Many entrepreneurs, such as Bill Gates and Sam Walton, did not attend a business school before they built their companies, yet they did enjoy business success. What are some of the skills required to be a successful entrepreneur?
In an article titled, “So You Want to Be an Entrepreneur?” by the Acton Foundation, they suggest that there are three areas of knowledge that are essential for starting a successful business. These are:
- An in-depth knowledge of the competitive structure of an industry and a network of contacts within that industry
- The skills to run the daily operations of a small, rapidly growing company
- The ability to raise money
The world of business is highly competitive with many companies vying for a few paying customers. The entrepreneur needs to understand the how the industry works; the status of customers, suppliers, competitors, product substitutes and barriers to entry. When David Neeleman started JetBlue Airways in Feb 1999, he had already acquired airline knowledge and experience by co-founding Morris Air (a low fare charter airline) and selling it to Southwest Airlines. From Morris Air, he was CEO of Open Skies, a touch screen airline reservation system which was later acquired by Hewlett Packard. Using his experience and knowledge, he was able to enter the highly competitive airline industry successfully.
Day to Day Operations
The entrepreneur needs to understand the daily operations of their company in order to manage and control productivity. When Shaun Neff from California started making a hand-knitted beanie for himself to endure the cold winters at BYU, he quickly realized that there could be a demand when his friends wanted the same beanies for themselves (2002). Seizing the opportunity, he started producing his hand-knitted beanies in his parents’ garage during the summer and sold them in in a ski shop in Utah. His father, Joe Neff, a corporate attorney by profession, helped his son by providing the business expertise to operationalize the business. Although their success can be attributed to being the “first to market” in the winter headgear market, a disorganized accounting system or poor production process can take a heavy toll on profits.
Ability to Raise Money
Some business require a small start-up fund and a bank loan may be sufficient to get the company started. These businesses tend to be local and serve a small geographic area, such as a restaurant or shop. However, when a business needs to expand beyond its initial size, business owners often have to look for additional funding to grow the company. The reality TV show, The Dragon’s Den, allows entrepreneurs to pitch their business ideas to investors who may be willing to invest in their business ideas in return for a share of the company.
The entrepreneur’s reputation is everything when fundraising. Elon Musk used borrowed money ($28,000) from his father (Errol Musk) to start his first company, Zip2 (ref: Vance, Ashlee (2015). Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. ISBN 978-0062301239.). Many companies later, Musk’s reputation allows him to obtain continuous financing for his companies such as, SpaceX, Tesla Motors, and SolarCity. However, he first had to build his reputation as a successful entrepreneur before he was able to obtain venture capital.