Which kind of person becomes an Entrepreneur?
Seven studies show traits that influence starting a business: market misjudgment, being well-rounded, mental health, difficult childhood, storytelling, networks, and passion.
Entrepreneurship is the new buzzword in the business world. Everyone wants to be their boss and create something that will make a difference. However, not everyone has the necessary traits and experiences to become a successful entrepreneur.
In this article, we will explore seven research studies that reveal the traits and experiences that influence the decision to start a business.
The Market Misjudges You
One of the primary reasons that people become entrepreneurs is that the market misjudges them. When employers underestimate a worker's value, the rational decision for that person is to start a business of their own. They know that they can create something unique and valuable that the market is currently overlooking.
You’re Well-Rounded
Venture capitalists often talk about finding a founder that “spikes” on a certain dimension, but those most likely to become entrepreneurs are well-rounded. A 2005 study from Edward Lazear suggests that the self-employed tend to be generalists, not specialists. They have a diverse skill set that enables them to adapt and succeed in different situations.
Mental Health Issues Run in the Family
Entrepreneurs are much more likely to face mental health problems – both directly and in their broader family. Sufferers of bipolar disorder, ADHD, and OCD are all more likely to go solo. While this may seem counterintuitive, it suggests that entrepreneurs are more comfortable taking risks and dealing with uncertainty.
You Survived a Difficult Childhood Running a business is not for the faint of heart. It is perhaps not surprising then that childhood adversity may increase entrepreneurship rates. One 2021 paper analyzes this connection by observing a group that suffered extreme hardship: China’s Great Famine survivors. Those who survived this period were more likely to start businesses later in life.
The Importance of Storytelling
When it comes to starting a business, storytelling is essential. Successful entrepreneurs are those who can craft a compelling narrative that inspires others to join them on their journey. This was demonstrated in a study by the University of Maryland researchers who found that entrepreneurs who were good storytellers were more likely to raise funding for their startups.
The Role of Networks
Networking is another critical component of entrepreneurship. Those with strong networks of family, friends, and colleagues are more likely to start businesses than those without them. A study by Michael Roach and Henry G. Myners found that entrepreneurs with stronger networks had more significant access to resources and were more successful in their ventures.
The Importance of Passion
Finally, passion is perhaps the most critical trait of successful entrepreneurs. Passion drives individuals to work long hours, overcome obstacles, and persist even when things are tough. Without it, starting and growing a business can be nearly impossible. A study by Amar Bhide found that most successful entrepreneurs had a deep passion for their work and were motivated by more than just making money.
Becoming an entrepreneur is a challenging but rewarding endeavor. The traits and experiences outlined above can help individuals determine whether they have what it takes to start a business. While not everyone may possess all of these traits, they can be developed over time.
By understanding what makes successful entrepreneurs tick, aspiring business owners can increase their chances of success and build thriving companies that make a positive impact on the world.