Ask Dr. Business – How do I know if I want to be an entrepreneur?

This week’s question:  How do I know if I want to be an entrepreneur?

Dr. Business:  Everyone has an idea for a business, but not everyone can be an entrepreneur and convert that idea to a commercially successful enterprise. Why is that? Primarily because the concept of entrepreneurship is inherently about taking risks, and most people are risk averse. Additionally, not all of their ideas are viable enough to be profitable, or there just aren’t enough customers, the cost of making it happen is beyond their means, etc.

Another major requirement for success as an entrepreneur is a deep rooted passion to the extent that it consumes them. Entrepreneurship can be a long hard road to success.  Passion for your purpose is vital.

Lastly, is the lack of experience in running a business. For all these reasons, I require the students in my course on Entrepreneurship to develop a business plan to see if their idea is commercially viable and to help them understand what it will take in terms of time, money, and pain to start and manage an embryonic business. It’s an exercise that can save them from themselves. The popular show “Shark Tank” is a wonderful platform for anyone wondering if they want to be an entrepreneur to observe what happens to would-be entrepreneurs and their ideas.

Entrepreneurs Beware The MBA

The big trend in the MBA today is NOT to follow the flocks of graduates rushing to the corner office in the traditional corporate jobs in finance and management.  Today, newly minted MBAs seek to become their own boss by becoming an entrepreneur or joining a startup.  In a study by the Wharton School of Business, 7% of their MBA graduates were bitten by the entrepreneurial bug at graduation, while historically about 25% of their graduates had dabbled in entrepreneurship since 1990.  The first thing these go-getters learn after graduation is that business school taught them a few things that aren’t really true when you own your own business.

  1. Plan. Plan. Plan.  Business schools like to focus on building plans for everything. That’s great if you don’t have any time pressure, like when you’re in a classroom.  However, when you’re in the thick of running a business and dealing with rapid change, planning is a task that requires significant resources and time.  These are luxuries that new entrepreneurs and startups don’t have.  Business is messy, unpredictable, amorphous and always changing.  Even the big companies use the most common method of business planning; that is, trial and error.
  2. Hard work is the key to success. This was echoed to me so many times in grad school.  I know I’ll have to work hard and in the corporate world, this exacerbated by competition for bonuses, promotions and fun work.  However, the new MBAs coming directly from business school aren’t seeing the benefits being hailed by professors.  Organizations aren’t giving away those perqs like in years past.  So, if you’re going to work your butt off, you might as well do it for yourself, rather than some organizational leaders who won’t appreciate what you have to offer.  There is a small caution to this tale.  Entrepreneurs will be pushed and pulled from all angles, so rest and release are critical to maintaining sufficient motivation.
  3. Learn what others do first. “Play it safe” sentiments are echoed through the hallways of business schools.  “Get a corporate job and learn how companies are running their business before tackling your own company” a professor always told.  Isn’t that what business school is for?    Besides, if there is ever a time for taking risk, it’s when you are young and full of energy.  Young MBAs have to chase their dreams while they can afford failures.  Diving into the corporate job can quickly lead to domestication, which comes with a family, mortgage and lots of activities that eat up time you don’t have.  There’s nothing wrong with these things, as I have them all.  But you can always fall back on your MBA to get you a decent job if the entrepreneurial thing doesn’t pan out.
  4. You need to acquire funding. The big MBA programs give out badges for raising a lot of capital to start a business.  Money is important but not necessarily when you’re starting out.  The biggest focus for you as a new entrepreneur is to figure out what the heck you’re doing.  Learning business in school is not the same as putting it into practice.  You aren’t solving problems that are easily defined and have easy solutions.  Learn the business first.  If you’ve seen the hit TV show, Shark Tank, you already know that investors don’t like investing in an unproven concept.  They want to see that you can make money with the idea, not risk their money trying to figure it out.

One of the big criticisms of business schools is that they don’t employ professors who’ve actually started and run businesses.  Of course, you will also find that the corporate world is full of those types too.  As an entrepreneur, learning is critical and has real value in all you do.  It’s psychotic to think that business school will give you all the tools you need.  That’s why we’ve brought a great resource for you here on our blog….Ask Dr. Business.  Send us your questions and we’ll get you answers from a tried and true entrepreneur.

5 Reasons You Can’t Find Opportunities

One of the activities we put so much energy into is finding opportunity.  We will spend an enormous amount of money and years of our lives to earn a college degree, in the hope of creating opportunity for ourselves.  Others choose to work long hours, travel extensively for the company and tackle difficult problems to earn access to opportunity.  Yet, others search and search for opportunity in another company or job, repeating this many times during their career.  But what if opportunity isn’t that complicated?  What if it is all around us but we just don’t see it for what it is?  Here is a look at one week in my life and the opportunities I came across.  I write all of them down in a notebook.  Opportunity is everywhere.  The question really is “what will you do with it?”

From my notebook:

On Sunday, I was mowing my lawn when a neighbor came across the street to talk to me.  He had a brilliant idea for a business and wanted to know what I thought about it. 

On Tuesday, a friend emailed me an idea for a mobile app.  She knows I started a Mobile apps development group. 

On Wednesday, an acquaintance emailed me an idea for a new book.  Just a few hours later, she sent an outline for the book.

On Friday morning, a business partner sent me an idea for a new product.  He wanted to create the product but wanted me to do marketing and distribution.

This is a typical week for me.  A few years ago, if you would have asked me how many opportunities I get in a week, I would have said I had no idea.  I wasn’t paying attention to what people were giving me.  Now, I log every single idea in a book I carry with me everywhere.  I won’t let an idea die without some consideration.  Of course, they are never dead as long as they remain in my book for consideration every month.  Opportunities are everywhere.  So why don’t we see them?

Fear.  Fear destroys our vision.  I have a close friend who has spent a lot of money and time earning college degrees in the hopes of moving up into a management role.  He’s been sitting in the same job he had before his MBA for 5 years now.  I’ve asked him so many times “What are you waiting on?  Opportunity? How long will you wait?”  He had invested so much into those credentials and is now burdened with a student load debt that feels like a mortgage, which he must pay with the same salary he had before the MBA.  His greatest fears are enveloped by the fact that he doesn’t know where to go or what to do.  What if he changes companies and it doesn’t work out? What if he asks for a raise or promotion and they say NO? The “what-if” syndrome keeps him locked in his own prison.  My “what if” question to him was “what if the opportunity never comes?”

Failure.  There’s no better teacher than failure.  Unfortunately, it can leave an everlasting distaste for taking risk.  One of the best stories I’ve ever heard about this was from Tom Stanley’s book, The Millionaire Mind.  In this book, he describes a situation where millionaires were sharing their story with each other.  One salesman stands up and begins to tell a yarn about the numerous sales jobs he had.  In his first job he learned about quotas and what can happen to you if you don’t meet yours.  On and on he goes about each job and how it didn’t work.  When he was describing job #5, someone in the circle of friends mentioned that he should just quit trying to be a salesman.  When he got to job #9, he mentioned he found the right company where he could be successful.  Then, after a year or two, he quit and started his own company.  Now, what if he would have quit at job #5?  Well, he wouldn’t be a millionaire sharing his story.  Don’t let failure imprison your ability to take risk.

Perspective.  Learning to spot opportunity requires some intentional conditioning.  Most people look for opportunities from their employer.  The bad part about this approach is that even though companies create processes to measure performance on a yearly basis, it rarely leads to opportunity for you.  This is also the reason most employees are unhappy with their work.  Jobs are unfulfilling and offer little personal growth.  So why do we only look to the company for opportunity?  It’s easy.  We know the process.  To see the opportunity that exists in your world, you need to adopt an entrepreneurial mindset, where everyone around has the potential to help you grow and develop.  As in my week described above, others offered numerous opportunities for me to build new skills, such as writing, marketing, sales and so on.  Which ones should I take?  The choice is mine.  Isn’t that the situation you want to be in?

Confidence.  By nature, most of us are followers.  In another post, I mentioned that the Wharton School of Business published statistics that indicated about 7% of the MBA graduates went into entrepreneurship.  That implies that 93% would be going to work for an existing company in the corporate world.  Why?  It’s safe.  Sure we have just built some awesome skills that will lead us to great success but we don’t want to put them to the real test where we risk everything if we fail, like when starting your own company.  As a follower, we wait to be told what to do.  So, I don’t get a promotion until my boss says I get one.  I won’t even consider asking for one.  This trained behavior keeps us from considering opportunities that others present to us.  Our lack of confidence in our own abilities makes the opportunity sound completely absurd.  Yet, many of us sit inside companies and shake our heads at those in leadership roles.  Can you really do any worse?  You won’t know until you try.

Bias.  When it comes to the future, we all think way too narrowly.  We make a single estimation about what our opportunities will be and then we close our minds.  We seek closure on this prediction because it’s easy.  Instead of exploring risks and uncertainties, we sum of our path to success in one single swoop and close the question.  The problem is that we have a strong tendency to be overconfident in our estimations, which leads to considerable error (and lack of action in the case of your career).  In the Harvard Business Review article “Outsmart Your Own Bias,” the authors propose a simple process for “nudging” your gut feelings which we fail to test sufficiently.

Since I began looking, I’ve found opportunity just about everywhere.  I have friends at the gym who always bring me business and product ideas.  Spotting opportunities is similar to the phenomenon we experience when we buy a new car.  Suddenly, we see our car everywhere.  But we didn’t see it before we bought it.  Why?  You’re looking now.  Opportunity is no different.  Open your eyes and see.  It’s right in front on you.  Then, you’ll just have to ask yourself one question “what shall I do with it?”