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Are You Suited to Entrepreneurship

Why Some Start-ups Succeed and Others Fail

Harvard researchers answer 10 perplexing questions about the success and failure of startups.

Alyson Shontell

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Do first time entrepreneurs have it harder? Does having a renowned venture capital firm behind you help? And most importantly, is successful entrepreneurship a skill, or is it luck? These are some of the issues analysed by Harvard Researchers for a working paper entitled Performance Persistance in Entrepreneurship.

1. Do serial entrepreneurs succeed more than first timers?

Answer: Yes.

If you’re a first time entrepreneur, the outlook is not so good. According to the Harvard researchers, there is performance persistence in entrepreneurship. They write, “All else equal, a venture-capital-backed entrepreneur who succeeds in a venture has a 30% chance of succeeding in his next venture. By contrast, first-time entrepreneurs have only an 18% chance of succeeding and entrepreneurs who previously failed have a 20% chance of succeeding.”

2. Who is more likely to get funded by a VC firm, a new entrepreneur or a tried and true one?

Answer: A new entrepreneur.

In addition, failed entrepreneurs are more likely to get funding than successful entrepreneurs from the same VC firm. Strange but true.

3. Is entrepreneurial success a skill, or is it luck?

Answer: Starting a company at the right time in the right industry is a skill.

According to the Harvard paper, “The industry-year success rate in the first venture is the best predictor of success in the subsequent venture. Entrepreneurs who succeeded by investing in a good industry and year (eg computers in 1983) are far more likely to succeed in their subsequent ventures than those who succeeded by doing better than other firms founded in the same industry and year (eg succeeding in computers in 1985).

“More importantly, entrepreneurs who invest in a good industry-year are more likely to invest in a good industry-year in their next ventures, even after controlling for differences in overall success rates across industries. Thus, it appears that market timing ability is an attribute of entrepreneurs.” Nothing indicated it has anything to do with wealth.

4. Does success breed success?

Answer: Yes.

Entrepreneurs with previous successes can get their hands on more capital and services if suppliers think they are persistent performers. “For example, high-quality engineers or scientists may be more interested in joining a company started by an entrepreneur who previously started a company in a good industry and year if they believe (justifiably given the evidence) that this track record increases the likelihood of success.”

5. Are companies that are funded by top-tier VC firms more likely to succeed?

Answer: Yes, with one exception (see next question).

The reason these companies are more successful is obvious. It’s either because the top VCs are better at identifying potential success, or it’s because they’re able to add more value to companies they fund. The Harvard paper assumes both.

6. If a company’s founder has been successful before, how important is the VC?

Answer: If a start-up is founded by previously successful entrepreneurs, then the VC firm doesn’t really matter. Basically, since successful entrepreneurs can easily obtain services and they have a better chance at success, then they really don’t need the guidance top VCs provide.

Harvard explains, “If successful entrepreneurs are better, then top-tier venture capital firms have no advantage identifying them (because success is public information) and they add little value. And, if successful entrepreneurs have an easier time attracting high-quality resources and customers, then top-tier venture capital firms add little value.

7. Where do most entrepreneurs get their ideas from?

Answer: From former employers.

Make sure employees sign those non-competes! The Harvard paper cites a 2000 study by Bhide that finds “a substantial fraction of the top 500 companies got their idea for their new company while working at their prior employer.”

8. Will VCs give the same entrepreneur funding on their next venture?

Answer: Not usually.

The same venture capital firm that funded you before probably won’t give you money again. You’d think successful entrepreneurs would have no problem getting funding from venture capital firms that previously backed them… but you’d be wrong. According to a 2007 study by Bengtsson, “it’s rare for serial entrepreneurs to receive funding from the same venture capital firm across multiple ventures.”

9. Who closes VC funding quicker, serial entrepreneurs or newbies?

Answer: Serial entrepreneurs receive venture capital sooner than first-time entrepreneurs.

It makes sense. If you’re established, it’s easier to convince VCs you’re worth betting on. “While 45% of first-time ventures receive initial venture capital funding at an early stage, close to 60% of entrepreneurs receive initial venture capital funding at an early stage when it is their second or later venture.” It takes an average of 21 months for established entrepreneurs to secure VC funding compared to 37 months for first-timers.

10. Who receives a higher initial valuation, seasoned entrepreneurs or new ones?

Answer: New entrepreneurs.

They were found to have higher initial pre-money valuations than serial entrepreneurs: $12,3 million compared to $16 million for first-time founders.

Are You Suited to Entrepreneurship

12 Entrepreneurial Traits That Will Tempt You To Quit Your Job Immediately

Unhappy in your job? It’s possible you’re an entrepreneur.

John Rampton

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quitting-work

You’re sitting at your desk one day, and a light bulb goes off for a business idea. After a couple of days spent contemplating the idea, you decide it’s not worth pursuing.

While the idea might not have been as great as you initially thought, the reality might be that you’re uncertain if  you are cut out to be your own boss. After all, starting and running a business isn’t for the faint of heart.

You may actually have what it takes to be an entrepreneur but you have been focused on providing for your family or just need a little spark to ignite that fire. If you’ve been on the fence about entrepreneurship, see if you have the following traits.

1. Your “business mind” began spinning at a young age

Think back to when you were young. Were you the type of kid who was making money with a side gig? That’s one of the most common denominators linking successful entrepreneurs.

For example, Daymond John created customised pencils for girls in his first-grade class. Mark Cuban sold trash bags in his neighbourhood as a 12-year-old. Richard Branson bred and sold parakeets. Juliette Brindak designed a website at age 16 that went on to be worth $30 million.

Simply put, the gears of an entrepreneur’s “business mind” start spinning at an early age. If you’ve always been looking for ways to make money, you’ve probably been an entrepreneur your whole life – you just didn’t realise it.

2. You’re a self-starter

Entrepreneurs are known for carving their own paths. They don’t follow others, wait for permission or let distractions get in their way.

Reflect on your life. Did you start an organisation in college? Have you volunteered for a local charity? When there’s a project to complete at work, have you been the person to take the reins and rally the troops?

These are signs that you have a get-it-done personality, which is essential to making your vision a reality. This is a very good sign you’re an entrepreneur.

Related: 10 Things You Must Do Before Quitting Your Job To Start Your Company

3. You think like MacGyver

Back in the ’80s, there was an amazing TV show called “MacGyver – there’s a reimagined version currently on-air. The series was about Angus “Mac” MacGyver, who was a troubleshooter with unconventional problem-solving skills. One time, he made a hot-air balloon out of a soccer ball, kerosene, newspapers and cotton.

Entrepreneurs are also troubleshooters who develop innovative and out-of-the-box ideas to solve problems. They are resourceful and think quickly on their feet.

4. Losing gets you fired up

No one likes to lose. But there’s a big difference between entrepreneurs and everyone else – they’re motivated by setbacks.

They don’t make excuses, complain or give up. Instead, they use setbacks as motivation. Take Gary Vaynerchuk, for example. He loves losing. It sounds a bit out there. But, as he explains, “I’m obsessed with losing.” The reason? “I love losing, because I know what you’re thinking about my loss, and I can’t wait to stick it in your face when I come back.”

5. You’re driven by passion

Passion: It drives us to take risks and pursue our dreams. For entrepreneurs, this also means focusing only on the goals they’re passionate about. It encourages them to see those goals through – regardless of distractions or hurdles.

If you’re the type of person who works out when you’re in pain or completes a project at your current gig before the deadline, you’re driven by passion.

Related: 9 Reasons To Quit Your Job As Soon As You Can

6. You are easily bored

Do you find yourself easily bored? Some people might think that’s a problem. There’s nothing wrong with being bored with activities that don’t use your abilities or aren’t challenging.

That’s why throughout school, you couldn’t stand most of the classes you attended. They either weren’t difficult enough or you just couldn’t sustain any interest – you knew you wouldn’t be using the information presented to you.

7. You’re able to delay gratification

Few successful entrepreneurs experienced overnight success. The reality is that it may take years, if not decades, for entrepreneurs to develop and launch a business. Even after they start their business, it takes a decent amount of time to start turning a profit. It takes many around three years, but this can vary.

Because of this, entrepreneurs must be patient and willing to delay gratification. At the same time, they can see the light at the end of the tunnel.

8. At work, you’re a super connector; at home, you’re a loner

When you’re at work, are you a rock star? This means you excel at your job, and people flock to you. When you get home, are you more of a loner?

That’s not exactly shocking. Entrepreneurs place a huge emphasis on their work. Even bigger on having productive habits at work. It’s their priority – even at the expense of close personal relationships.

Richard Branson has said that “Business is all about personal contact. No matter how heavy your workload is, do not allow yourself to work in your cubicle or office all day, every day – for your own well-being and the health of your business, you need to get out and about, meeting people and developing relationships.”

Related: Why You Shouldn’t Quit Your Job To Start A Business

9. You can spot trends

When entrepreneurs are out and about, they’re taking stock of what’s going on around them. It’s not some strange safety precaution. It’s because they’re looking for trends and analysing what customers are demanding.

Take Beanie Babies, for example. The craze started when a community in the Chicago suburbs started trading the stuffed animals. After it went national, Peggy Gallagher noticed it hadn’t reached Germany. Gallagher contacted a distributor in Germany and placed an order for $2 000. She brought the box of hard-to-find stuffed animals back to the States and made an impressive $300 000.

10. You go big or go home

“We’re often told not to ‘bet the house’ on anything,” writes Lauren Elmore, president of Firmatek. “It’s generally good advice. But the best business advice I’ve received is actually the opposite: Bet the house on it.”

“Betting the house is the best piece of advice I’ve received because it’s not a singular thing to do,” explains Elmore. “It’s a way of life and a mentality that promotes taking risks and giving everything you have to make it work.”

Of course, just because you go all-in doesn’t mean you do so carelessly. Entrepreneurs minimise risks by surrounding themselves with the right people, being resilient and addressing their fears to let them go.

11. You’ve had a history of losing jobs

Have you bounced from job to job because you got fired? Don’t be embarrassed. You’re just too creative, driven and self-motivated to work for someone else.

I’d even say you may be a bit selfish – why should someone else reap the benefits of your hard work and talent?

Related: 20 Signs That You Should Quit Your Job (Infographic)

12. You’re never satisfied

In school, did you best your classmates in academics or sports, but still feel disappointed? Do you have more sales than your colleagues, but it’s still not enough?

You’re constantly striving for more because you realise victories are short-lived. That’s why you see a lot of entrepreneurs start a thriving business and move on to another – they want to tackle new challenges and setbacks.

You may not have made the entrepreneurial leap yet, but if these 12 traits sound familiar, it’s more likely a matter of “when,” not “if.”

This article was originally posted here on Entrepreneur.com.

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Are You Suited to Entrepreneurship

Want To Get That Side Hustle You’ve Been Dreaming Of Off The Ground This Year?

Stop dreaming. Carve out 30 minutes a night after the kids are in bed, and start putting together something tangible.

Syed Balkhi

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side-hustle

Want to make extra income? Who doesn’t? That’s why so many people in recent years have been taking their talents and skills and turning them into a side hustle. In fact, according to a recent survey from Bankrate, nearly four in 10 Americans polled (37 percent) said they have a side hustle.

Unfortunately, though, a lot of people get stuck in the “dreaming” stage. They sit around brainstorming ideas and dreaming of the day they have a successful side hustle that brings them joy and money but never actually get started. Well, scratch that: This is the year to turn it all around.

And to do that, and get one step (or multiple steps) closer to turning your side gig idea into an actual money-maker, check out these five tips for how to get your side hustle off the ground this year.

1. Change your mindset

A lot of people never get their side hustle off the ground because they have the wrong mindset. I know it seems simple, but believing in yourself and thinking of yourself as a business owner and not just a hobbyist will make all of the difference when it comes to starting a successful side hustle.

Even if you’re nowhere near to being a successful business owner yet, act like one. In fact, the “fake it until you make it” strategy actually works. According to a study in Psychology Today, people gain influence by acting dominant and confident. This strategy has the ability to convince people you’re serious about your side hustle and can win you customers, too.

Related: 20 South African Side-Hustles You Can Start This Weekend

2. Create an agenda

You can’t expect your side hustle to take flight on its own; you’ve got to put in the hours to get it off the ground. I know it’s hard to feel motivated to do that when you’ve already got a full-time job and a ton of other responsibilities, but you’ve got to set time aside.

Luckily though, you don’t have to fear burning out to get it done: Chris Guillebeau, founder of the Side Hustle School and author of Side Hustle: From Idea to Income in 27 Days, says that you can develop a successful side hustle by carving out just 20 to 30 minutes of your day. If you’re a parent, you might choose 30 minutes each evening after the kids are in bed; or you could even use your lunch break at work.

Whatever time you choose, put it in your calendar, set an alarm for it, stick to it and don’t let anyone drag you away from it.

3. Join a community

Sometimes we all need a little bit of inspiration to give us the push we need and some good solid advice to help us improve. That’s why you should join an online community for side hustlers. Joining with like-minded people can help you build a support system of buddies who have been where you are now and can provide a wealth of information to get your side hustle going.

There are tons of such groups onlines. Simply search for them on Facebook and LinkedIn and you’ll discover numerous groups for every niche. Ask questions, bounce ideas off other members, learn from others’ mistakes and get inspired by stories of success. All of this community interaction will push you in the right direction.

4. Build a tangible brand

Branding is the personality that identifies a company to its customers. Even if your business is only part-time, you still need to build a brand in order to attract customers and present yourself as a professional business. This means creating a logo, coming up with a tagline and developing a theme for your website, including a colour scheme and personality. All of this will work together to show your target audience who you are as a business.

If you’re thinking that all of that sounds expensive, don’t worry. For side hustlers who are strapped for cash, there are a number of ways to create a stunning brand while still saving your pennies. If you set up your website with WordPress, for example, you’ll find many free and affordable website themes to help you build a brand with just the click of a button. You can also use a free tool like Canva to create a gorgeous logo, business cards, flyers and more for your side hustle venture.

Related: 50 Jobs, Gigs And Side Hustles You Can Do From Home

5. Start marketing your side hustle

The final step to getting your side hustle off the ground is to start putting yourself out there. So, whatever you do, don’t keep your side hustle a secret! Start telling all your friends, family and neighbours about your side hustle. One of them could become your first client or customer or could recommend you to someone he or she knows.

Next, get online and start marketing your side hustle on social media. Social media platforms like Pinterest and Instagram are particularly great for marketing product-based side hustles. Other free ways to market your side hustle online include joining forums like Quora, blogging and building an email list and cold-emailing potential clients to offer your services.

Over to you

Don’t sit around again this year wondering if your side hustle has what it takes to make money. Get out there and make it happen. With the new tips you’ve learned, this year will finally be the year you hit the ground running.

This article was originally posted here on Entrepreneur.com.

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Are You Suited to Entrepreneurship

7 Skills Every Entrepreneur Should Adopt Today

There are certain skills that any entrepreneur can adopt to help build a business and shape their future.

Nicholas Bell

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entrepreneurial-skills

The road taken by the entrepreneur used to be the one least travelled. The one where only the bold dared to tread and few understood the risk or benefitted from the reward. Today, the road may be one travelled by many but it still comes with challenges and obstacles that can trip up the unwary. The best way to thrive, is to learn from other entrepreneurs, using their learnings and mistakes to sidestep the challenges and embrace the opportunities.

Here are seven skills that any entrepreneur can apply to their journey today:

1. A vision

Know exactly what you want. Have a clear idea of your end goal. Write it down, verbalise it, embrace it. This is how you know exactly where your steps will take you. Your vision is what defines the strategic goals of your company and what helps you create a business plan that will get you where you want to go.

2. Ask questions

Question yourself, your plans, your strategy, your business plans and your decisions. This is a critical skill that will ensure that you are constantly driving yourself to be better tomorrow than you are today. By challenging yourself at every turn you will refine your vision and ensure you are always on the right path.

3. Passion and energy

Nobody else is going to be passionate about your business. Nobody else has the energy to take it where it has to go. It is entirely up to you. This may sound extreme, but without these two key qualities you will battle to take your business through the complexities that lie ahead and onwards into long-term success.

4. A work ethic

Like passion and energy, a work ethic is critical. This is your business and your vision so you need to put in the hours. And there are a lot of hours.

If you’re not prepared for the weekends, late nights and unexpected holiday disruptions, then you may not be ready for the demands of being an entrepreneur.

5. Create opportunity

While you may be the vision, the passion and the workhorse of your business, it is important to remember that your company can only go so far with only one person behind the wheel. Learn how to build a team and focus your energy on building something bigger than yourself. Your drive should not be just about building a successful business, but creating opportunities for others.

6. Communication

Throughout your journey you will need to share your vision, ideals and business plans with your employees and your executives. They have to buy into what you are planning, to be fully engaged with the work that they do. This means you have to learn how to communicate clearly and create a transparent culture so people feel part of something and committed to what it represents.

7. Sales

Ultimately, you want your business to grow and this means mastering the art of selling. Regardless of your business proposition, it is likely you need customers to buy into your product or service. So, learn how to sell. A large part of this magic formula is made up of the passion, energy and work ethic you’ve already mastered, the rest is all about relationships, communication and hooking the clients.

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