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Module 3. Lecture Handout

Module 3. – CHARACTERISTICS OF AN ENTREPRENEUR

INTRODUCTION
People become entrepreneurs for different reasons. Many want to own and operate their
own business. They find the challenge appealing and they don't mind the risk. Others
become entrepreneurs because they see little other choice. They don't have a job and one
isn't forthcoming, so they start their own business and try to make it work.
In this section we will discuss the entrepreneur as a person and discuss what abilities are
needed to be successful in entrepreneurship. You will have the opportunity to evaluate
your own entrepreneurial competencies after you have explored the characteristics of a
successful entrepreneur.

Module 3. OBJECTIVES
Upon completion of this topic you will be able to:
1. Describe the characteristics of a successful entrepreneur
2. Do a self‐assessment to determine your entrepreneurial competencies.

CHARACTERISTICS OF AN ENTREPRENEUR

Entrepreneurs and business people come from all walks of life and have different backgrounds
and life experiences. Do you remember the definition of entrepreneur which we discussed in Module
1? We can determine four basic abilities from the definition that enable entrepreneurs to develop
successful business ventures. These include:

 An innovator ‐ a person who attempts to introduce new products, new productive

techniques or new forms of business organizations.
 A risk taker, risking not only time, effort and business reputation, but his or her
invested funds and those of other stakeholders/role players/investors.
 A person who takes the initiative to combine land, capital and labor to produce
goods and services.
 A person who has the ability to organize multiple people and tasks and makes
business policy decisions to set the course of the business enterprise.
(Source: http://www.smallbusinessnotes.com/choosing/issues.html )

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A successful entrepreneur needs to possess certain abilities and qualities. These qualities
include:

A clear vision of goals.

Motivated to achieve goals, coupled with having a high degree of self‐confidence.
Prepared to take moderate risks.
Resilience: being able to take “no” for an answer without giving
up. Having initiative and independence.
Possessing leadership and organisational skills.
Seeking creative solutions to problems.
A positive outlook.
Taking responsibility for decisions.
A positive attitude to all tasks.
Being enterprising (recognising business opportunities).

Being an entrepreneur is not easy. In order to succeed, entrepreneurs must demonstrate

specific characteristics. Let’s look into these characteristics a bit further. The table below
reflects on some of the qualities that help people to better understand themselves as
entrepreneurs (VUSSC, 2011.)

Passionate about Entrepreneurs will view the business as a labor of love instead
their work of just "work". In addition to that, successful entrepreneurs
have self‐determination. Thus, passion and self‐determination
will drive entrepreneurs to be persistent in building their
organization/company.
Clear vision Having a clear vision of the goals to be achieved is fundamental
to drive entrepreneurs and extremely important for the whole
company. This vision must be flexible and adjusted continuously
as the company matures and new opportunities arise. All of this
requires entrepreneurs to have a creative imagination in order
to recognize business opportunities and envision alternative
scenarios as they face the many challenges of starting up an
enterprise.

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The information described in this module was downloaded and modified from Commonwealth of Learning using the CC‐BY‐SA (share alike with
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S.M.A.R.T. S.M.A.R.T. goal setting guides successful entrepreneurs.

S.M.A.R.T. goal setting means that your goals are:
Specific: Are your goals precise, detailed
and unambiguous?
Measurable: How will you measure it? Goals can
be measurable by quality, quantity and cost.
Achievable: Is it achievable? Although goals should be
a stretch to the team’s capabilities, they must be within
reach and realistic.
Relevant: Does it contribute to the goals and
strategies of the team? Goals should focus on
practical results to be achieved.
Time‐bound: When will this goal be achieved? Is
the completion date realistic?
Using the SMART acronym in goal setting helps entrepreneurs
think carefully about the process of goal setting for their
business.
Resilient Becoming an entrepreneur is not easy. There will be great,
exhilarating moments, but there will also be moments of
disappointment. Resilience is the capacity within self to bounce
back or recover after a disappointment. Entrepreneurs must be
resilient to stay their course if they believe they are on track,
and flexible to adapt to environmental change.
Organised Entrepreneurs, especially the ones that go “solo”, are the
business. They must carry out a diversity of tasks while meeting
deadlines. It is therefore extremely important for entrepreneurs
to have excellent organisation skills, so that they are able to
manage their time and tasks effectively.
Competent in Entrepreneurs must be able to inspire their employees to work
human relations towards their vision and achieve common goals, while nurturing
creative spirit among them.

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Self‐aware Self‐awareness will help entrepreneurs to understand their

personality traits and how these traits will affect decision
making or other people. For example, self‐awareness is useful
when the company’s growth forces entrepreneurs to change
their management style from hands‐on management to
professional management, where the entrepreneur is not
involved in the day to day decision making anymore. It is so
valuable for entrepreneurs to recognise when it is no longer
feasible for them to continue to do everything by themselves ‐
this is self‐awareness in action. Many entrepreneurs have
admitted that shifting to a different way of leading is the most
challenging change they have had to undergo in order to
sustain their companies’ growth.
Technical knowledge Excellent technical knowledge, whether it concerns producing
goods or services, is very important for entrepreneurs in order
to influence and engage other stakeholders in leading the
business in its start‐up stages. The entrepreneur is the business
in the start‐up stage and their technical know‐how will
influence and excite others to get involved.
Market knowledge Entrepreneurs must have a deep knowledge about the market
and the industry in which they wish to start a company.
Superior customer Successful entrepreneurs make customer satisfaction the
service company’s central focus without limiting their imagination on
how or how much to satisfy their customers.

THE ENTREPRENEUR’S FAMILY

The decision to pursue an entrepreneurial opportunity not only impacts the new business
owner, it also impacts his or her family. A business start‐up requires time and energy. The
time spent planning and implementing the business means less time spent with your family.
In addition the family may have to agree to accept some of the financial risks. Often the
money required to begin the business comes from family and friends who believe in what
you are doing. Family assets may have to be mortgaged or savings invested to start the
business. Family members may have to give of their time and energy to support the
business start‐up activities for little or no remuneration.
Lack of family support or fear about squandering the family assets adds considerable stress
to the new entrepreneur. It is essential that you consider the impact on you, your family
and others impacted by the new business. You must be willing to accept the personal risk if
you believe in your business idea.

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The information described in this module was downloaded and modified from Commonwealth of Learning using the CC‐BY‐SA (share alike with
attribution). Goto- http://creativecommons.org/licenses/by‐sa/4.0
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ENTREPRENEUR BACKGROUND AND CHARACTERISTICS

Education, Age and Work History -

Although some may feel that entrepreneurs are less educated than the general population, research
findings indicate that this is clearly not the case. Education is important in the upbringing of the entrepreneur.
Its importance is reflected not only in the level of education obtained but also in the fact that it continues to
play a major role in helping entrepreneurs cope with the problems they confront. Although a formal education
is not necessary for starting a new business—as is reflected in the success of such high school dropouts as
Andrew Carnegie, William Durant, Henry Ford, and William Lear—it does provide a good background,
particularly when it is related to the field of the venture. For example, entrepreneurs have cited an educational
need in the areas of finance, strategic planning, marketing (particularly distribution), and management. The
ability to communicate clearly with both the written and the spoken word is also important in any
entrepreneurial activity.
Even general education is valuable because it facilitates the integration and accumulation of new
knowledge, providing individuals with a larger opportunity set (i.e., a broader base of knowledge casts a wider
net for the discovery or generation of potential opportunities), and assists entrepreneurs in adapting to new
situations.27 The general education (and experiences) of an entrepreneur can provide knowledge, skills, and
problem-solving abilities that are transferable across many different situations. Indeed, it has been found that
while education has a positive influence on the chance that a person will discover new opportunities, it does
not necessarily determine whether he will create a new business to exploit the discovered opportunity.28 To
the extent that individuals believe that their education has made entrepreneurial action more feasible, they
are more likely to become entrepreneurs.

The relationship of age to the entrepreneurial career process also has been carefully researched. In
evaluating these results, it is important to differentiate between entrepreneurial age (the age of the
entrepreneur reflected in his or her experience) and chronological age (years since birth). As discussed in the
next section, entrepreneurial experience is one of the best predictors of success, particularly when the new
venture is in the same field as the previous business experience. In terms of chronological age, most
entrepreneurs initiate their entrepreneurial careers between the ages of 22 and 45. A career can be initiated
before or after these ages, as long as the entrepreneur has the necessary experience and financial support, and
the high energy level needed to launch and manage a new venture successfully. Also, there are milestone ages
every five years (25, 30, 35, 40, and 45) when an individual is more inclined to start an entrepreneurial career.
As one entrepreneur succinctly stated, “I felt it was now or never in terms of starting a new venture when I
approached 30.” Generally, male entrepreneurs tend to start their first significant venture in their early 30s,
while women entrepreneurs tend to do so in their middle 30s. However, an entrepreneurial career is quite
popular later in life when the children have left home, there are fewer financial concerns, and individuals start
to think about what they would really like to do with the rest of their lives.

Work history can influence the decision to launch a new entrepreneurial venture, but it also plays a
role in the growth and eventual success of the new venture. While dissatisfaction with various aspects of one’s
job—such as a lack of challenge or promotional opportunities, as well as frustration and boredom—often
motivates the launching of a new venture, previous technical and industry experience is important once the
decision to launch has been made. Experience in the following areas is particularly important: financing,
product or service development, manufacturing, and the development of distribution channels.
As the venture becomes established and starts growing, managerial experience and skills become
increasingly important. Although most ventures start with few (if any) employees, as the number of employees
increases, the entrepreneur’s managerial skills come more and more into play. In addition, entrepreneurial
experiences, such as the start-up process, making decisions under high levels of uncertainty, building a culture
from “scratch,” raising venture capital, and managing high growth, are also important. Most entrepreneurs
indicate that their most significant venture was not their first one. Throughout their entrepreneurial careers,
they are exposed to many new venture opportunities and gather ideas for many more new ventures.
Finally, previous start-up experience can provide entrepreneurs with expertise in running an
independent business as well as benchmarks for judging the relevance of information, which can lead to an
understanding of the “real” value of new entry opportunities, speed up the business creation process, and
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The information described in this module was downloaded and modified from Commonwealth of Learning using the CC‐BY‐SA (share alike with
attribution). Goto- http://creativecommons.org/licenses/by‐sa/4.0
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enhance performance.31 Previous start-up experience is a relatively good predictor of starting subsequent
businesses.32 To the extent that start-up experience provides entrepreneurs with a greater belief in their
ability to successfully achieve entrepreneurial outcomes, this increased perceived feasibility will strengthen
entrepreneurial intentions.

ATTRIBUTION:
The information described in this module was downloaded and modified from Commonwealth of Learning using the CC‐BY‐SA (share alike with
attribution). Goto- http://creativecommons.org/licenses/by‐sa/4.0