Business Brain: How the choices you make substantially alter your chances of achieving success
The famous management guru Peter Drucker once wrote that entrepreneurship is not an art but a science and like any science it can be learned. I believe this to be true as I have long argued that any person is capable of starting their own business. However, the more pertinent questions that should be asked of a potential entrepreneur are: 'do you wish to start a business (choice)' and 'is it appropriate for you to start this specific business (capability/sustainability)'?
Within entrepreneurship modules in education, students are now being asked to organise charity events, run market stalls, trade on eBay or other similar experiential learning assignments. Students respond positively within that environment (either by choice or because they must do it as part of their coursework) and, naturally, performances will range from highly successful to very disappointing. What matters is that the students do respond positively to the challenge and they do create some form of entrepreneurial activity (whether individually or in teams).
So if everyone can become an entrepreneur, why is every country not overloaded with successful entrepreneurs? First of all, not everyone wants to become an entrepreneur and the reasons for this are well documented (e.g. risk too great, rewards too low, family commitments). The second reason is that many people who start a business either have a poor business idea in terms of sustainable market potential or they do not have the skillsets required to start that particular type of business.
Making a positive choice to become an entrepreneur, having a business idea with market potential that is sustainable over a long period of time, and having the required skillsets (either in oneself or in collaboration with co-founders) to run the business successfully (a term that is also open to interpretation) are all manageable decisions and are not dependent upon chance. People can significantly increase the chances of being successful if they pay greater attention to these elements ahead of starting a business, rather than blindly following a 'notion' to create an enterprise.
But the passion that feeds an entrepreneur when starting an enterprise can frequently be the same passion that causes the firm to fail.
An entrepreneur will champion their idea and against significant challenges, they will bring the business into existence. But as the company develops, the entrepreneur will frequently bring with them a mindset of mistrust, reluctance to delegate, preferences for multi-layered hierarchical structures, and an unwillingness to share ownership, control, or rewards. As the company expands beyond first stage growth, there is a need to move from entrepreneurial management to a professional management style, and many founders are unwilling or unable to make that transition. These are all choices that an owner-manager can make.
A basic characteristic of successful firms is that they keep up-to-date financial accounts. It is critical that every business owner (including sole traders) produces a monthly set of accounts, even if it contains just the basic figures such as sales, costs, debtors, and cash in the bank. It is extraordinary how many good decisions you can make with these simple monthly figures and equally extraordinary how many businesses do not have them. This is a simple choice to make.
You do not have to be a workaholic to achieve success. Delegating responsibility to colleagues/employees can lighten the workload of the owner-manager while also achieving your organisational goals. Low-achieving owner-managers are generally not prepared to give greater responsibility and control to their employees despite the fact that such actions can increase their potential for greater personal and organisational success. Meanwhile, successful firms are managed by owner-managers who are willing to trust their people and who are also willing to make difficult decisions. That is their choice.
High-achievers operate in the same markets and face the same challenges as low-achievers, but recent research has clearly highlighted that the mindset of the owner-manager has a significant bearing on the ability of an enterprise to achieve success. Equally, an owner-manager that makes good choices significantly influences the ability of firms to be successful. Nothing in business (or in life) is guaranteed but the choices that you make can substantially alter the chances of your firm being successful.
Thomas Cooney is Professor of Entrepreneurship as the College of Business, Dublin Institute of Technology.