Entrepreneurs Make Lousy Business Owners
Finding the Right Balance for Long-Term Business Ownership
By: Andrea Normandeau, Staff Writer
Anyone who has ever thought of starting his or her own business surely knows the staggering statistics of businesses that fail before the end of their first year (over 70 percent). Yet, entrepreneurs face these odds head-on and thousands of new businesses open their doors in Canada each year. What fuels these particular people to take on such risks?
Entrepreneurs are often said to have a burning ache that can only be soothed with ownership. They are hard-wired to jump at opportunities and follow their impulses. This is what is necessary to leave the security of a steady paycheck and act on a dream. But do their intrepid qualities also make them inherently doomed to fail?
The blatant contradiction in business is this: everything that makes entrepreneurs so good at being impulsive and seizing opportunities is also what can prevent them from being successful business owners. Risk-taking is often seen as only beneficial in the start-up phase. Long-term ownership requires risk-management and strategic planning.
Even before an entrepreneur considers opening the doors of his or her new business, they may find it hard to work for someone else. There may be a feeling of dissatisfaction from doing the physical work while someone else collects the profit. This can lead to burnt bridges, poor credit, and the inability to maintain a job. When an entrepreneur does finally seize an opportunity to go out on his or her own, he or she may not be in the optimal financial position to do so.
Risk-taking is often seen as only beneficial in the start-up phase
Studies show that entrepreneurs with significant capital at the beginning of their venture can expect to make more money in the future. Those who start their business with less capital must take greater risks to equal the same high returns. In business, often the less risk you take, the higher your chances for success. This is just not compatible with the entrepreneurial spirit.
So what do you do if you begin to feel that internal pull towards ownership? How do you get the odds of success back in your favour?
According to The E-myth, bestselling book by Michael E. Gerber, business owners need to be three people in one: The Entrepreneur, The Manager and The Technician. While this may seem a little daunting, each position is just a natural extension of who you are.
The Entrepreneur is the fire that ignites the passion of the business. This is your internal innovator and risk-taker, the part of you that is continually coming up with new ideas. But it is also often a flash-in-the-pan personality, with an intensity that can only last for so long.
Business owners need to be three people in one: The Entrepreneur, The Manager and The Technician.
Eventually, this must give way to The Manager; the down-to-earth component that takes care of all the business needs. It is The Manager who is responsible for tasks like payroll, inventory, and making sure the bills are paid on time.
The third part you need to balance is The Technician. This is the side of you that enjoys all the technical work, such as assisting customers and making or selling the goods or services.
Owners who spend an unequal amount of time in any of the positions may find crucial sectors of their business begin to decline. However, when the right balance is achieved, you may just have the advantage needed for success.
Business News with BITE.
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