27 April 2021|Resilience, Success
82% of business owners are confident that they have the right qualifications and experience to run a company. Yet, only 40% of small businesses are profitable and as many as 50% fail within their first year.
While market research, quality products that meet market needs, and listening to your customers are all important; what’s often overlooked is the mindset an entrepreneur needs to weather the ups and downs of starting and sustaining a new venture.
It’s all in the mind(set)
Viewing adversity as an opportunity to learn and grow, having a firm internal locus of control – the belief that you are the creator of your success – and training your mind to manage negativity and leverage positivity are some of the key strategies required to succeed as an entrepreneur.
Let’s take the example of Adrian.
Adrian was a budding entrepreneur with a great idea for a business matching service. His digital platform would enable the mutual development of companies’ talent pools via cross-business employee sharing programs. His background in databases, software development, and work experience with human resource organizations gave him a firm foundation for launching his own business. The business plan was ready with a prototype and the next step was to seek funding.
Unfortunately, initial presentations to potential investors hit a dead end. Adrian believed that he didn’t have what it took to be a “sales guy”. This belief put him on the back foot when trying to gain buy-in. Adrian’s inability to allay his doubts impacted his self-confidence and each failed attempt was a punch to the gut for him.
Keen to move his idea forward, Adrian considered approaching his bank for a loan and finance the start-up with his own savings. Nigel, his co-founder, disagreed with both, investing his own capital into their venture and leaving the security of his job to devote more time to their new business. Without Nigel’s support, Adrian began to question the potential of the idea and started getting stuck in a negativity spiral, creating a mental checklist of everything that could possibly go wrong.
A change of view
Adrian soon acknowledged that if he continued this path, his business venture would never see the light of the day.
The Co-founders carved out some time and wrote out all the negatives that had been swirling around in their heads and worked towards a solution to the challenges staring them in the face. It was essentially a brainstorming exercise and nothing was rejected as a ‘bad idea’. This exercise helped turn their negative thinking around to a solution-focused approach. Rather than hiding from the problems, they came up with a number of strategies to get their business off the ground.
Solution-focused thinking increases motivation and enables people to address problems with increased creativity. This enables entrepreneurs to keep moving forward and overcome the obstacles that crop up when establishing a new venture. Research into solution-focused thinking shows that this approach often stops people from becoming ‘stuck’.
Since Nigel was hesitant to use his capital or quit his job, Adrian agreed to invest half of his savings in the business and devote his time to finding capital investors while taking up a part-time job. This would ensure he had time and income until he was able to get the investment needed to focus more effort on their venture.
As Adrian and Nigel practiced solution-focused thinking, they also addressed the elephant in the room i.e. Adrian’s poor presentation skills that had so far failed to impress the investors, in spite of getting an initial interest in the product. To build his skill sets, Adrian used two different techniques:
- He took measures to build his confidence by hiring a coach
- He worked on his sales pitch by seeking the support of his mentor.
Adrian began working to strengthen his internal locus of control. Studies have shown that entrepreneurs with a strong internal locus of control (a firm belief that you can influence outcomes) are more proactive and tenacious, recognizing and seizing opportunities faster.
With the support of his coach, he became aware of his inner dialogue. When his thinking turned to ‘I can’t…’ he switched it around to ‘I can attempt…’/ ‘I can learn…’
This simple change of mindset led him to take a brief online course in sales to learn key pointers for presenting business ideas to potential investors. His new knowledge helped him refine his introductory emails and he began approaching weak connections in his network – friends of friends and ex-colleagues to ask for investment. This strategy filled Adrian’s schedule with investor meetings.
Reframing for investors
Adrian had recognized that one of the biggest flaws with his sales pitch was his inability to see his product from the perspective of potential investors. In order to get ahead of their questions and doubtful queries, Adrian used a reframing matrix.
This gave him a holistic view of his business idea and allowed him to answer potential investors’ questions before meeting them.
Due to his prep work, Adrian was more positive and optimistic in his presentation. He gained deeper insights into the problems his business could solve and even created a development path for future projects that would supplement the core business idea. After a few more attempts, Adrian was able to find the right investor for his business.
Nigel, unwilling to take the risk of leaving his secure job, eventually asked Adrian to buy him out. With the investment that Adrian had secured and the new confidence and direction he’d gained, Adrian did so happily, moving on to build a successful platform that matched professionals to mentoring and talent development opportunities with other companies.
Starting a new business requires a range of skills. However, even when we embody all the right skills and experience, success can remain elusive. Without the right mindset and attitudes to drive us forward, there is a greater chance of becoming one of the 50% of small businesses that never make it.
The right mix of tenacity, enthusiasm, positivity, and creativity is what sets successful entrepreneurs apart from the rest.