins’ famous book “Good to Great” he outlines a key idea called the hedgehog concept.
According to Jim these are three areas that must overlap to build a successful business. Circle one requires that your company be world-class in the area you want to compete. Circle two establishes that you and your team need to be deeply passionate and committed to your products, services and company. The last circle demands that you have a strong economic driver for your business, in other words, lots of people that would willingly pay to buy what you are selling. I have met many entrepreneurs that have the first two circles; they are world-class at something they are deeply passionate about, but they don’t have the third circle. They believe they have created something that will change the world, unfortunately nobody wants to buy it. Having the first two circles, without the third means you have a hobby not a business.
Next, you must understand that you can’t do it all by yourself, you have to have a strong team of highly talented people around you that you trust. I recently heard Bill Gates explain one of the biggest stumbling blocks when he started Microsoft. Basically, he said, “I thought I was a pretty smart guy, so I tried to do everything myself. Marketing? It can’t be too challenging, I’ll figure it out and I’ll handle that. What I learned was I couldn’t handle that, I needed to find somebody who was extremely talented in marketing so I could focus on the things I am good at.”
Another thing, don’t take money from venture capitalists or private equity if you can possibly help it. It has been my experience that they will be your best friend on Friday when they write you the check, and the next Monday they will be demanding you increase EBITDA and give them a three-year cash forecast.
Once you take money you give up the ability to make your own decisions and this can be extremely challenging for an entrepreneur. I also know many entrepreneurs that have been pushed out of their own companies from overly aggressive investors.
Lastly, you must be prepared to fail. Starting your own business is risky, current research shows that:
- A bit more than 50 percent of small businesses fail in the first four years.
- 4 percent made it to the second year
- 3 percent made it to the third year
- 9 percent made it to the fourth year
- 3 percent made it to the fifth year
When I started my first company I barely made any money for the first three years, there was one point that I was down to only $500 in my checking account, it was really scary. Today, 25 years later, my business is thriving and I couldn’t imagine working for anyone else. Even with all the challenges becoming an entrepreneur was one of the best decisions I’ve ever made.
JOHN SPENCE has been recognized as one of the top 100 business thought leaders and as one of the top 500 leadership development experts in the world. He is an international keynote speaker and management consultant and has written five books on business and life success. www.johnspence.com