Entrepreneurs

"The ultimate risk is … not taking a risk. "

Entrepreneurs come in all shapes and sizes - the dynamic, the cautious and the greedy. But all of them hold an equal fascination for us. How do they do it? What's their secret? Some of the world's biggest corporations would like to know too. For entrepreneurism is in. And these days everyone wants to be an entrepreneur.

But an entrepreneur is not what you are, it's what you become, and real entrepreneurs exist only in retrospect. At first, nobody takes them seriously. They're crackpots, dreamers, unemployables. And by the time they've finally carried the respect of the business community, they've already made it. So cancel the classes on entrepreneurship and throw out your business plan. For the road to entrepreneurial success can't be mapped out in advance. You get there one sale at a time.

In the beginning only the entrepreneur needs to see the goal, nobody else. And the goal is quite simple: you get an idea; you identify your customer; you make a sale. Then you make another and another and another until your office in the spare bedroom has turned into the tower block in Manhattan you always wanted. Forget about marketing strategy at this stage. What you need first is a steady cashflow. Bide your time. Focus on the little things. That's how it works. Big companies are just small companies that got bigger.

Take Richard Branson, for instance. For the founder of Virgin, the first ten years were a struggle, with his company suffering some cashflow problems until as late as 1980. By then the Virgin Group was running 80 different operations, none of them making large amounts of money and some of them losing money hand over fist. Yet in 1992 Branson's music business alone sold for £560 million.

Or take Nicolas Hayek, the man who invented the Swatch and brought the Swiss watch­making industry back from the dead. Hayek took on Japanese market leaders, Seiko and Citizen, and beat them on quality and price. Today he sells 28 million Swatches a year and has built a £1.6 bn company in the process. The Swatch is a 20th century icon. And, incredibly, though the price on a new one has never increased, some or the highly collectable early designs are now classed as art and fetch more than £20,000 - not bad for a plastic watch!

So what is it that makes a good entrepreneur? Clearly, not the same thing that makes a good manager. For good managers tend to come from fairly conventional backgrounds. They’re the bright kids everyone knew would do well, born organizers, who rise through the ranks to reach the top of large corporations. But the budding entrepreneur is more likely to be an outsider, a troublemaker, a rebel, who drops out of college to get a job, discovers a flair for building companies from nothing, gets bored quickly and moves on. Most of all, they'll be a master of risk-management. For risk doesn't mean the same thing to the entrepreneur as it does to the rest of us. The king of corporate raiders, Sir James Goldsmith, sums it up best: "The ultimate risk," he says, "is not taking a risk." And that's probably how he got to be a dollar billionaire.

2. FEAR, GREED AND DEDICATION

`Fear, greed, dedication and luck – all play their part. The rest follows '.

Last week I discussed the reasons for businesses going bust and concluded that the ultimate problem often lies in the fact that the founder of the business is not cut out to start up and develop his own operation. Sometimes this is due to a lack of knowledge, skill or business experience: sometimes to personal weaknesses.

So let us attempt to analyse the character traits of an entrepreneur. Although entrepreneurs are a diverse species, there are clearly some common factors. Permit me to quote from The British Entrepreneur - a study prepared by accountants Ernst and Young and the Cranficid School of Management. "Not all entrepreneurs are cast in the same mould. Indeed it would be an extremely dull world if they were. Almost by definition they defy categorisation.

"Some have a strong sense of humour, some none; some thrive on publicity and adulation, others are virtual hermits; some have an overwhelming need for power, others for creativity, some need the trappings of wealth, others lead very simple lives. Whatever the difference is, there is one factor which all successful entrepreneurs have in common - they and their firms are always on the move."'

It must be appreciated that management skills can be learned whereas entrepreneurial ability is a matter of flair; either you have it or you don't. Business requires both skills, the flair of the entrepreneur and the solid competence of the manager. It is dangerous to generalize but some of the characteristics ofthe entrepreneur, in contrast to the manager, are: belief in himself and his business; belief in wealth and material gain; and belief in delegation.

Entrepreneurial talent and management skills may not both be present in the one person. This may lead to the idea of partnership and, indeed, as the business flourishes and expands, the creation of a management team.

The British Entrepreneur encompasses the results of a survey of the views of owner­managers ofthe top 100 entrepreneurial firms in the UK. One of the questions asked was "what are the critical factors for success?" The answers came under three main headings:

Marketing:

A unique product; an innovative approach; a good fundamental idea; aggressive sales and marketing strategies; active selling; quality; price; heavy marketing investment.

Management:

Dedicated senior management; hard work and commitment of staff; tight financial controls; cash flow; investment for the long term; regular views and overhaul of the management structure; disciplined and cost effective management of employees; unwavering and total support from initial hackers.

Personal:

Vision; hard work; concentration; flexibility; persistence; ability to recognise opportunities. The owner-managers were asked about their personal life and family background. Many came from families where the father had some form of a small firm or self-employment background and the mother was a full time housewife. It was interesting to note that not one was an only child and more than half came from families with more than two children.

The previous survey, in 1988, revealed that the group showed low educational attainments, 45 per cent having left school at the age of 16 and very few having any post-school qualifications.

The 1989 list reveals somewhat greater academic attainments but apart from the obvious value of management skills which result from taking MBA, few of these owner­-managers saw any relationship between educational achievements and their current success.

There is a misconception that successful entrepreneurs fail a number of times before making the breakthrough. Not true with this sample, where only 20 per cent had started more than one business. The average age of the entrepreneurs when they started their first business was 32, while the youngest was 24. Presumably they had gained valuable skills and product knowledge between school and start-up. On the other hand, the majority had started businesses which bore no commercial relationship to their previous employment.

All rather confusing. Perhaps we should dwell on the wisdom of Sir James Goldsmith: 'First you must have the appetite to succeed - ambition. When you have no ambition you are dead. You have to be willing to work. You have to be ready to let go of a smart, safe, socially acceptable job in pursuit of your objective. Fear, greed, dedication and luck - all play their part. The rest follows".

Ex.3.30. Match the words and phrases on the left with their definitions on the right and translate them.

1) resilient	a) to attract or interest very much
2) to pass sb over	b) wait until the right time to do smth
3) to fascinate	c) attention that smb. gets from newspapers, television, etc
4) unemployable	d) ignore the claims of sb to advancement
5) to bide your time	e) openly resist or refuse to obey
6) to take on sb	f) who prefers to live away from other people
7) icon	g) ability to do things very well
8) flair	h) able to withstand or recover quickly from difficult conditions
9) publicity	i) sth that many people connect with an important idea
10) hermit	j) excessive admiration
11) to defy	k) to compete or fight against sb
12) adulation	l) not able or likely to get paid employment because of a lack of skills or qualification

Ex.3.31. Comprehension check

a) Which of the following topics are discussed in the articles above?

1) the hero-status of the entrepreneur

2) how to get rich quickly

3) goal-setting

4) perseverance

5) enterprising managers

6) the characteristics of an entretreneur (what are they?)

b) As business editor of an evening newspaper, you prepared the following notes on the article Fear, Greed and Dedication for use in your ‘comment’ section. On re-reading your notes, however, you discover that they are not accurate. Correct your notes.

1) It is difficult to categorize entrepreneurs.

2) Entrepreneurs have nothing in common with each other.

3) Successful entrepreneurs never stand still.

4) It is possible to learn how to be a manager, but entrepreneurs need flair.

5) Entrepreneurs belive in themselves, like to make money, do not like delegating work.

6) According to The British Entrepreneur, some of the critical factors for entrepreneural success include: a unique product, effective management, aggressive sales/marketing, ability to recognize opportunities, cash flow.

7) Many of the owner-managers surveyed in The British Entrepreneur were only children whose father owned a small firm or was self-employed and whose mother was a housewife.

8) Few of the entrepreneurs questioned saw a link between academic achievement and entrepreneural success.

9) Most of the entrepreneurs surveyed had started several businesses before becoming successful.

10) The majority of survey respondents had started businesses which were a direct extension of their previous employment.

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