What are the key success factors for entrepreneurs?

The “Making of a Successful Entrepreneur” report, published by the Kauffman Foundation (November 2009), sheds light on this interesting question. The study explored the opinions of 549 successful company founders in the US on the crucial factors that led to the failure or success of their businesses.

Companies surveyed were from industries as diverse as aerospace and defense, to computer services, software and programming. Only companies that had made it past the start up stage were surveyed for the report.

The top three factors that had a major influence on whether an entrepreneur was successful were experience, management and luck, according to the company founders.

Statistics from the Kauffman Report revealed the following:

• “96 percent ranked prior work experience as an “important” success factor; 58 percent ranked this as “extremely important”.

• 88 percent said that learning from previous successes played an “important” role in their present success, and 78 percent said that learning from previous failures was similarly “important”. 40 percent of company founders claimed that lessons from failures were “extremely important” (the factor rated second highest as “extremely important”.

• 82 percent said their management team was “important” to their success. 35 percent said this was “extremely important”.

• 73 percent said that good fortune was an “important” factor in their success. 22 percent ranked this as “extremely important”.”

Interestingly enough, the majority of company founders surveyed in the report were serial entrepreneurs – i.e. those who had successfully launched two or more businesses.

As a budding entrepreneur, it is vital to learn from projects that have failed or not been as successful as hoped for. It is also important to take incremental steps that will help you progress towards your business goals.

The Report alluded to “good fortune” being an “important” success factor. If this is the case, then a question that comes to mind is whether we create our own good fortune or wait until luck comes our way?

I have always been a firm believer that it is important to take action rather than sit around and wait for good fortune to arrive. If the law of attraction via action appeals to you, it might be time to welcome some “good fortune” your way and get moving on your next business steps.

The Report revealed some of the most common barriers that prevented people from starting their own business. These barriers included the following:

Risk Taking

The factor most commonly ranked as “important” by 98% of respondees was the lack of willingness or lack of ability to take risks. In addition, 50% believed this to be an “extremely important” barrier to entrepreneurship.

Time and Effort

93% of respondees surveyed felt that the amount of time and effort required to launch a successful business was an “important” barrier to being a successful entrepreneur.

Funding

Entrepreneurs tended to use their own personal savings to fund their first business. 70% of respondents had used their personal savings as a main source of funding for their first business.

It was usually not till after their first business succeeded that entrepreneurs considered securing venture capital. On a related matter, venture capital became easier to secure for subsequent projects once the company founder had an existing successful business in operation.

Education

Only 20% of entrepreneurs ranked university education as “extremely important”.

Key Takeaways

The report has been an excellent resource in providing readers with a lowdown on the key factors of successful entrepreneurs. My key takeaways from this report were as follows:

Learn from your failures. Even better, learn from someone else’s failures.

The report suggests that experience is a key factor to success. However, if you were just starting out on your first business venture, you may not necessarily have much experience. A useful strategy to implement is to find a successful entrepreneur who would be willing to mentor you and help you avoid making the same mistakes he or she made.

Be willing to put in considerable time and effort into your business venture.

Be willing to take risks.

Save hard from your own personal finances to raise money for your first successful business venture.

The report has identified savings to be the most common method by which successful entrepreneurs have funded their own businesses, especially first time businesses.

The report identifies a good management team to be a prerequisite to becoming a successful entrepreneur.

Consider developing your own management skills to run your business effectively. Each of us is equipped with a unique set of skills, so it is a good idea to identify your current skill set and any gaps that exist. That way, you have the necessary information to take action to develop necessary new skills.

Another good strategy to adopt is to hire people who can contribute good management or specialized skills to your team. As an owner of a start up, you will find out sooner or later that it’s not feasible to do everything yourself.

Don’t get hung up on whether you have an Ivy League university education.

Only 20% of entrepreneurs in the survey felt that a university education was an “extremely important” factor. Looks like coming from an Ivy League school will not guarantee your success as an entrepreneur.

Armed with some useful evidence from this report on what it takes to become a successful entrepreneur, its time to remove your own personal barriers to success and get cracking with your own business venture.

If you are already part way through your business venture, continue refining and improving upon those systems and procedures that will help your business achieve success. Taking intelligent risks, learning from your failures and getting a good management team in place will help you achieve success even faster.

Love and leadership go hand in hand

“Love is patient, love is kind and is not jealous; love does not brag and is not arrogant, or rude. It does not demand its own way. It is not irritable, and it keeps no record of being wronged. It isn't happy when injustice is done, but it is happy with the truth. Love never gives up, never loses faith, is always hopeful, and endures through every circumstance. Love never fails.”

Paul of Tarsus

ON Valentine's Day, when love took centre-stage, my thoughts started to drift to my apartment in Dallas, situated near Love Field, the home of the “love” airline Southwest. The company's NYSE ticker symbol: LUV. The largest and only consistently profitable airline through tumultuous times, Southwest's model of success has inspired countless others, including AirAsia.

Astonishingly, Southwest founder and former leader Herb Kelleher built the entire business on love. I heard Kelleher at the tail-end of his career attributing Southwest's greatness to love, saying, “If you seek long continued success for your business, treat your people as family and lead with love.”

He named Colleen Barrett, who started her career as a legal secretary, his successor, because “she knows how to love people to success”. Barrett claims that she spends 85% of her time on her people. Kelleher adds that “an infusion of love is an essential, but oft overlooked ingredient in any business”.

According to new research, leaders who put love into their work are significantly more successful that those who rule by fear.

Interestingly, rarely is love described as a leadership competency. Yet, a lack of love in some form is generally the cause of failed leadership. We want our customers to love us and our products. We want our employees to love their jobs and their company. Yet, when we talk about leadership, we ignore love. Says leadership guru Ken Blanchard: “It might sound slightly bizarre, but one of the keys for effective leadership is to be madly in love with all the people you are leading.”

So, why is love ignored? First, love is synonymous with sex, beauty and its physical form. This makes it dicey to talk about or express love in an organisation. Furthermore, love is intangible, causing leaders to be sceptical. Most leaders fear love, believing it is about group hugs, soft mushy talk or holding hands around a company campfire singing Rasa Sayang.

But what Kelleher meant by “leading with love” means truly caring, serving and loving people both employees and customers. “We've never had layoffs,” he once declared. “Our people know that if they are sick, we will take care of them. If there are occasions or grief or joy, we will be there with them. We value them as people, not just cogs in a machine.”

He really loves his employees and customers, knowing all by name and unselfishly delighting in their well-being. Although Southwest is a low-cost airline, its salaries is on par with those of other airlines. Its employees' productivity remains the highest, allowing it to price tickets low. Its pilots spent more time flying and less time on the ground. Southwest can turn around an airplane in 20 minutes while others struggle. Its short hauls are more fuel-efficient than most big airlines' long hauls. Because the leaders at Southwest love their employees and have a “love” strategy, their employees always deliver.

Entrepreneur Mark Cuban's love for customers ultimately led him to becoming a billionaire. When it comes to customers, the owner of NBA team Dallas Mavericks, passionately believes that customers should be happy, even if it means working 24 hours a day to please them.

Love strategy for business

According to “love” guru Patch Adams, every organisation needs a “love strategy” as it delivers a better ROI (return on investment) than any other investment. According to new research, leaders who put love into their work are significantly more successful than those who rule by fear.

Great leaders are fuelled by love. They love what they do and they love the people they do it with. Indra Nooyi , CEO of PepsiCo, reinvented Pepsi by caring for people and the planet, pushing PepsiCo into becoming a “green company.”

Most business leaders have a disinclination towards embracing love as a business strategy because they are conditioned to believe leadership means being cutthroat, aggressive and mean. In their eyes, love is for sissies, and by being nice, they risk being viewed as soft and this can result in losing their grip on leadership.

Nothing could be further from the truth. Leaders who love their people are more likely to push their employees to perform at their potential through honest feedback. They raise the bar consistently just as a parent who loves their children do, disciplining them and ensuring the children face difficulties so they can learn and grow.

My yearly performance appraisals with managers who cared were never pleasant but at the end of the day, I knew exactly where I stood. Milton Mayeroff believes love is “the selfless promotion of the growth of others”.

Love is action

Love is not what you say or feel, but what you do. Mahatma Gandhi's leadership was driven by passion and action. He lived humbly because he loved people and wanted to engage with all walks of life.

Love is action. Love leads to positive thoughts, thoughts to words, and words to action. Negative emotions destroy organisations. Biologist Humberto Maturana notes that love is the only human emotion that consistently generates productive and intelligent actions.

Leaders cannot ignore feelings as leadership is emotional, dealing with dreams, passion, inspiration and love.

The opposite of love is hate. Hate manifests itself through fear. Fear restrains behaviour. Love liberates it. Fear freezes enterprise, suffocates creativity, and deters people from stretching and growing. Fear drives compliance but not commitment. Unfortunately, most of our leadership practices are fear-goaded and insidiously rooted in our work structures and culture.

Love brings success

Basketball coaching legend John Wooden, who won a record 10 NCAA titles, considers love the “most powerful thing there is”. The power of love powered his coaching career. He exclaimed: “Your players must know that you care for them more than just as athletes. Certainly, they understand that they are there because of their athletic ability. But when you have them under your supervision, it's up to you to make sure that they understand that you care for them as individuals. I've never had one I didn't love.”

John must have learnt from Sun Tzu's Art of War “... he who loves them as his own beloved sons and they will stand by him until death”.

Research shows love being more effective in driving organisational cultural shifts than visionary statements or brilliantly worded goals. Even hard-nosed leaders such as Rudy Giuliani believes that “if you don't love people, then don't be a leader”.

In studying successful leaders, we find success driven by the quality of loving relationships within an organisation. These loving relationships are seen through behaviours like compassion, commitment, care, kindness, reflection, intuition, inclusiveness and forgiveness.

Prominent leader John Hope Bryant believes there are four laws of love-based leadership for business:

l Fear fails Leading through fear is antiquated and crippling. Love is the antidote to fear.

l Love makes money Long-term loving relationships with customers and employees make everyone wealthy.

l Vulnerability is power When you open up, people open to you.

l Giving is getting Giving inspires loyalty and confers true wealth. John D. Rockefeller, regarded as the richest man ever, was governed by love and believed it was greater to give than receive. People rallied to him because he gave. He later used his wealth to build universities and fund great causes.

Military love

Surprisingly, we find high levels of trust in military leaders. Most expect fear to be the dominant leadership style but according to retired colonel Scott Snook, it boils down to love, adding “it's a deep abiding love and respect for one's comrades” that matters most in battle.

A study by sociologist Shils and Janowitz attempted to understand why soldiers fought till death and they concluded that a soldier continued to fight well beyond the point when the battle was lost “as long as he gave affection to and received affection from the other members of his squad”.

Soldiers love each other and are willing to lay down their life for each other. If love can be the touchstone of leadership in a vocation as violent as the military, then why not in business?

Snook adds that even during military training at West Point, love is emphasised continuously: Love your country, love your classmates and friends, and love the future officers you will someday serve with and love the soldiers you would someday lead. Great commanders love their troops and put their well-being above theirs.

Final thoughts

Here are some questions you can ask to help you get love into your organisation and start your journey to being a love-based leader:

1. When was the last time you did something unexpectedly nice for someone at work?

2. When was the last time you thanked or recognised someone for a particular special effort for the company?

3. Whom have you not thanked who has done something really nice or been especially helpful to you recently?

4. Who goes the extra mile routinely (for example, working late or doing things technically not part of their job) that you take for granted?

5. What are things you could do regularly to add “love” to your workplace?

6. What are actions that I can take to truly “love” my customers? (Not actions just for marketing reasons)

7. What can I do to bring fun and joy to the workplace?

Decorated army Maj-Gen John Stanford, known for extraordinary loyal troops, claimed that the secret to success is to stay in love. He said: “Staying in love gives you the fire to ignite others. A person who is not in love doesn't feel the kind of excitement that helps them to lead others. I don't know any other thing in life more exhilarating and positive a feeling than love.”

Many of us remember the dizzying joy of being in love. We need to get that energy in the workplace too. Leadership is an affair of the heart.

Love begins with you. So, this weekend, your people need you to take a good long look in the mirror and decide that your people and your organisation deserve a leader who has the courage to stand up and love them.