Do you have what it takes to be an entrepreneur?
According to a new study from Babson College, 14% of Americans were involved with starting or running a new businesses last year, the highest level in 16 years!
The report found that around 1 in 7 American adults ran a company that was less than three-and-a-half years old, with most of them running companies less than three months old.
The study also revealed that the fear of business failure dropped last year, and the percentage of people planning to start a new company remained high. What’s more, Americans were more likely to follow through on their entrepreneurial ambitions than people from other countries.
Having the intent to start a new business is one thing. Having the skills to translate that into successful action is everything.
When I started my ad agency at the age of 30, a few years after the ice-age, I had two partners. Bob was a VP-Account Service (12 years my senior) and Sheldon was Senior Art Director (6 years my senior). I met them both at a leading Miami agency where we all worked together. When Bob left the agency to become a Marketing Director at two leading radio stations, I missed him terribly. I missed his skills and talents and his ability to convince the agency principal right from wrong. So I approached him 6 months later and asked if he wanted to open an agency together. Bob had owned businesses in lumbering and marketing before, but more than anything, he had a gift with clients. And he demonstrated a unique passion for supporting a Creative Director’s (my) work. I also needed an art director, so I asked Sheldon to join us as we struck out on our own, renting a cheap warehouse west of the airport next door to a fish wholesaler on one side and an insect spraying company on the other. Humble beginnings indeed.
I don’t think we were in business more than two or three months when I realized that Sheldon was not keeping time sheets of his projects, nor requiring our other art director to do the same. We explained to him that accurate billing in the art studio was our profit center and asked him to understand that he’s leaving thousands of dollars on the table. Several times he assured us that he would, but eventually, I had to take over the responsibility and prove to him that he was losing the agency $20,000 a month by not being on top of things. Sheldon had no real answer other than to say to Bob and I to “buy him out.” Which we did and ended up growing the agency without him into the 3rd largest marketing firm in South Florida.
You see, Sheldon was not an entrepreneur. He was a worker bee. And while the Babson College study is insightful, it certainly misrepresents the true reality that starting or running a business is not the same as being successful at it.
Sheldon refused, or probably more accurately, was incapable of taking ownership of a company that he was 1/3 partner in. He could not transition from being an employee to being an entrepreneur. It was not in his DNA. It’s uncanny that in the Babson study, most of the 1 in 7 American adults running companies had been running them less than three months. That was exactly the timeframe when Bob and I realized that Sheldon was not cut out to be an entrepreneur.
For many newbie entrepreneurs, the rubber meets the road when they have to rent a location or register their business.
The Babson report mentions that only a small fraction of the new companies in the study were venture capital-fueled startups. Most of the young companies were more traditional —a man starting his own farm, or a hotelier opening a bed-and-breakfast. They point out that some new companies being formed today are born out of economic necessity, rather than seizing a new opportunity.
When we started our agency in 1982, we had $3,000 between us. And when I gave my $1,000 check to the phone company as a deposit, I was required to give them a title. So I called myself President. Simple enough. Back then, just after the dinosaurs roamed the earth, you didn’t need venture capital to fund a startup. You could use your bar mitzvah money. Or what was left of it.
Unlike a lot of people who get weeded out at the critical stage where they must register their businesses with the State, or rent a suitable space, we were not phased in the slightest. In fact, the space that we rented had a box in the lobby, left by the previous owner, containing large wood letters that spelled out their name on the outside marquise, GOLD COAST PLUMBING. That box of letters represented one of the most important and early tests for an entrepreneur, picking a name for the business.
Now, considering that my last name was Dornfield, Bob’s last name was Utsman, and Sheldon’s last name was Brodsky, we quickly realized that an agency named Dornfield, Utsman, Brodsky, or something similar, wouldn’t even make for a good-sounding law firm, let alone a creative ad agency. It didn’t exactly roll off the tongue, if you know what I mean. Not to mention the difficulty in deciding who’s name would go first, second and third?
So being a true entrepreneur, I said, “well, we already have GOLD COAST in wood letters in the box, all we need to do now is buy more letters to spell ADVERTISING. The team agreed, after all, we were entrepreneurs, and making split second decisions is the sign of genius.
Research shows that superior performance in your current role doesn’t automatically guarantee success at the next level.
The mistake I made was thinking that because Sheldon was a great art director and production artist, he could leverage those skills into a position of leadership, or ownership for that matter. In reality, fewer than 30% of high-performing employees have the skills, ambition and personality for moving into senior management or ownership roles.
Bob and I found out the hard way that outstanding performance doesn’t ensure success at the next level, but lack of it does guarantee failure.
So before you decide to invest in your employee’s development as a high-potential leader, or take someone from employee to partner, be sure that they are truly ready for — and capable of — the challenge.
According to Jennifer Miller, these are a few of the elements that signal potential:
Comfort with new situations. Think of past situations in which your team member was placed into chaotic or ambiguous situations. How did he or she handle it? True high-potential employees thrive on being tossed into the figurative “deep end” of a situation and finding a way to swim triumphantly to the surface. Your team member is ready if she thrives on the uncertain and sees it as “fun” to tackle new challenges. If your star player is more comfortable deepening the skills he already has, then he’s most likely a “high performer.”
A track record of learning. A hallmark of high-potential employees is the ability to learn from any situation they encounter. How does your superstar employee handle mistakes? If he recovered quickly and didn’t repeat the error, he’s on the right track. How did she cope with a sudden change in direction? If she came up with a creative solution, and loved doing so, she’s a good candidate. People who are ready to take on bigger responsibilities are those who learn quickly and roll with the punches.
They aspire to it. One element that’s often overlooked: Does the employee in question want to move up? Some high-potential leaders meet all other criteria except for this very important final hurdle — the desire to reach for the next level of responsibility. I recently spoke with a high-performing middle manager whose team leader is ready to promote him. The problem is, he’s not 100% sure he wants the promotion.
And he’s not alone: nearly 50% of high-potential employees say they don’t sufficiently desire a promotion, according to a survey by the Corporate Leadership Council.
In short, not all of your star employees are cut out to move into a more senior leadership or ownership role. High performers help the company achieve their goals today. High potentials will help the company achieve their goals in the future. Don’t set your current stars up for failure if they lack any of the attributes necessary for future success. Instead, find other ways to capitalize on their talents. Not everyone’s cut out for senior leadership or ownership.
Why are women underrepresented in the entrepreneurial quest?
According to the Babson report, only 11 percent of women were involved with new companies, compared to about 17 percent of men. Although nearly as many women see entrepreneurship opportunities as men, only 46 percent of women see themselves as capable of taking those chances, compared to 61 percent of men. Women have a higher fear of failure.
Fear of failure is not an option for an entrepreneur, as we so aptly demonstrated when it came time to hire a bookkeeper and a receptionist. Our only fear was cash flow. So we did what every entrepreneur must do in situations like that. We found two of best and most affordable candidates in the city, our wives.
My wife, Karyn, had no fear of failure. Never had, never will. And Bob’s wife, Maureen, was a take charge individual as well. In fact, both of them could have been successful entrepreneurs in their own right, but chose other paths for their careers.
How take charge must you be? Well, if I or anyone else in our new ad agency didn’t pick up their phone quickly enough, or ignored my wife’s page over the intercom, she came running down the hall at breakneck speed screaming “there’s a call for you on line 2.”
Whether it was my wife’s fear that we might miss a potential client, or simply that she expected people to be as timely and responsive as she was, I don’t know for sure. But she took her job, and I might say, ownership, very seriously. Certainly more seriously than Sheldon.
Are you the kind of person that can be a successful entrepreneur?
The Babson survey found that entrepreneurship in America takes many different forms. They pointed out that 45 percent of young companies last year were started by two or more people. Those companies planned to hire more people than single-founder startups.
Surprisingly, older adults also started companies, with 11 percent of U.S. adults between 55 and 64 owning a new business, the highest percentage among 29 advanced economies included in the study!
Changes and advancement in technology have made this a great time for Boomers to start a business in a growing economy. Need a website? No problem. Companies like Wix and SquareSpace eliminate the need for costly development and design. Canva for unique graphics, HootSuite to manage social media accounts, Quickbooks for your finances and LegalZoom for legal needs are web-based tools that can make setting up and running a business easier than ever.
So it’s never too early, and fortunately, never too late to become an entrepreneur. After 22 years of owning an ad agency, then working as Sr.VP-Creative Director at a large $1.5 billion Omincom agency for two years, I too joined the ranks of those 55 to 64 entrepreneurs. I left the 9 to 9 grind of the agency world and became a freelance Creative Director and Copywriter. No rent to pay. No payroll to meet. No staff medical insurance and rising annual premiums to worry about. Best of all, no wives running down the hallway.
STUART DORNFIELD is an award-winning freelance Creative Director/Copywriter with more than 40 years experience in marketing, strategy, advertising and production. As the former Sr. VP-Creative Director of Zimmerman Advertising (Omnicom), the 13TH largest agency in the U.S., and the former co-founder of Gold Coast Advertising, 3rd largest agency in South Florida, today Stuart offers his creative services and marketing insights as a freelancer with offices in New York and Miami. http://www.stuartdornfield.com