Why modern entrepreneurs won’t succeed under the influence.
By Carol Roth | Amid a struggling economy, the current zeitgeist is that we need innovation, entrepreneurship, and small-business activity to become the engines of sustainable growth. Entrepreneurship has long been a hallmark of our capitalistic society. Ever since historian James Truslow Adams popularized the concept of the American Dream in 1931, entrepreneurship has flourished. Over the past 80 years, hungry individuals with innovative ideas have created businesses ranging from the groundbreaking (Microsoft), to the fun (Nike), to the mundane but necessary (the corner dry cleaner).
But it’s not the 1930s anymore, and the American Dream needs to be looked at differently.
Entrepreneurship today is more accessible—and more complicated—than ever before. Given technologies that enable access to information, the good news is that you can work from just about everywhere. The bad news is that you can work from just about anywhere. The amount of additional administrative and non-revenue producing tasks that an entrepreneur needs to do today is staggering.
Let’s also not forget that we already have virtually everything that we need and most of the things that we want—and a bunch of stuff that we don’t really care about. But despite the number of products and services available to us, and the increasing challenges of business ownership, we are fostering entrepreneurship blindly. According to the Kauffman Foundation, approximately 6 million new businesses are created every year. Most of those aren’t driven by innovation, and if recent history is an indicator, they won’t grow or even exist five years from now.
If we are going to hang our hat on entrepreneurship, we need to ensure more successes, get better at avoiding true failures, and make sure that we have the right people pursuing the right opportunities at the right time with the right preparation.
This means keeping entrepreneurs away from the drink du jour: passion-flavored Kool-Aid.
With tough economic times and demanding lives, more than ever we are in constant search of balance and fulfillment. The lines between our personal and professional lives are getting blurred, whether it’s with our time or our social media interactions. Balance in our lives is harder to define and to achieve. This has spurred the creation of a huge “follow your passion” movement, which suggests that you should earn a living by creating a livelihood from your greatest life passion.
But getting intoxicated by the passion story is akin to “business beer goggling.” You aren’t thinking clearly or seeing the reality.
While successful businesses have leaders (and often employees, by the way) who are passionate about business opportunities and their customers, you do not need to make your life’s passion a starting point. If you love a good steak more than anything, I am pretty sure that doesn’t translate into you investing in some livestock. But seriously, why do so many people think that you need to earn a living from what you love to do the most?
For businesses to be successful, entrepreneurs need to think about opportunities from their customer’s perspective, as much as from their own. When an entrepreneur is incredibly passionate about filling that customer need and is uniquely positioned to be the best person to do so, that’s when business success happens. And here’s the brilliant part: where are entrepreneurs likely going to find an opportunity? As long as they aren’t trying to jump on whatever is hot, they will likely find an opportunity from an area of personal interest. Someone with no curiosity about green technologies is unlikely to notice a customer need in that area, for instance, but a die-hard foodie may well notice an unfilled niche in the boutique grocery marketplace. However, passion itself is not a productive starting point.
For an example of why, consider the online retailer Zappos.com, a business where passion followed the opportunity, but clearly wasn’t the starting point. I can’t imagine that CEO Tony Hsieh is more passionate about shoes than most of the women I know. He is, however, completely passionate about customer service, which has taken the business to the top of its game. But people’s life passions generally aren’t focused on concepts like customer service, which drive successful businesses. Kids grow up wanting to be firemen, ballerinas, baseball players, or Star Wars characters, not abstract concepts like community builders. If you ask someone their passion, I can guarantee that almost without exception you will get answers like golf, dancing, wine, scrapbooking, or sex before community building and customer loyalty.
If passion alone were the starting point or most critical ingredient for a successful business, Imelda Marcos would have beat Tony Hsieh to the punch ages ago.
Plus, turning your passion into a business raises other issues. One of the ways to truly have some semblance of balance in life is to try to keep your work life from seeping into the rest of your life. This is increasingly difficult, I know. But if you have something that you do to relieve stress or add joy to your life, do you really want to layer on the requirement of earning a living from it? Once you depend on something to put food on your family’s table and to pay your mortgage, it changes the entire nature of the relationship. Sometimes, work can be fun, but it’s not called that for a reason. Plus, we weren’t designed to always be “on.” We need time to recombobulate and relax.
Passions are magical, but businesses are grounded in realities. Do you remember when Dorothy and the gang peered behind the curtain to find out the Wizard of Oz wasn’t an all-powerful being, but rather, kind of a loser? Or when you figured out that your parents weren’t superheroes, just people with flaws? It sucked, right? Our hobbies are about escapism. There is a bit of magic and fantasy in them. When you make that your business, that tempers the magic.
We need to educate entrepreneurs that by approaching a business on the basis of personal passions, they are completely ignoring those who allow you to have a business: customers. This is a challenge. Our environment is fraught with competition. Customers, whose attention spans are contracting, are bombarded with messages. You have to make the customers the most important part of your business or you will have no business.
So if you are drinking the Kool-Aid, sober up before you move forward.
Living Kool-Aid free doesn’t mean having no fun. It means having a clear head. It means doing the prep work. The Boy Scouts know the value of preparation, and statistics show that businesses with plans succeed at a higher rate than those without. If you want to begin a business, here are some questions you should ask yourself:
Are you motivated by the right factors? Do you understand that the customers are the boss, not you? Are you inspired to serve them and meet their needs? Or are you hopping on the latest bandwagon?
Are you pursuing an opportunity that makes sense? Is the opportunity and business model big enough to justify the risks that you have to take on to make it happen? Is it viable, scalable, and suitable for you?
Is it the right time? Timing plays a huge factor in business success, and not just market timing. Do you have your finances in order? Can you prioritize the business in your life? Do you have the right experience?
Have you done everything you can do to stack the odds in your favor? Have you tested out the business? It is better to fail fast on a limited budget than to bet the farm from the very beginning. Have you put the right network in place?
If your answers to these questions are no, take the time to get it right up front. There’s a lot of motivational “just do it” stuff around, but action without purpose can have you just spinning in a circle and getting tired. If you want to get somewhere, research it to make sure it really is what you had imagined, set it as the goal, and figure out the path to get there. Action for action’s sake doesn’t make a lot of sense.
At the end of the day, while you absolutely need to be passionate about making your business a success, you don’t need to make a business from your greatest passion in life. Don’t let anyone tell you otherwise.
Carol Roth (Schneiderman) W’95 is a business strategist, dealmaker, and The New York Times bestselling author of The Entrepreneur Equation. She is a frequent media contributor on MSNBC, Fox News, WGN Chicago, and many other venues. Web: www.CarolRoth.com