By Melissa Grafton, Andrum Consulting
We recently conducted a study of 111 business owners to better understand what makes them entrepreneurs, who inspires them, the key challenges they face and the role things like social media will play in their future success.
Here, I will talk you through the findings and outlines what the insights may mean for other entrepreneurs.
Characteristics of an entrepreneur
We first asked respondents to choose the top three criteria that they believe define an entrepreneur. Their response was:
1.ability to spot an opportunity (31%)
2.willingness to take risks (19%)
3.positive mental attitude (12%)
Although this list might sound obvious, few people have this blend of abilities and fewer still combine them with the ability to sell their ideas to employees, investors and customers and the determination to never give up.
Who are the main inspirers of today’s entrepreneurs? Two thirds voted for Sir Richard Branson. Second was Steve Jobs (36%) and third, Dame Anita Roddick (33%). What were their characteristics that made them so admired? Sir Richard Branson reported his drive came from striving to achieve the unachievable, setting himself almost impossible challenges. Steve Jobs wanted to be a leader and key influencer in his field. His success with Apple today illustrates how his focused determination has driven business growth forward. Dame Anita Roddick was driven by an ethical conscience. When she launched The Body Shop, she hit the market at the right time with a unique product and a clear ‘proposition’ that consumers wanted to buy into.
In addition to asking the 111 entrepreneurs for the qualities that they believe define an entrepreneur, we also wanted to know whether the presence of certain skills made a difference to entrepreneurial success. Interestingly, 46% of the entrepreneurs studied said they are really good with the written word, 45% said they are good public speakers and 39% are really good with numbers. It is easy to see why these skills are important, they have all helped the business owners to develop a well-structured business plan (something clearly lacking in the candidates in the final of this year’s Apprentice), communicate the message to potential investors and motivate employees to share that end goal. It is the balance of all three that’s the key.
Sources of future growth
Looking at the practicalities of their current entrepreneurial endeavours, a third of respondents said they expect growth in their business to most likely come from expansion within the UK, while a quarter said a major new product or service would be the major source of growth.
Indeed if innovation is crucial to entrepreneurship then there seems to be no shortage of new product or service ideas among the 111 entrepreneurs studied, as over half said they have two or three new ideas yet to be commercialised. The bigger challenge will be filtering those ideas, identifying those which can be turned into genuine successful businesses and focussing on making it happen.
An eye on exports
Fewer than 10% expect growth to come from expansion overseas. While this may be low due to the sample of respondents who took part in the study, one current inhibitor is undoubtedly the complex contract laws across the different countries. The European Commission is currently discussing an optional European contract law that businesses can choose for their contractual relations. It was recently claimed that 51% of small firms would expand their business activities if they could use a single European contract law.
Other sources of growth such as acquisitions, mergers or franchising a business are less popular with our entrepreneurs. These sources of growth tend to have a lower uptake as they involve more upfront risk and sometimes more financial investment — something people perhaps have less appetite for or access to at the moment. They can also be more complicated to implement and may require a level of expertise that is not available in-house.
However entrepreneurs should remember that the upside of these is they can lead to more rapid growth, a greater gain of market share and substantial increase in turnover. If the merger, acquisition or franchise model is right for their business, then expert advice can always be sought to help with its implementation.
Barriers to success
According to the business owners studied, the main barriers to success at the moment seem to be:
1.lack of finance for investment (39%)
2.lack of business confidence (33%)
3.too little time in the working day (31%)
Research conducted by Investec Specialist Private Bank shows that entrepreneurs expect access to finance to become significantly easier over the next 12 months.ii
Interestingly, poor day-to-day cashflow was not seen as a significant barrier in our study, yet experience tells us this can often be a major stumbling block in the very early stages of establishing a new business. Late payments are still making it very difficult for small firms to pay their suppliers. Over 73% of small businesses have been paid late for something within the last 12 months.iii
While it is often factors beyond the entrepreneur’s control that determine the availability of finance or the level of confidence within the economy, the third barrier (poor time management) is something successful entrepreneurs can and should address themselves.
The role of Social Media
Looking beyond the more traditional barriers and opportunities, social media is stimulating sales growth for some but not for others. For instance 40% say social media didn’t contribute at all to any sales growth in the past year. However for 17% sales grew by at least 26% and in some cases more than 200% thanks to Facebook, Twitter et al. For the year ahead there is more social media dependency with 50% having a social media plan, but there is still 11% expecting no sales growth from social media.
There appear to be ‘social media haves and have nots’ and the divide is getting bigger by the day. While the base from which some are predicting massive growth may be low, their intent is clear. These companies see the social media revolution as bringing with it free opportunities and are keen to find a way to harness them.
Obviously companies shouldn’t just join in for the sake of it but do make it part of your strategy and take time to understand where and how social media can support your business objectives. The trend is not going to go away and successful entrepreneurs in all markets will be those who capitalise on its possibilities.
This brief snapshot of our research shows that it’s rare for someone to have all characteristics and skills of an entrepreneur. It is also unlikely that the same person will have all the answers when faced with the barriers or opportunities that inevitably come an entrepreneur’s way. It is perhaps therefore as important to be aware of ones strengths and weaknesses and to know when to call in experts to fill the gaps. Ideas alone are not enough. The key to success is identifying those that can be turned into a real business. As Steve Jobs said “you can have the most innovative idea in the world, but if you can’t get people excited about it, it doesn’t matter.”iv
For a copy of the full ‘What Makes Entrepreneurs Tick report, please go to www.andrum.co.uk