The Road to Entrepreneurship...

I was reading this article on Forbes magazine - How Entrepreneurs Identify New Opportunities - and the guest on the article [Raffi Amit] brought the following to my attention.

While there are many risks for any new business ventures the biggest sources of risk are the founders. Do they have the wherewithal not just to start the company, but also grow the company?

So of course this got me thinking…I spent most of this weekend trying to find articles or other blog posts that could either prove or disprove this statement. Unfortunately, I did not find anything. Email me at raymond[at]adeyemiking.com if you find anything! Nevertheless, I DO agree with Raffi Amit. We [Entrepreneurs, Founders] are the biggest source of risk to our start-ups.

However, the more I think of it, his statement was rather obvious. If you are the leader of any organization - sports, political, music etc… the success or failure of such organization is somewhat dependent on you. So to make this a little bit more interesting, I decided that instead of telling you why I agree with him, I want to talk about the factors about you - the entrepreneur - that can influence this risk. These factors are the four that I have listed below in order of importance to me.

Experience

The experience level of a founder at the time of forming a start-up has a lot to do with the probability that the start-up will grow - that is if it even survives past the first year. Now, I understand that there are many first time entrepreneurs that have gone to create huge companies - i.e. Michael Dell (Founder of Dell). However, many successful entrepreneurs will tell you that it was not until their fourth or fifth venture that they finally got it.  Experience is extremely important as it has a way of teaching you lessons that you probably would not have learned anywhere else. These lessons can sometimes be the difference between making it or not. Therefore, this is why I think that an entrepreneur without any experience is by far riskier than one with experience.

Business Sense

Next is what I refer to as business sense - another sixth sense if you will. Business sense is that innate understanding of business that some of us are just gifted with. I find it hard to describe but I have met some people that just get it! I must say though, I do believe that ordinary people doing extraordinary things can create great businesses but I also think that being gifted with a business sense does make it a little easier. This factor though is not just about the gift you are born with, a pretty good substitute for business sense is education - either formally through a university or through a mentor. Just like experience, it important that you have an idea on how to build, grow, and exit a business venture. The level of business sense and/or education that an entrepreneur has should greatly impact the risk on the start-up.

Patience

This factor can also be related to the experience factor because I think as you gain more experience, you learn that patience is truly a virtue of successful entrepreneurs. Having the patience to carefully stay the course of your strategy and whither the comments of the naysayers is important. Remember, Rome was not built in a day, or a week, or a month, or 6 months…you get the point. Jack Dorsey, founder of Twitter has shown great patience with this venture. Twitter has always been slashed at for not having a revenue making business model since its inception in 2006 but somewhat due to the patience of its founder it has become a leading social networking and micro-blogging service. The point is, an patient entrepreneur is most likely a lower risk to a start-up than one who is not patient.

Willingness to Listen and Adapt

This fourth factor is strictly about business strategy and the founders attitude towards it. A good business plan should map out the strategy of the founder to create and grow a business. However, in a time where it seems like change happens on a daily basis, it is important that the founder be willing to listen to messages of market/industry and carefully adapt to the changes that are around him/her. While I am a strong proponent of setting a solid strategy that you are patient enough to stick with, it is very important to know when the strategy is not working due to the forces around you. A stubborn entrepreneur is who is not willing to adapt is much riskier to his/her start-up than one who is.

So, next time you meet an entrepreneur, ask them how they would rate themselves on the four factors I mentioned - Experience, Business Sense, Patience, and Willingness to Listen and Adapt. It might give you an understanding of just how risky they are to their own start-ups.