As someone who has been the founder of a half dozen businesses, the co-founder of several others, an owner in a half dozen more, an outside board member in still more, a management consultant working with owners and founders of privately held companies for 44 years, the co-founder of a weekly podcast that interviews entrepreneurs and small business owners nearly every week, and a teacher of entrepreneurship at the university level for almost 20 years, I think I have a unique insight into how entrepreneurs think.
The conclusion I have come to is that there needs to be more understanding in the general public as to exactly what that is. Following are some of my observations and conclusions on how entrepreneurs really think:
- The idea that the entrepreneur is on a quest to find a need in the marketplace and fill it is different from the genesis of the business. Sometimes, the founder wants to do what they want and see if they can sell it. They have a passion for something. They often perform no market research or validation whatsoever. However, they may understand the industry or market they are going into and know what they want to do. More businesses start this way than those that follow a logical market identification and validation process.
- Entrepreneurs have a different attitude toward risk than most people, but they aren’t careless risk-takers. They feel that having a job and getting paid a salary is riskier than owning their own business because they could lose their job at any time due to no fault of their own. Their boss could change. The owner could sell the company. Top management could decide to outsource what they do. The entrepreneur thinks that being employed is like owning a business with only one client or customer, and that’s very risky indeed.
Entrepreneurs never do something they don’t fully believe they can succeed at, but at the same time, they don’t bet the whole farm on one thing. They also know they can’t “save” their way to success by always taking the safe route. Instead, risk is minimized by placing lots of bets vs. never betting. That could mean that their business is constantly offering different new products or services or that the entrepreneur has many different companies entirely. They know the odds are that something will always work out, even if everything doesn’t.
- Entrepreneurs are more preoccupied with growth, cash flow and long-term value creation than profit. Many never even set profitability goals but instead focus on achieving specific revenue goals. They believe revenue takes care of everything. That is one of the primary distinctions between entrepreneurs and those who are just small business owners, and it is a critical distinction few people understand.
- Entrepreneurs feel that taking action is more important than ideas and planning. They think ideas are easy to come by — everyone has them. That is also why they aren’t secretive and will share their ideas with nearly anyone who asks them. They are not focused on their competition but look within themselves and their companies. They know that planning makes it easy to convince yourself that you are doing something. But what matters and will advance their goals, and what separates them from the coffee shop entrepreneur wannabes, is doing something. That’s why they value those who “do” in their employees greatly and are heavily involved in “doing” some of the work of the business themselves.
One thing I do know for sure is that little real information is known about entrepreneurs. They deserve more study and attention than they get. It’s one of the reasons that the Walton College at the University of Arkansas broke out entrepreneurship from management by creating a whole new department of strategy, entrepreneurship, and venture innovation a few years back.
Mark Zweig is the founder of two Fayetteville-based Inc. 500/5000 companies. He is also entrepreneur-in-residence in the Sam M. Walton College of Business at the University of Arkansas and author of the award-winning book, “Confessions of an Entrepreneur.” The opinions expressed are those of the author.