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Entrepreneurship
An entrepreneur is someone who organizes, manages, and assumes the
risks of a business or enterprise. An entrepreneur is an agent of change.
Entrepreneurship is the process of discovering new ways of combining
resources. When the market value generated by this new combination of
resources is greater than the market value these resources can generate
elsewhere individually or in some other combination, the entrepreneur
makes a profit. An entrepreneur who takes the resources necessary to
produce a pair of jeans that can be sold for thirty dollars and instead
turns them into a denim backpack that sells for fifty dollars will earn a
profit by increasing the value those resources create. This comparison is
possible because in competitive resource markets, an entrepreneur’s
costs of production are determined by the prices required to bid the
necessary resources away from alternative uses. Those prices will be
equal to the value that the resources could create in their next-best
alternate uses. Because the price of purchasing resources measures
this OPPORTUNITY COST— the value of the forgone alternatives—the
profit entrepreneurs make reflects the amount by which they have
increased the value generated by the resources under their control.
Entrepreneurs who make a loss, however, have reduced the value created
by the resources under their control; that is, those resources could have
produced more value elsewhere. Losses mean that an entrepreneur has
essentially turned a fifty-dollar denim backpack into a thirty-dollar pair
of jeans. This error in judgment is part of the entrepreneurial learning, or
discovery, process vital to the efficient operation of markets. The profit-
and-loss system of CAPITALISM helps to quickly sort through the many
new resource combinations entrepreneurs discover. A vibrant, growing
economy depends on the EFFICIENCY of the process by which new ideas
are quickly discovered, acted on, and labeled as successes or failures.
Just as important as identifying successes is making sure that failures are
quickly extinguished, freeing poorly used resources to go elsewhere.
This is the positive side of business failure.
Successful entrepreneurs expand the size of the economic pie for
everyone. Bill Gates, who as an undergraduate at Harvard developed
BASIC for the first microcomputer, went on to help found Microsoft in
1975. During the 1980s, IBM contracted with Gates to provide the
operating system for its computers, a system now known as MS-DOS.
Gates procured the software from another firm, essentially turning the
thirty-dollar pair of jeans into a multibillion-dollar product. Microsoft’s
Office and Windows operating software now run on about 90 percent of
the world’s computers. By making software that increases
human PRODUCTIVITY, Gates expanded our ability to generate output
(and income), resulting in a higher standard of living for all.
Sam Walton, the founder of Wal-Mart, was another entrepreneur who
touched millions of lives in a positive way. His innovations in
distribution warehouse centers and inventory control allowed Wal-Mart
to grow, in less than thirty years, from a single store in Arkansas to the
nation’s largest retail chain. Shoppers benefit from the low prices and
convenient locations that Walton’s Wal-Marts provide. Along with other
entrepreneurs such as Ted Turner (CNN), Henry Ford (Ford
automobiles), Ray Kroc (McDonald’s franchising), and Fred Smith
(FedEx), Walton significantly improved the everyday life of billions of
people all over the world.
The word “entrepreneur” originates from a thirteenth-century French
verb, entreprendre, meaning “to do something” or “to undertake.” By the
sixteenth century, the noun form, entrepreneur, was being used to refer
to someone who undertakes a business venture. The first academic use of
the word by an economist was likely in 1730 by Richard Cantillon, who
identified the willingness to bear the personal financial risk of a business
venture as the defining characteristic of an entrepreneur. In the early
1800s, economists JEAN-BAPTISTE SAY and JOHN STUART MILL further
popularized the academic usage of the word “entrepreneur.” Say stressed
the role of the entrepreneur in creating value by moving resources out of
less productive areas and into more productive ones. Mill used the
term “entrepreneur” in his popular 1848 book, Principles of Political
Economy, to refer to a person who assumes both the risk and the
management of a business. In this manner, Mill provided a clearer
distinction than Cantillon between an entrepreneur and other business
owners (such as shareholders of a corporation) who assume financial risk
but do not actively participate in the day-to-day operations or
management of the firm.
Two notable twentieth-century economists, JOSEPH SCHUMPETER and
Israel Kirzner, further refined the academic understanding of
entrepreneurship. Schumpeter stressed the role of the entrepreneur as an
innovator who implements change in an economy by introducing new
goods or new methods of production. In the Schumpeterian view, the
entrepreneur is a disruptive force in an economy. Schumpeter
emphasized the beneficial process of CREATIVE DESTRUCTION, in which
the introduction of new products results in the obsolescence or failure of
others. The introduction of the compact disc and the corresponding
disappearance of the vinyl record is just one of many examples of
creative destruction: cars, electricity, aircraft, and personal computers are
others. In contrast to Schumpeter’s view, Kirzner focused on
entrepreneurship as a process of discovery. Kirzner’s entrepreneur is a
person who discovers previously unnoticed profit opportunities. The
entrepreneur’s discovery initiates a process in which these newly
discovered profit opportunities are then acted on in the marketplace until
market COMPETITION eliminates the profit opportunity. Unlike
Schumpeter’s disruptive force, Kirzner’s entrepreneur is an equilibrating
force. An example of such an entrepreneur would be someone in a
college town who discovers that a recent increase in college enrollment
has created a profit opportunity in renovating houses and turning them
into rental apartments. Economists in the modern AUSTRIAN SCHOOL OF
ECONOMICS have further refined and developed the ideas of Schumpeter
and Kirzner.
During the 1980s and 1990s, state and local governments across the
United States abandoned their previous focus on attracting large
manufacturing firms as the centerpiece of economic development policy
and instead shifted their focus to promoting entrepreneurship. This same
period witnessed a dramatic increase in empirical research on
entrepreneurship. Some of these studies explore the effect of
demographic and socioeconomic factors on the likelihood of a person
choosing to become an entrepreneur. Others explore the impact of taxes
on entrepreneurial activity. This literature is still hampered by the lack of
a clear measure of entrepreneurial activity at the U.S. state level.
Scholars generally measure entrepreneurship by using numbers of self-
employed people; the deficiency in such a measure is that some people
become self-employed partly to avoid, or even evade, income and
payroll taxes. Some studies find, for example, that higher income tax
rates are associated with higher rates of self-employment. This
counterintuitive result is likely explained by the higher tax rates
encouraging more tax evasion through individuals filing taxes as self-
employed. Economists have also found that higher taxes on inheritance
are associated with a lower likelihood of individuals becoming
entrepreneurs.
Some empirical studies have attempted to determine the contribution of
entrepreneurial activity to overall ECONOMIC GROWTH. The majority of
the widely cited studies use international data, taking advantage of the
index of entrepreneurial activity for each country published annually in
the Global Entrepreneurship Monitor. These studies conclude that
between one-third and one-half of the differences in economic growth
rates across countries can be explained by differing rates of
entrepreneurial activity. Similar strong results have been found at the
state and local levels.
Infusions of venture capital funding, economists find, do not necessarily
foster entrepreneurship. Capital is more mobile than labor, and funding
naturally flows to those areas where creative and potentially profitable
ideas are being generated. This means that promoting individual
entrepreneurs is more important for economic development policy than
is attracting venture capital at the initial stages. While funding can
increase the odds of new business survival, it does not create new ideas.
Funding follows ideas, not vice versa.
One of the largest remaining disagreements in the applied academic
literature concerns what constitutes entrepreneurship. Should a small-
town housewife who opens her own day-care business be counted the
same as someone like Bill Gates or Sam Walton? If not, how are these
different activities classified, and where do we draw the line? This
uncertainty has led to the terms “lifestyle” entrepreneur and “gazelle” (or
“high growth”) entrepreneur. Lifestyle entrepreneurs open their own
businesses primarily for the nonmonetary benefits associated with being
their own bosses and setting their own schedules. Gazelle entrepreneurs
often move from one start-up business to another, with a well-defined
growth plan and exit strategy. While this distinction seems conceptually
obvious, empirically separating these two groups is difficult when we
cannot observe individual motives. This becomes an even greater
problem as researchers try to answer questions such as whether the
policies that promote urban entrepreneurship can also work in rural
areas. Researchers on rural entrepreneurship have recently shown that
the INTERNET can make it easier for rural entrepreneurs to reach a larger
market. Because, as ADAM SMITH pointed out, specialization is limited
by the extent of the market, rural entrepreneurs can specialize more
successfully when they can sell to a large number of online customers.
What is government’s role in promoting or stifling entrepreneurship?
Because the early research on entrepreneurship was done mainly by non-
economists (mostly actual entrepreneurs and management faculty at
business schools), the prevailing belief was that new government
programs were the best way to promote entrepreneurship. Among the
most popular proposals were government-managed loan funds,
government subsidies, government-funded business development
centers, and entrepreneurial curriculum in public schools. These
programs, however, have generally failed. Government-funded and -
managed loan funds, such as are found in Maine, Minnesota, and Iowa,
have suffered from the same poor incentives and political pressures that
plague so many other government agencies.
My own recent research, along with that of other economists, has found
that the public policy that best fosters entrepreneurship is ECONOMIC
FREEDOM. Our research focuses on the PUBLIC CHOICE reasons why
these government programs are likely to fail, and on how improved
“rules of the game” (lower and less complex taxes and regulations, more
secure PROPERTY RIGHTS, an unbiased judicial system, etc.) promote
entrepreneurial activity. Steven Kreft and Russell Sobel (2003) showed
entrepreneurial activity to be highly correlated with the “Economic
Freedom Index,” a measure of the existence of such pro-market
institutions. This relationship between freedom and entrepreneurship
also holds using more widely accepted indexes of entrepreneurial
activity (from the Global Entrepreneurship Monitor) and economic
freedom (from Gwartney and Lawson’s Economic Freedom of the
World) that are available selectively at the international level. This
relationship holds whether the countries studied are economies moving
out of SOCIALISM or economies of OECD countries. Figure 1 shows the
strength of this relationship among OECD countries.
The dashed line in the figure shows the positive relationship between
economic freedom and entrepreneurial activity. When other
demographic and socioeconomic factors are controlled for, the
relationship is even stronger. This finding is consistent with the strong
positive correlation between economic freedom and the growth of per
capita income that other researchers have found. One reason economic
freedom produces economic growth is that economic freedom fosters
entrepreneurial activity.
Figure 1 Economic Freedom and Entrepreneurship in OECD Countries,
2002
Economists William Baumol and Peter Boettke popularized the idea that
capitalism is significantly more productive than alternative forms of
economic organization because, under capitalism, entrepreneurial effort
is channeled into activities that produce wealth rather than into activities
that forcibly take other people’s wealth. Entrepreneurs, note Baumol and
Boettke, are present in all societies. In government-controlled societies,
entrepreneurial people go into government or lobby government, and
much of the government action that results—tariffs, subsidies, and
regulations, for example—destroys wealth. In economies with limited
governments and rule of law, entrepreneurs produce wealth. Baumol’s
and Boettke’s idea is consistent with the data and research linking
economic freedom, which is a measure of the presence of good
institutions, to both entrepreneurship and economic growth. The recent
academic research on entrepreneurship shows that, to promote
entrepreneurship, government policy should focus on reforming basic
institutions to create an environment in which creative individuals can
flourish. That environment is one of well-defined and enforced property
rights, low taxes and regulations, sound legal and monetary systems,
proper contract enforcement, and limited government intervention.
10 important skills for entrepreneurship
What is entrepreneurship and what makes a successful entrepreneur? If
you look at the pure definition of entrepreneurship it is described as "the
capacity and willingness to develop, organize, and manage a business
venture along with any of its risks in order to achieve profit”. I believe
that what distinguishes a mediocre entrepreneur from a great
entrepreneur depends on the following 10 skills.
1. The ability to execute (hugely important!)
2. Great interpersonal skills
3. Willingness to take risk
4. Must have a vision
5. Eagerness to create a fundamental change in
an existing market or new market
6. Confident in own abilities
7. Can-do-approach to work
8. The ability to identify consumer’s “pain points”
9. Money and power should be secondary, creating a great
product or service should be primary
10. Endurance
Arguably, it is possible to improve some underlying skills like
interpersonal and work-related skills, but the majority of the skills
mentioned depend on an individual’s personality. While there are
many mediocre entrepreneurs, there are very few great ones such as
Elon Musk, Reid Hoffman and Jack Dorsey. What these great
entrepreneurs have in common is that they wanted to create a
fundamental change in the market and they were willing to take the
risk. LinkedIn provides a professional platform for users worldwide,
Twitter connects like-minded individuals, and PayPal enhances online
transactions. What do they have in common? If you read the “10
important skills for entrepreneurship properly, you will immediately
notice that all of these billion dollar companies have solved a problem.
As an entrepreneur you have to be able to sit down with people and
understand their problems in order to come up with a solution. In
other words, entrepreneurship is about identifying problems, coming
up with solutions and executing your brilliant plan. If you can
recognize yourself doing this chances are that you are already great.
The Psychological Price of Entrepreneurship
BY JESSICA BRUDER
No one said building a company was easy. But it's time to be
honest about how brutal it really is--and the price so many
founders secretly pay.
By all counts and measures, Bradley Smith is an unequivocal business
success. He's CEO of Rescue One Financial, an Irvine, California-based
financial services company that had sales of nearly $32 million last year.
Smith's company has grown some 1,400 percent in the last three years,
landing it at No. 310 on this year's Inc. 500. So you might never guess
that just five years ago, Smith was on the brink of financial ruin--and
mental collapse.
Back in 2008, Smith was working long hours counseling nervous clients
about getting out of debt. But his calm demeanor masked a secret: He
shared their fears. Like them, Smith was sinking deeper and deeper into
debt. He had driven himself far into the red starting--of all things--a
debt-settlement company. "I was hearing how depressed and strung out
my clients were, but in the back of my mind I was thinking to myself,
I've got twice as much debt as you do," Smith recalls.
He had cashed in his 401(k) and maxed out a $60,000 line of credit. He
had sold the Rolex he bought with his first-ever paycheck during an
earlier career as a stockbroker. And he had humbled himself before his
father--the man who raised him on maxims such as "money doesn't grow
on trees" and "never do business with family"--by asking for $10,000,
which he received at 5 percent interest after signing a promissory note.
Smith projected optimism to his co-founders and 10 employees, but his
nerves were shot. "My wife and I would share a bottle of $5 wine for
dinner and just kind of look at each other," Smith says. "We knew we
were close to the edge." Then the pressure got worse: The couple learned
they were expecting their first child. "There were sleepless nights,
staring at the ceiling," Smith recalls. "I'd wake up at 4 in the morning
with my mind racing, thinking about this and that, not being able to shut
it off, wondering, When is this thing going to turn?" After eight months
of constant anxiety, Smith's company finally began making money.
Successful entrepreneurs achieve hero status in our culture. We idolize
the Mark Zuckerbergs and the Elon Musks. And we celebrate the
blazingly fast growth of the Inc. 500 companies. But many of those
entrepreneurs, like Smith, harbor secret demons: Before they made it big,
they struggled through moments of near-debilitating anxiety and despair-
-times when it seemed everything might crumble.
"It's like a man riding a lion. People think, 'This guy's brave.' And he's
thinking, 'How the hell did I get on a lion, and how do I keep from
getting eaten?"
Until recently, admitting such sentiments was taboo. Rather than
showing vulnerability, business leaders have practiced what social
psychiatrists call impression management--also known as "fake it till you
make it." Toby Thomas, CEO of EnSite Solutions (No. 188 on the Inc.
500), explains the phenomenon with his favorite analogy: a man riding a
lion. "People look at him and think, This guy's really got it together! He's
brave!" says Thomas. "And the man riding the lion is thinking, How the
hell did I get on a lion, and how do I keep from getting eaten?"
Not everyone who walks through darkness makes it out. In January,
well-known founder Jody Sherman, 47, of the e-commerce site Ecomom
took his own life. His death shook the start-up community. It also
reignited a discussion about entrepreneurship and mental health that
began two years earlier after the suicide of Ilya Zhitomirskiy, the 22-
year-old co-founder of Diaspora, a social networking site.
Lately, more entrepreneurs have begun speaking out about their internal
struggles in an attempt to combat the stigma on depression and anxiety
that makes it hard for sufferers to seek help. In a deeply personal post
called "When Death Feels Like a Good Option," Ben Huh, the CEO of
the Cheezburger Network humor websites, wrote about his suicidal
thoughts following a failed start-up in 2001. Sean Percival, a former
MySpace vice president and co-founder of the children's clothing start-
up Wittlebee, penned a piece called "When It's Not All Good, Ask for
Help" on his website. "I was to the edge and back a few times this past
year with my business and own depression," he wrote. "If you're about to
lose it, please contact me."
Brad Feld, a managing director of the Foundry Group, started blogging
in October about his latest episode of depression. The problem wasn't
new--the prominent venture capitalist had struggled with mood disorders
throughout his adult life--and he didn't expect much of a response. But
then came the emails. Hundreds of them. Many were from entrepreneurs
who had also wrestled with anxiety and despair. (For more of Feld's
thoughts on depression, see his column, "Surviving the Dark Nights of
the Soul," in Inc.'s July/August issue.)"If you saw the list of names, it
would surprise you a great deal," says Feld. "They are very successful
people, very visible, very charismatic-;yet they've struggled with this
silently. There's a sense that they can't talk about it, that it's a weakness
or a shame or something. They feel like they're hiding, which makes the
whole thing worse."
If you run a business, that probably all sounds familiar. It's a stressful job
that can create emotional turbulence. For starters, there's the high risk of
failure. Three out of four venture-backed start-ups fail, according to
research by Shikhar Ghosh, a Harvard Business School lecturer. Ghosh
also found that more than 95 percent of start-ups fall short of their initial
projections.
Entrepreneurs often juggle many roles and face countless setbacks--lost
customers, disputes with partners, increased competition, staffing
problems--all while struggling to make payroll. "There are traumatic
events all the way along the line," says psychiatrist and former
entrepreneur Michael A. Freeman, who is researching mental health and
entrepreneurship.
Complicating matters, new entrepreneurs often make themselves less
resilient by neglecting their health. They eat too much or too little. They
don't get enough sleep. They fail to exercise. "You can get into a start-up
mode, where you push yourself and abuse your body," Freeman says.
"That can trigger mood vulnerability."
So it should come as little surprise that entrepreneurs experience more
anxiety than employees. In the latest Gallup-Healthways Well-Being
Index, 34 percent of entrepreneurs--4 percentage points more than other
workers--reported they were worried. And 45 percent of entrepreneurs
said they were stressed, 3 percentage points more than other workers.
But it may be more than a stressful job that pushes some founders over
the edge. According to researchers, many entrepreneurs share innate
character traits that make them more vulnerable to mood swings. "People
who are on the energetic, motivated, and creative side are both more
likely to be entrepreneurial and more likely to have strong emotional
states," says Freeman. Those states may include depression, despair,
hopelessness, worthlessness, loss of motivation, and suicidal thinking.
Call it the downside of being up. The same passionate dispositions that
drive founders heedlessly toward success can sometimes consume them.
Business owners are "vulnerable to the dark side of obsession," suggest
researchers from the Swinburne University of Technology in Melbourne,
Australia. They conducted interviews with founders for a study about
entrepreneurial passion. The researchers found that many subjects
displayed signs of clinical obsession, including strong feelings of distress
and anxiety, which have "the potential to lead to impaired functioning,"
they wrote in a paper published in the Entrepreneurship Research Journal
in April.
Reinforcing that message is John Gartner, a practicing psychologist who
teaches at Johns Hopkins University Medical School. In his book The
Hypomanic Edge: The Link Between (a Little) Craziness and (a Lot of)
Success in America, Gartner argues that an often-overlooked
temperament--hypomania--may be responsible for some entrepreneurs'
strengths as well as their flaws.
A milder version of mania, hypomania often occurs in the relatives of
manic-depressives and affects an estimated 5 percent to 10 percent of
Americans. "If you're manic, you think you're Jesus," says Gartner. "If
you're hypomanic, you think you're God's gift to technology investing.
We're talking about different levels of grandiosity but the same
symptoms."
Gartner theorizes that there are so many hypomanics--and so many
entrepreneurs--in the U.S. because our country's national character rose
on waves of immigration. "We're a self-selected population," he says.
"Immigrants have unusual ambition, energy, drive, and risk tolerance,
which lets them take a chance on moving for a better opportunity. These
are biologically based temperament traits. If you seed an entire continent
with them, you're going to get a nation of entrepreneurs."
Though driven and innovative, hypomanics are at much higher risk for
depression than the general population, notes Gartner. Failure can spark
these depressive episodes, of course, but so can anything that slows a
hypomanic's momentum. "They're like border collies--they have to run,"
says Gartner. "If you keep them inside, they chew up the furniture. They
go crazy; they just pace around. That's what hypomanics do. They need
to be busy, active, overworking."
"Entrepreneurs have struggled silently. There's a sense that they can't
talk about it, that it's a weakness."
No matter what your psychological makeup, big setbacks in your
business can knock you flat. Even experienced entrepreneurs have had
the rug pulled out from under them. Mark Woeppel launched Pinnacle
Strategies, a management consulting firm, in 1992. In 2009, his phone
stopped ringing.
Caught in the global financial crisis, his customers were suddenly more
concerned with survival than with boosting their output. Sales
plummeted 75 percent. Woeppel laid off his half-dozen employees.
Before long, he had exhausted his assets: cars, jewelry, anything that
could go. His supply of confidence was dwindling, too. "As CEO, you
have this self-image--you're the master of the universe," he says. "Then
all of a sudden, you are not."
Woeppel stopped leaving his house. Anxious and low on self-esteem, he
started eating too much--and put on 50 pounds. Sometimes he sought
temporary relief in an old addiction: playing the guitar. Locked in a
room, he practiced solos by Stevie Ray Vaughan and Chet Atkins. "It
was something I could do just for the love of doing it," he recalls. "Then
there was nothing but me, the guitar, and the peace."
Through it all, he kept working to develop new services. He just hoped
his company would hang on long enough to sell them. In 2010,
customers started to return. Pinnacle scored its biggest-ever contract,
with an aerospace manufacturer, on the basis of a white paper Woeppel
had written during the downturn. Last year, Pinnacle's revenue hit $7
million. Sales are up more than 5,000 percent since 2009, earning the
company a spot at No. 57 on this year's Inc. 500.
Woeppel says he's more resilient now, tempered by tough times. "I used
to be like, 'My work is me,' " he says. "Then you fail. And you find out
that your kids still love you. Your wife still loves you. Your dog still
loves you."
But for many entrepreneurs, the battle wounds never fully heal. That was
the case for John Pope, CEO of WellDog, a Laramie, Wyoming-based
energy technology firm. On Dec. 11, 2002, Pope had exactly $8.42 in the
bank. He was 90 days late on his car payment. He was 75 days behind on
the mortgage. The IRS had filed a lien against him. His home phone, cell
phone, and cable TV had all been turned off. In less than a week, the
natural-gas company was scheduled to suspend service to the house he
shared with his wife and daughters. Then there would be no heat. His
company was expecting a wire transfer from the oil company Shell, a
strategic investor, after months of negotiations had ended with a signed
380-page contract. So Pope waited.
The wire arrived the next day. Pope--along with his company--was
saved. Afterward, he made a list of all the ways in which he had
financially overreached. "I'm going to remember this," he recalls
thinking. "It's the farthest I'm willing to go."
Since then, WellDog has taken off: In the past three years, sales grew
more than 3,700 percent, to $8 million, making the company No. 89 on
the Inc. 500. But emotional residue from the years of tumult still lingers.
"There's always that feeling of being overextended, of never being able
to relax," says Pope. "You end up with a serious confidence problem.
You feel like every time you build up security, something happens to
take it away."
Pope sometimes catches himself emotionally overreacting to small
things. It's a behavior pattern that reminds him of posttraumatic stress
disorder. "Something happens, and you freak out about it," he says. "But
the scale of the problem is a lot less than the scale of your emotional
reaction. That just comes with the scar tissue of going through these
things."
"If you're manic, you think you're Jesus. If you're hypomanic, you think
you're God's gift to technology investing."John Gartner
Though launching a company will always be a wild ride, full of ups and
downs, there are things entrepreneurs can do to help keep their lives
from spiraling out of control, say experts. Most important, make time for
your loved ones, suggests Freeman. "Don't let your business squeeze out
your connections with human beings," he says. When it comes to
fighting off depression, relationships with friends and family can be
powerful weapons. And don't be afraid to ask for help--see a mental
health professional if you are experiencing symptoms of significant
anxiety, posttraumatic stress disorder, or depression.
Freeman also advises that entrepreneurs limit their financial exposure.
When it comes to assessing risk, entrepreneurs' blind spots are often big
enough to drive a Mack truck through, he says. The consequences can
rock not only your bank account but also your stress levels. So set a limit
for how much of your own money you're prepared to invest. And don't
let friends and family kick in more than they can afford to lose.
Cardiovascular exercise, a healthful diet, and adequate sleep all help,
too. So does cultivating an identity apart from your company. "Build a
life centered on the belief that self-worth is not the same as net worth,"
says Freeman. "Other dimensions of your life should be part of your
identity." Whether you're raising a family, sitting on the board of a local
charity, building model rockets in the backyard, or going swing dancing
on weekends, it's important to feel successful in areas unrelated to work.
The ability to reframe failure and loss can also help leaders maintain
good mental health. "Instead of telling yourself, 'I failed, the business
failed, I'm a loser,' says Freeman, "look at the data from a different
perspective: Nothing ventured, nothing gained. Life is a constant process
of trial and error. Don't exaggerate the experience."
Last, be open about your feelings--don't mask your emotions, even at the
office, suggests Brad Feld. When you are willing to be emotionally
honest, he says, you can connect more deeply with the people around
you. "When you deny yourself and you deny what you're about, people
can see through that," says Feld. "Willingness to be vulnerable is very
powerful for a leader."
Five Creativity Exercises to Find Your Passion
Want to start a business, but not sure what to pursue? Here's how to
discover what you love.
Benjamin Disraeli, a 19th century British Prime Minister, once said,
"Man is only great when he acts from passion."
For today's aspiring entrepreneur, exploring avenues of creativity to find
your passion is likely the quickest route to increase your chances of
launching a successful business. Where to start? Here, five exercises to
help you uncover your passion.
Exercise 1 - Revisit your childhood. What did you love to do?
"It's amazing how disconnected we become to the things that brought us
the most joy in favor of what's practical," says Rob Levit, an Annapolis,
Md.-based creativity expert, speaker and business consultant.
Levit suggests making a list of all the things you remember enjoying as a
child. Would you enjoy that activity now? For example, Frank Lloyd
Wright, America's greatest architect, played with wooden blocks all
through childhood and perhaps well past it.
"Research shows that there is much to be discovered in play, even as
adults," Levit says.
Revisit some of the positive activities, foods and events of childhood.
Levit suggests asking yourself these questions to get started: What can
be translated and added into your life now? How can those past
experiences shape your career choices now?
Exercise 2 - Make a "creativity board."
Start by taking a large poster board, put the words "New Business" in the
center and create a collage of images, sayings, articles, poems and other
inspirations, suggests Michael Michalko, a creativity expert based in
Rochester, N.Y., and Naples, Fla., and author of creativity books and
tools, including ThinkPak (Ten Speed Press, 2006).
"The idea behind this is that when you surround yourself with images of
your intention -- who you want to become or what you want to create --
your awareness and passion will grow," Michalko says.
As your board evolves and becomes more focused, you will begin to
recognize what is missing and imagine ways to fill the blanks and realize
your vision.
Related: Bridging the Gap Between Passion and Profits
Exercise 3 - Make a list of people who are where you want to be.
You don't have to reinvent the wheel. Study people who have been
successful in the area you want to pursue.
For example, during the recession, many people shied away from the real
estate market because they thought it was a dead end. Levit believes
that's the perfect time to jump in -- when most others are bailing out --
because no matter the business, there are people who are successful in it.
Study them, figure out how and why they are able to remain successful
when everyone else is folding and then set up structures to emulate them.
"If you want to be creative, create a rigorous and formal plan," Levit
says. "It's not the plan that is creative; it's the process that you go through
that opens up so many possibilities."
Related: An Introduction to Business Plans
Exercise 4 - Start doing what you love, even without a business plan
A lot of people wait until they have an extensive business plan written
down, along with angel investors wanting to throw cash at them -- and
their ideas never see the light of day, according to Cath Duncan, a
Calgary, Canada-based creativity expert and life coach who works with
entrepreneurs and other professionals.
She recommends doing what you enjoy -- even if you haven't yet figured
out how to monetize it. Test what it might be like to work in an area
you're passionate about, build your business network and ask for
feedback that will help you develop and refine a business plan.
It's a way to not only show the value you would bring, but you can also
get testimonials that will help launch your business when you're ready to
make it official.
"Perhaps most importantly, though, it'll shift you out of paralysis and
fear," Cath says, "and the joy of seeing the difference your contribution
makes will fuel your creativity."
Exercise 5 - Take a break from business thinking.
While it might feel uncomfortable to step outside of business mode, the
mind sometimes needs a rest from such bottom-line thinking, says Levit,
who has recently taken up Japanese haiku, a form of poetry. Maybe for
you, it will be creative writing, painting, running or even gardening.
After you take a mental vacation indulging in something you're
passionate about, Levit suggests coming back to a journal and writing
down any business ideas that come to mind.
"You'll be amazed at how refreshed your ideas are," he says. "Looking at
beautiful things - art and nature - creates connections that we often
neglect to notice. Notice them capture, them in writing and use them."
6 Practical Exercises To Harness Your Entrepreneurial
Fears
Serial entrepreneur Seth Epstein recently gave a keynote address as part
of the University of California at Santa Barbara’s Distinguished Lecture
Series. During his inspirational talk, Seth shared six hands-on exercises
that entrepreneurs can use to harness their fears.
Seth began his entrepreneurial career when he dropped out of
the University of California, Santa Barbara at 19 years old to start a
clothing company, which he eventually built into a national line of
denim products featured atNordstrom, Macy’s and Neiman Marcus.
Seth was also the Founder and CEO of FUEL, a broadcast design firm
that Razorfish acquired for more than $30 million, and is an Emmy
Award winner for his work rebranding ESPN’s X-Games.
7 Business Mistakes Serial Entrepreneurs Never Make (Twice)John
Greathouse Contributor
Many Entrepreneurs Never Leave Their Comfort Zone Martin Z willing
Contributor3 Steps To Becoming Fearless At Work Learn Vest
Contributor
Seth’s comments are acutely applicable in today’s dismal economy.
Stubbornly high unemployment, sluggish growth and ongoing regulatory
uncertainties have contributed to make many entrepreneurs even more
fearful that usual.
You can watch Seth’s 4-minute discussion of these six exercises below.
Fear is an unwelcome hindrance at all startups, where uncertainty and
ambiguity are the norm. Entrepreneurs are constantly required to
perform new tasks and overcome unexpected challenges. Thus, startup
warriors must condition themselves to channel the adrenaline that
naturally arises from fear of the unknown into motivational energy.
Properly harnessed, fear can be inspiring.
Six Exercises To Harness Your Fears
Seth encourages entrepreneurs to pick one exercise per week from the
list below that they find intimidating and execute it. If a particular task is
unchallenging, skip it. As Seth notes in his talk,“These tools will
expand your capacity to be successful. Do what you are afraid of,
because in business, you will have to do…thing(s) that you are afraid
(of) to be successful. You need to expand your capacity to deal with
challenge. If you shy away from being unreasonable, when you are
in business, you will shrink.”
1. Dating Up – ask someone on a date who others would think is “out of
your league.” Note: only engage in this exercise if you are single,
entrepreneurs do not need the added stress of a fractured relationship
2. Strange Talk – engage in a meaningful conversation with three
strangers and identify at least three things you have in common with
each person
3. Extreme Challenge – engage in a physical activity that you find
intimidating, such as: bungee jumping, parachuting, white-water rafting,
surfing, long-distance running, ocean swimming, etc.
4. Hero Courtship – contact someone you admire, the higher-profile
and more seemingly unattainable the person, the better
5. Adventure – plan a challenging trip to a remote destination that will
force you to call upon your resourcefulness
6. Be A Yes – for one week, say “Yes” to every (physically safe)
opportunity you encounter
According to Seth, “You need to become a ‘Yes.’ Be a ‘Yes’ for one
week to everything. Try it. It will feel awesome. You will meet people
that you never would have met. You will learn things you would
never learn. You will go places you would never go.”
If you enjoyed Seth’s advice, you might want to check out his 7 Tools of
Entrepreneurial Awesomeness video.
More activities and Podcasts
http://ecorner.stanford.edu/
http://academicearth.org/online-college-courses/entrepreneurship/
http://www.entre-ed.org/teach/activits.htm