We usually associate the characteristic of risk taking with an entrepreneur. But is risk taking the only characteristic required to be a successful entrepreneur? Or are there other qualities too? Or it is not about just being a risk taker but about something else?
We have many friends who have this amazing product idea and want to turn it into a profitable one by taking it ahead as an entrepreneur. In fact, many of us may feel that may be not today or tomorrow, but somewhere in the near future, would like to be a successful entrepreneur. Today, you are being prudent. You plan your life. First, you are going to take a good job which will pay you sufficient to take care of your expenses and also help you save for your future endeavours. Secondly, you are going to start working on a business idea. At the same time, you are going to gain as much experience as possible related to different domains.
But what about those people who never planned all these things? They had a business idea and just took their chance and went ahead with it. And Bang On! They were successful. Bill Gates, his love and passion for coding computer software programs has made him the wealthiest person in the world. He never thought of getting a good job to fund his business and gaining knowledge in all the other fields. He did not walk on the prudent path. He dropped out of Harvard. Can you believe a college dropout now owning a multi-billion dollar company? A company, in which all the aspiring software engineers and MBAs desire to work, is built by a college dropout.
What did Bill Gates do different? He did have exceptional skills. He had love for machine. He had passion for programming. He saw an opportunity and grabbed it. Can a lame man do the same? Can anybody get up from their sleep and start chasing their dreams? Bill Gates had a dream. But this very dream he chased was backed by his skills, love and passion, and vision. What if he had no vision? He saw a dream and randomly decided he wanted to start his own computer software company. What if he had not seen an opportunity which was knocking and decided to start a firm? People would have said he was just lucky, and the luck does not shine every time. But, if there was no such opportunity and he would have decided to start a firm with his friend. Then? He would have failed miserably, his dream would have been crushed, enrolled back in college and would have worked for some successful company. Most importantly, Microsoft would not have existed. Can anybody of us imagine making a presentation or a normal report without using Microsoft Office? Is there any other software that can replace MS Office? Not that I cannot think of any!
Let us talk about the prudent way. We say we will do business, but let us save to fund it. Or we say, ‘I don’t have an idea right now. I am going to wait for the right time.’ But after securing a good job and getting comfortable with the current lifestyle, we see an opportunity but how many of us seize it? How many of us are ready to let go off the steady and fixed income for one business idea. After getting too comfortable with the 9 am to 5 pm job, we find this risk ridiculous.
Dhirubhai Ambani would have got comfortable with the way things going at Majing Corp., but he did not. He parted ways with his partner, Champaklal Damani, for simple reasons. Their style of doing business was different. Damani was prudent. Ambani was a risk taker. But Ambani was not just a risk taker. He had an eye. He built up inventories because he anticipated a price rise, sold the inventories at a higher price and made huge profits.
What differentiates an entrepreneur from a risk-taker is his eye. The vision of anticipating the future market trends, to foresee and move forward with a decision. We have seen many people losing their money on stocks in the anticipation of price rise, but their stocks fail them. These investors anticipate the price rise correctly or they do follow someone’s advice. But where do they go wrong? They did anticipate the price rise but did not know when to exit the stock. They see the rise, they can see the stock has given returns above their expectations but they feel the price will raise more and are ready to take the risk. However, instead of rising, the price goes down steeply, washing out all the returns they could have cashed in.
Here is the difference between an entrepreneur and a risk-taker. An entrepreneur has seen the market trends and knows where to exit. A risk taker jumps at the situation when there is more at stake for a very less return. For an entrepreneur, returns do matter, but he is good at calculating the return for every pound of risk.
You may argue that entrepreneurs do make losses in the initial phase of the life cycle of the business, so why not exit. But which business doesn’t make losses in the initial phase. It is a common phenomenon. But what does not fail or disappoint the budding entrepreneur, is his belief in his idea that will work out. This belief pushes him forward to tackle the obstacles he faces. A belief can exist in many ways, sometimes even externally. For instance, Ekta Kapoor, when she started her television endeavour, she named her every television serial starting with the alphabet ‘K’. Her belief came externally. But over the years, she has scrapped out the letter ‘K’ belief and has been successful both on television and in movies.
If we take a risk and are successful, we are rewarded. But if we take a risk and fail miserably, we call it a lesson. However, the most important lesson for an entrepreneur is the risk of letting go. For an entrepreneur, this is the most difficult part. Partly, because of the love he has for the product he created with his own hands or the outstanding idea he developed all by himself. And, partly because of his ego when he’s about to lose the control over to the new management. However, if he loves his business so much, he should not hold an ego which has been build up due to the autonomy issues and handover the business for its better management. When it comes to his love for the product which he gave birth to and took its motherly care, he should know when to sell it off or even close it down. After trying the IV shots available in his first aid to revive and develop the product, he should learn to give up if its products do not sell.
An entrepreneur may not have attended the finest business school but he may possess management skills. A person may have skills to develop a product, has love and passion and sees an opportunity, but he may not have skills to manage a business. This person should know when to sell off his business when a good deal comes his way. When you reach this stage the risk of handling the whole business by oneself is very high with a huge downfall. And this risk should be avoided. Knowing one’s capabilities is important. And if your capabilities are not excellence in all the areas from funding to selling, you should concentrate on the product.
Article by Divyanka Gangurde