Archive for August 17th, 2011

5 Traits That Make a Successful Entrepreneur

There are five characteristics that I see in the successful entrepreneurs.

Successful entrepreneurs are:
1) passionate
2) risk-takers
3) good communicators
4) self- aware
5) know the value of a dollar

We have all heard that entrepreneurs need to be passionate about their company and passion needs to be 24/7. It is not, however, working 24/7. It is their excitement for the technology. If entrepreneurs are in it for the money without the passion they will fail. For some entrepreneurs, however, their passion turns into a love for the technology without regard for the business. This kind of passion can kill a company.

It is risky to start a business. There are no guarantees of success, there has to be that leap of faith. This is especially true of first-time entrepreneurs because they face the greatest odds of success. Entrepreneurs put second mortgages on their homes, go without salaries for long periods of time, even years. They may even go to the Big Box stores and split-up the paper towels amongst the employees to keep expenses down all in an effort to keep their business going. They sacrifice a lot personally to get the business going.

The best entrepreneurs are good communicators. That means they listen as well as speak. They listen to a wide range of people, advisors, employees, mentors and most importantly customers. They listen to what people are telling them, process it and then and act upon it. They keep key people informed of their progress. They build relationships with people who can help them along the way. They articulate their technology and business to others in plain, non-technical, language. They always remember that an important aspect of being a good communicator is knowing who they are talking to so that they can effectively communicate their message, and get that person interested in the company.

Entrepreneurs need to have self awareness. They need to know their strengths and limitations. They seek advice and look for people who can add value to their limitations. An entrepreneur who thinks he/she can do everything is fooling him/herself and is jeopardizing the company. I see it so often when the company is ready to go to market and they want to be the sales person, the chief technology officer as well as the CEO. After all, who understands and can explain the product best? That’s what they think.

Money— every entrepreneur needs, but to some it is a mystery as to how to fund their company. Successful entrepreneurs are money smart and I’m not talking about knowing how to work the stock market. They invest their own money in their company and it is documented on the books. They know their expenses. They know their needs. They seek out all avenues for funding and develop a plan. Some decide to bootstrap the company while others realize at some point they will need an infusion of capital, either angel or venture. Smart entrepreneurs know which kind of funding they need and they know how to go after it.

As important as all of those points are, the truly money-savvy entrepreneur never loses sight of two things: raising money takes a long time, sometimes six months or more, and all money is not the same. The need to do due diligence on the source of funding is just as important as the due diligence the funder does on the company.

Times are tough and money is tight, but waiting until you need the money and being desperate can have dire consequences. Sometimes the strings are so tight it can choke the company. Read the fine print. One company received an equity investment by a corporate investment fund. While it was a minor percentage in equity, the company failed to read the agreement thoroughly. They didn’t realize that the company could not be sold without consent of the equity investor. That small print cost them the ability to raise any capital from venture investors. I have plenty of stories to tell about this. My caution is before signing on the dotted line, think seriously about the long-term effects of the agreement and always read every word of the agreement.

Good entrepreneurs are passionate, they work hard, they seek advice, and they know their limits. They have a business and financial plan to grow their company; they evaluate it and make adjustments as needed.

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