ARE YOU AN ENTREPRENEUR?

According to a dictionary definition an entrepreneur is “one who organizes, manages and assumes the risks of a business or enterprise.” So you are a risk taker if you are an entrepreneur. It is true that many startups do not survive. That, you say, is the risk that is assumed. But there is bare risk and then there is managed risk.

Using the investment community as an example you can be a great risk taker, do day trading including option buying and ride a roller coaster. Or you can make a managed long term diversified investment plan. Both choices involve risk but the second choice of diversifying manages that risk and results in a successful outcome.

Michael Gerber, in his book “The E Myth Revisited”, discusses what I would suggest are the unnecessary bare risks in entrepreneurship. The e-myth or the entrepreneurial myth as described by Gerber incorrectly assumes that the desire of the new business owner or entrepreneur, plus capital, plus a profit goal will result in success. This lack of true understanding of what it takes has caused businesses to fail.

For example, I notice many restaurants opening and closing. The concept sounds simple. Some people love cooking and have some great recipes. They feel that because they understand how to create a great meal that, therefore, they would be a natural to open a restaurant. The business can open and make sales. The owner may spend all his time working the kitchen without any oversight of what is happening to the operation and profit in the restaurant.

If you fail to understand the nature of the business then the business will fail. In order to manage your risk you need to have a plan, work that plan, and manage the results.

I have found that the enterprises that I have coached and consulted have had success when they have followed the following points.

1.     The enterprise has a clear vision. How does it look when it is successful? What is the future of the business five to ten years from now? How will it adapt to change?

2.     Who are the customers now and in the future? What is the unique value proposition; what sets the business apart from the competition? How does the business acquire customers?

3.     How does the business work rather than what work is done by the business? What processes and procedures are in place to facilitate the smooth operation of the business when the owner is not present?

4.     How does this business generate profits rather than how does the business make sales?

5.     How is the business structured to meet the needs of the customers? How does the business build loyal customers?

6.   How does the business hire, motivate, and retain the best people?

7.   Can this business continue to grow and duplicate? In other words, is this a sustainable business?

You are entrepreneur if you assume the risk of the enterprise. But you are a successful entrepreneur if you manage risk by having a strategic plan and working your plan.

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