Despite their vital role in the global economy, entrepreneurs are often misunderstood.
“By developing new businesses, they create jobs, increase economic activity and drive innovation,” explains Maria T. Pinelli, global vice chair, Strategic Growth Markets, EY.
Yet, she says, decades of academic research into the topic have produced no universal definition of entrepreneurship, and no agreement about the precise traits and behaviors that characterize entrepreneurial leaders.
As founders of the EY World Entrepreneur Of The Year™ program, the world’s most prestigious business award for entrepreneurs, EY undertook its own research to unlock the entrepreneurial DNA.
“Although entrepreneurs operate across a highly diverse range of sectors and regions of the world, we have found they share a number of common behaviors and characteristics,” Pinelli says.
EY’s research included a survey of 685 entrepreneurs and in-depth interviews with winners of the Entrepreneur Of The Year™ Awards. Here are the key findings from the report:
Entrepreneurial leaders are made, not born.
Although many entrepreneurs start at a reasonably young age, the experience they gain through education and time spent in a more traditional corporate environment is vital to their success. More than half the respondents described themselves as “transitioned” entrepreneurs — meaning they previously spent time in traditional employment before setting out on their own.
Entrepreneurship is rarely a one-off decision.
The majority of respondents consider themselves “serial entrepreneurs,” having launched at least two companies. Entrepreneurial leaders who embark on more than one venture gain valuable insight and lessons into how to make a new business successful. They learn from mistakes made and use that experience to create more companies.
Funding, people and know-how are the biggest barriers to entrepreneurial success.
Among the six out of 10 respondents who experienced obstacles in their ventures, the most common barrier is lack of funding or finance. Despite the gradual easing of credit conditions in most countries, access to financing remains a top issue. The two other most-cited obstacles are people and expertise.
Entrepreneurs share common traits.
Entrepreneurs typically exhibit a strong locus of control — a belief that events result directly from an individual’s own actions or behavior. This is complemented by a mindset that sees opportunity where others see disruption, along with an acceptance of calculated risk and a tolerance of failure.
Traditional companies can learn from entrepreneurial leaders.
Employee incentives and fostering innovation are good places to start. It is no coincidence that fast-growing entrepreneurial companies tend to place larger amounts of share ownership in the hands of employees.
For more information, or to read the entire report, visit www.ey.com.
What was the make-up of the people interviewed for this extensive survey?
- 685 entrepreneurial leaders.
- More than 30 countries and 25 industry sectors represented.
- Majority of companies have revenues between $10 million and $20 billion.
- 58 percent of the respondents achieved annual revenue growth in excess of 20 percent in the previous year.
Who are some of the entrepreneurs who participated in the study?
- Howard Schultz, chairman, president and CEO of Starbucks, the world’s most famous coffeehouse company.
- Wally Fry, co-founder of Fry Group Foods, manufacturers of a range of vegan products.
- Ronald J. Kruszewski, chairman and CEO of Stifel Financial Corp., a full-service regional brokerage and investment banking firm.
- Denys C. Shortt, chairman and CEO of DCS Europe plc, the UK’s leading distributor of health and beauty brands.
- Khudusela Pitje, co-founder and executive director of New Gx Capital, a South African infrastructure advisory and funding company.
- Yuliasiane Sulistiyawati, President Director PT Pazia Pillar Mercycom, a chain of one-stop IT shops based in Indonesia.