USA Today recently did a feature on what it takes to start a new business. Think it's out of reach? Think again!
What attributes suggest someone's a good candidate to start their own business?
A college degree doesn't hurt — though dropping out didn't stop Bill Gates from launching the world's biggest software maker. Being rich would solve the problem of start-up financing — yet Sam Walton got his start in business on not much more than a wing and a prayer.
There are no definitive answers, but the entrepreneurs, private investors and academics USA TODAY's Jim Hopkins talked with suggested these experiences, traits and skills.
Childhood experienceYou didn't rely on allowances and other handouts from your parents for spending money when you were young. You set up a weekend lawn-mowing business — and hired friends to work for you. Or you franchised your lawn-mowing service idea to other kids in the neighborhood. "It's very common for adult entrepreneurs to be those who started lemonade stands or went house-to-house trying to make money when they were children," says Leann Mischel, a management professor and entrepreneur at Susquehanna University's Sigmund Weis School of Business.
Entrepreneurial genes
In the nurture vs. nature debate, there's new research showing that the drive to start companies may be genetic. Researchers compared self-employment among 609 pairs of identical twins and 657 pairs of fraternal twins in the United Kingdom. They found that nearly half — 48% — of an individual's tendency to be self-employed is genetic. For example, genes leading someone to be extroverted are key to salesmanship — a vital trait among entrepreneurs, says Scott Shane, an entrepreneurship professor at Case Western Reserve University and one of the study's authors. There's also evidence people with dyslexia are more likely to become entrepreneurs. London's Cass Business School says entrepreneurs in a study of 215 managers were five times as likely as corporate managers to have dyslexia. Why? Dyslexia forces people to hunt for creative ways to steer through life. Famous entrepreneurs with dyslexia include discount stockbroker Charles Schwab and Virgin's Richard Branson.
Family supportPrepare for crazy-long hours, including weekends, during a company's start-up phase — a work load that's also taxing for an entrepreneur's family. And vacations? What are those? About two-thirds of small-business owners said they planned to take a vacation of a week or more this summer, but more than half planned to check in with their companies at least once daily, American Express found in a survey. "Starting a business can require 80-to-100-hour weeks," Mark Ciavarella, an assistant management professor at Bucknell University, said in an e-mail. "Many spouses/partners don't understand this and won't tolerate it." As start-up adviser Ralph Sherman of Createabank near Detroit said, you know you're an entrepreneur when "your family has been looking for your picture on a milk carton."
Money doesn't motivateTwo of the USA's most famous entrepreneurs — Bill Gates at Microsoft and Warren Buffett at Berkshire Hathaway — are also the two richest Americans. But they were driven to create great companies, not just huge fortunes. Indeed, Gates and Buffett are combining their riches to create a $60 billion philanthropic powerhouse in the Bill & Melinda Gates Foundation. "Entrepreneurs are much more interested in 'wealth' rather than 'riches,' " says Scott Laughlin, director of the University of Maryland's tech entrepreneurship program. Riches are piles of money, he says; wealth is broader, encompassing less-tangible rewards such as respect and independence. So, would-be entrepreneurs need to examine how they expect to be rewarded. "If the compensation is just cash," Laughlin says, "then the practice of entrepreneurship will not be very rewarding."
PassionYou don't just think you've built a better mousetrap — you feel it in your gut, and know the world will be much better if only you can get your idea to market. "When something is important to you, then you know it with your heart as well as your brain," says Bob Barbato, a management and entrepreneurship professor at Rochester Institute of Technology. "You infect others with your passion, and they believe in you."
The flip side of passion is impatience with other people's ideas, says Amy Millman, president of Springboard Enterprises, which helps start-ups led by women find investors. The would-be entrepreneur's attitude, Millman says: "I know what I want to do, and I know how to do it." Conventional wisdom 20 years ago said a black woman from rural Mississippi would have a tough time launching a career as a TV host on even the lowest-rated show. But one such woman went to launch her own company, Harpo Productions. And now, Oprah Winfrey is one of TV's biggest stars, ruling over an estimated $1.4 billion fortune.
PragmatismAs passionate as entrepreneurs must be to drive start-ups forward, they also know when to cut losses. "Know when to give up on an idea," says Lou Marino, an associate professor of entrepreneurship at the University of Alabama at Tuscaloosa. "Not every idea an entrepreneur has is going to be a home run." Giving up doesn't necessarily mean the business idea was bad. Instead, it might be the right idea at the wrong time — as was the case with thousands of dot-coms launched in the late 1990s before household high-speed Internet access became widespread, making viable all the offerings those dot-coms hoped to sell.
Risk-takingYou know start-up success isn't guaranteed. Still, you don't flinch at the thought of betting your severance pay or retirement savings on self-employment. Would-be entrepreneurs are calculated risk-takers — like world-class mountaineers, says Vineet Buch, a principal at venture-capital firm BlueRun Ventures in Silicon Valley's Menlo Park. "They hammer in protection on the way to the top, but don't let the thought of falling slow their steps as the slope gets steeper and narrower," he says. "True entrepreneurs strive to control risk while still thriving on it." Martha Stewart risked leaving the safety net of publishing giant Time in 1996 to launch her Martha Stewart Living Omnimedia. She successfully took that company public, becoming one of the world's most famous entrepreneurs.
Strong ethicsStart-ups depend heavily on good first impressions when entrepreneurs hire employees, court investors and line up customers. In a hyper-competitive economy, any whiff of dishonesty can deep-six a new enterprise. Penn State University's Anthony Warren, who advises venture capitalists, says honesty and trustworthiness are high on the list of attributes he looks for when he considers recommending a venture to potential investors. "Who wants to be in business with someone you cannot fully trust, especially in the start-up phase where the stress levels are high?" says Warren, director of the school's Farrell Center for Corporate Innovation and Entrepreneurship. The founders of Google, Sergey Brin and Larry Page, famously created a "don't be evil" mantra when they took their online search giant public.
Tech easeFeeling comfortable with technology is crucial, because computers, software and other gadgets are key to launching a business in the fastest-growing economy, the service sector. Start-up costs there have plummeted as prices fell for powerful computers and software. Those lower prices came as the Internet let entrepreneurs tap global markets for engineering, accounting and other services. Setting up a small office with a laptop, fax machine, cellphone and other gizmos costs as little as $5,000. Add a professional-looking website for $500 or so, and you can compete with bigger, more established companies. But you can't take advantage of those lower costs if you aren't comfortable using popular word-processing, database, spreadsheet and presentation programs.
TenacitySometimes the best business ideas fail to take hold — not because there isn't demand, but because the start-up was undercapitalized, or the entrepreneur lacked management know-how or simply gave up too soon. "If you really believe in it, you keep fighting for it," says Earl "Butch" Graves, president and CEO ofBlack Enterprise, the magazine founded by his father, Earl Sr. One-third of new small employers fail within two years; and 56% are toast after four years, says the Small Business Administration. About 672,000 small employers launched last year — but 545,000 others closed, the SBA says. A nobody entrepreneur who started a variety store in Arkansas in 1945 eventually lost the business when his landlord wouldn't renew his lease. But he didn't give up. "I've never been one to dwell on reverses," Sam Walton recalled in his autobiography, "and I didn't do so then." The company he fought to start, Wal-Mart, is now the USA's biggest private employer, with more than 1.3 million workers.
