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Keys to Entrepreneurial Success06-10-15 | News

Keys to Entrepreneurial Success

Recent studies show members of the millennial generation appear less interested than previous generations in starting their own businesses.

In 1989, 11.6 percent of households headed by someone younger than 30 held a stake in or owned a private enterprise; today that percentage is 3.6 percent, according to a recent Wall Street Journal report.

Randy H. Nelson, author of the Amazon best-selling book The Second Decision: The Qualified Entrepreneur, isn't quick to put all the blame on the millennial generation for the drop.

"The statistics show the odds of success for a new business are pretty dismal," says Nelson, "Half of new U.S. small businesses fail in their first five years, and 70 percent have gone under by year 10. That's not exactly a new trend, but what is a new is that each year in the United States more businesses now are shutting down than are being started."

But Nelson, who developed leadership skills as a Navy submarine officer and has a track record of starting and building successful businesses, says there is a reason for those sobering statistics.

He says that the odds of success could improve if more entrepreneurs understood the ramifications that anyone can become an entrepreneur with no qualifications required – and took steps to compensate for their weaknesses.

One problem, Nelson feels, is that entrepreneurs tend to be extraordinarily confident, which can blind them to their weaknesses.

Looking back over his 25-year entrepreneurial career, he identified four components of the qualified entrepreneur, and recently he added a fifth component, which is an important piece of each of the other four. They are:

• Entrepreneurship - People who become entrepreneurs are usually brimming with self-confidence, Nelson says. That helps them when it comes to making that "first decision" of starting a new company, all but ignoring those sobering odds for failure that would dissuade many others. The entrepreneur optimistically thinks: "I know I can do this."
• Career-Long learning - Entrepreneurs think growth all the time for their businesses. They preach their vision to employees and hire the best talent to help them reach their goals. But are entrepreneurs growing their skillsets as fast as their companies grow? If not, they risk becoming the wrong person in the wrong seat.
• Leadership - The importance of good leadership is paramount to business success, but not all leaders are created equal. Nelson breaks down leaders into four types. The "urgent/reactive" leader thrives on an almost crazed atmosphere where he or she can ride to the rescue, put out the fire and move on to the next problem. The "ever optimistic" leader starts from the belief there is nothing he or she can't do. The "reflexively pessimistic" leader plays to survive, not to win. The "steady/proactive" leader, is the one every CEO should strive to become, Nelson says. This type of leader values productivity and profitable growth above all things, knows how to achieve both and can course-correct no matter the difficulty.
• Life cycle. A business has different needs at different stages of the corporate life cycle. The qualified entrepreneur must recognize that. The startup stage is where many entrepreneurs thrive. Creating something from scratch is what they are about. Needs and challenges change, though, as companies enter growth or expansion stages. The entrepreneur's needs change too, because entrepreneurs have their own life cycle, Nelson says.
• Self-Awareness. Entrepreneurs need to know their strengths and weaknesses, and how they affect the business, Nelson says. Unfortunately, that's a trait they often fail to develop. His suggestion: Surround yourself with people who know more than you and learn from them. Once you have a clear understanding of what you do and don't know, you can decide your next steps.