Were you born to be an entrepreneur? Introduction to the study of entrepreneurship
By: Prof. Liora Katzenstein, Founder and President, ISEMI College
"Many people dream of “making it big”, setting up a business, issuing it/ selling it and becoming a millionaire.It turns out that you can learn to be an entrepreneur. Of course, studies cannot promise that you’ll become a millionaire, but you can certainly reduce the risks.In the last 20 years entrepreneurship has emerged as a field of knowledge that occupies a place of honor in business administration studies worldwide. Today it is accepted that entrepreneurship is not only expressed by starting new businesses, but mainly within organizations (intrapreneurship). Yet in spite of this subject’s cardinal importance in the third millennium, studies show that 90% of startups set up by entrepreneurs of all kinds (technological, financial, marketing) close within 3 years, and of the 10% that survive, very few make the breakthrough, while the rest mark time. So “entrepreneurial genes” are not usually enough, and something else is needed.
A study of failed businesses by ISEMI Business Entrepreneurship shows clearly that in most cases it is a question of management failure, due to the founders’ lack of experience.
The same “entrepreneurial” qualities that helped start the business are ultimately what cause its failure – the transition from the first stage that requires creativity to the professional stage that demands management capabilities.
Research shows that there is indeed an innate quality of entrepreneurship, indicated by an ability to make rapid intuitive decisions and a relatively high tendency to take personal and business risks. But contrary to the widespread myth, successful entrepreneurs do not gamble in a vacuum. They take calculated risks, derived from a thorough study of their intended area of activity.What do entrepreneurs need for the big breakthrough?After two decades of assisting numerous entrepreneurial companies, start-ups, intra-organizational ventures and social entrepreneurship ventures, I believe that the missing link is usually a deep understanding of the field of business entrepreneurship. A mastery of technology does not necessarily make a successful technological entrepreneur; a creative idea is not a guarantee of business success, unless the entrepreneur knows how to establish, develop and manage a business.In addition to having a creative idea, establishing a business is a complex mix of the type of venture, good communication between people of different backgrounds, a thorough understanding of the business area, confidence in one’s abilities, knowing how to obtain the required resources, marketing-oriented thinking, financial understanding, control of various technologies, and more.
Can one person combine all these qualities?
Of course not, but it is possible and necessary to develop an understanding of these areas, with studies and practice that draw the various threads together. In my experience, after assisting dozens of ventures, I believe there is very little value in studying specific business areas as tools in themselves. For example, financial forecasts not based on a broad business/ marketing understanding and familiarity with human and other resources in organizations, have limited usefulness.By contrast, interdisciplinary studies can be enormously helpful, for example “Identifying business opportunities” – a study process based on real-life projects, integrating classes in strategy, marketing, technology, finance, the legal and regulatory environment and so on.
Experience based studies, built on real projects, give potential entrepreneurs the tools to reduce their risks considerably. So it’s not only possible to learn how to be an entrepreneur, it’s essential to do so. “Gut feelings” not based on professional knowledge and familiarity with the specific business increase your chances of being one of the 90% failed startups.
How does this sit with the fact that the founders of today’s giant corporations had no formal business education?
If we look carefully, we’ll find that nearly all of them were autodidacts who knew how to teach themselves what they had to know to expand their businesses. Their common trait is their vision and the unceasing drive to realize it, involving enormous personal investment in learning by experience, often with serious losses in the early stages. Moreover, a “wise entrepreneur” knows when its time to transition from an entrepreneurial venture to an established business.
I have learned that failed ventures share a number of features: a lack of management systems, poor financial planning, over-dependence on key people, insufficient sources of capital for the growth phase, over-investment in the technological aspect at the expense of proper strategic and marketing business planning.
In today’s information age with its rapid changes in technology and business complexity, it is unthinkable to set up a business venture not based on thorough research. So the most important investment for a would-be entrepreneur, before raising capital, is a process of learning, training and practicing how to manage a startup in general, in addition to the specific study of his area of business.