He pens, "Management guru Peter Drucker wrote that “entrepreneurship is neither a science nor an art. It is a practice.” If that is true, then what are the personal character traits that a person must have to be a successful entrepreneur? Now there may be an answer to that question, found at an intersection between leading management theory and business performance data. The dictionary definition of an entrepreneur is “one who organizes, manages, and assumes the risks of a business or enterprise” (from Merriam-Webster). It is more than just innovation, but the ability to take what is innovative, create a market for it, and then deliver it to customers; or in the words of Scott Belsky (co-founder of Behance): “It’s not about ideas. It’s about making ideas happen.”
So, are organizational skills the key? Or management skills? Or vision?
Perhaps the leading research on the essential personal traits necessary to succeed in business comes from Gallup’s very popular StrengthsFinder methodology, introduced by Marcus Buckingham and Donald O. Clifton in their 2001 best-selling book, Now, Discover Your Strengths. Their research has identified 34 distinct personal traits (what Gallup calls “talent themes”), and created a test for individuals to assess their strengths.
The theory is that people should focus on making the most of their talents, rather than struggling to mend their flaws. Repair work is slow, dispiriting, and “the path of most resistance.” By contrast, a strengths-based approach can have rapid payoffs in confidence and productivity.
To date, nine million people have taken the test, and it is a favorite of companies from Facebook to Harley-Davidson.
Then Gallup took five years to study more than 4,000 business founders to understand which of the 34 talent themes are particularly significant for entrepreneurial success – or as Gallup describes it: “The world’s best entrepreneurs share something in common. They are born with 10 talents that help them build and grow great companies.” This led to the EP 10 – the Entrepreneurial Profile 10 — which are: Confidence, Creative, Delegator, Determination, Focus, Independence, Knowledge Promoter, Seeker, Relationship Builder, and Risk Taker. Successful entrepreneurs would generally score as “high” or “exceptional” on at least two of these traits; and each such trait showed up in 20% or more of the successful business owners that were part of the study.
Each year, Inc. Magazine names the “Inc. 500” — an annual ranking of America’s fast-growing private companies. The performance of these companies is amazing. These 500 companies racked up a median growth rate of 1,828% and collectively created over 46,000 jobs – doing both in one year!
The Inc. 500 is not so much a collection of fast growing companies, but a collection of elite entrepreneurs. More than 90% of Inc. 500 CEOs are also their company’s founders, and most of them are serial entrepreneurs. So, Inc. Magazine asked these 500 entrepreneurs to take the Gallup Entrepreneurial StrengthsFinder assessment, to see if (1) their profile would verify the research and show the predicted talent themes; and (2) if any of EP10 would be particularly strong in these super entrepreneurs.
155 of the 500 agreed – and the results were off the charts.
The Inc. 500 Entrepreneurs as a group excelled in every one of the ten EP10 traits identified by Gallup’s research. The national average of successful entrepreneurs is to score high or exceptional in two of EP10 traits – these super entrepreneurs averaged a high or exceptional score in six of the ten. The national average for each talent theme was to show up in about 22% of any group of successful entrepreneurs – but each talent theme showed in an average of 60% of the super entrepreneurs.
But more striking, the Inc 500 Entrepreneurs absolutely dominate in three key character strengths.
The Three Key Traits:
Number one on the list was Risk-Taker – the ability to assess and take risk without fear of failure. This talent theme was present in 22% of business founders nationally – but 85% of the super entrepreneurs.
“Risk Taker” is not to be confused with recklessness or unjustified faith. Gallup says those with a talent for risk-taking possess a highly optimistic perception of risk but are also rational decision makers who have an extraordinary ability to mitigate that risk. The start up of every business requires risk assessment, and the decision of whether to accept that risk. In the simple words of Ray Kroc (of McDonald’s): “If you’re not a risk taker, you should get out of business.”
The second key character trait was Business Focus (a talent theme present in 20% of business founders nationally and in 72% of the super entrepreneurs). Andrew Carnegie said that the prime condition for success was to “concentrate your energy, thought and capital exclusively upon the business in which you are engaged.” The Entrepreneur 500 is a very, very focused group. They concentrate their efforts on the core product and service of that business, and require that same focus from the people in their company. They are very data driven. Short term goals are set, and refined as new data becomes available.
Finally, the Entrepreneur 500 excelled at Determination (a talent theme present in 23% of business founders nationally and in 71% of the super entrepreneurs). Quite to the contrary of the public image of an entrepreneur as just “the big idea person”, these super entrepreneurs exhibited a strong work ethic and accepted delayed gratification.
Of the Entrepreneur 500, 76% worked more than 60 hours/week in the first year of their business – and 53% still do. Most waited a full year before paying themselves a salary. 57% said their first office was their home. 75% said that the source of their initial capital was their own savings – and only 4% received venture or angel funding.
Finally, these character traits showed up in how the Entrepreneur 500 saw the challenges to their business success, and by extension the challenges of businesses in America. When asked the major obstacle their business has to overcome today, they listed Finding Good Staff as Number 1; and government regulation near the bottom (listed as “not an obstacle”). When asked what issues government should address as most critical, they answered: Education and Tax Policy."