People often think of entrepreneurs as risk takers and as a unique group of people who are more willing to take risks than the general population. From the outside looking in, entrepreneurs do often look like they are taking big risks. And granted, any startup is a step into the unknown and therefore risky. But, in reality, successful entrepreneurs often do not have a different risk profile from non-entrepreneurs. Some are risk averse and others are more likely to seek out risks. What is common among successful entrepreneurs is a willingness to consider those risks in advance and determine the likelihood of failure and then decide whether, when and how to take action. In other words, take calculated risks.
There are countless stories of people who have dreamed big ideas, even discovered or created feasible business opportunities, but never took the step to bring their dream to fruition. Like opportunities, the willingness to evaluate the risks and take action will be influenced by who you are, what you know and who you know. And, while there is no entrepreneurship without opportunities it is the willingness to act on them that ultimately leads to the path of entrepreneurship. Where does that proclivity to take action originate?
The willingness to take action to start a new business begins with an intention. The reasons to start a business are many and can range from very personal and unique experience to events or elements external to us that lead to the thoughts that encourage us to consider turning an opportunity into a business. However, the willingness to move from intention to action requires a belief that we can do what it takes to reach our entrepreneurial vision. Psychologists often refer to the belief that we can reach our goals as self-efficacy and research has shown us that higher levels of self-efficacy mean we are more likely to focus on success whereas lower levels mean we tend to focus more on feelings of failure. Higher self-efficacy also means we are better able to cope with adverse situations. Having this kind of confidence in our abilities not only leads to the first steps of starting a business, but will also carry us through the challenges, failures and setbacks that are inevitably on the pathway to success.
Having this confidence in your ability to execute on your goals is valuable in all aspects of life. In entrepreneurship it is vital to not only the success of the business, but also to the health and wellbeing of any entrepreneur. As someone who has helped prepare and coach hundreds of business founders, helping nascent entrepreneurs build this confidence has become a top priority. Psychologists have identified four ways to enhance self-efficacy which can be applied to the practice of entrepreneurship. Today’s blog will address the first of these four – mastery experiences.
Mastery of any subject includes not only gaining knowledge but also applying it in multiple settings and with both positive and negative outcomes. Positive outcomes, or what we commonly think of as successes, tend to build confidence and therefore increase self-efficacy. Negative outcomes, or what we think of as failures, may initially undermine confidence. However, in the long run addressing and learning from negative outcomes builds a more resilient self-efficacy that is even more powerful and provides the ability to persevere in the face of adversity and to quickly rebound. By sticking it out through tough times, we emerge stronger from adversity. This is why investors are often more anxious to invest in someone who has started a company, whether the company was a success or not, than in someone who has no experience with entrepreneurship. Entrepreneurship, like any other set of skills, can be learned and practiced and over time can be enhanced. Education and experience in entrepreneurship are powerful tools to enhance confidence in your ability to take action.
Brad Chisum is the co-founder of Launch Factory, a startup studio in San Diego. This program, like many others, is designed to help launch new business ventures. He decided to start this company because of what he learned on his own entrepreneurial journey as the co-founder of Lumedyne Technologies, a MEMS Inertial Sensor company. MEMS Inertial Sensors are the technology that makes accelerators and gyroscopes which, at the time of the Lumedyne launch was relatively new but are now found everywhere, including your mobile phone. When I talked with Brad, he confessed that he initially didn’t think he could be an entrepreneur because he “knew nothing about business.” He was an engineer and had a great job but realized he was actually a “closet entrepreneur.” So, he decided to go back to school. Brad actually credits one of his professors during his MBA program with teaching him what Brad calls the real story about entrepreneurship. And that includes two important facts about entrepreneurship that enabled him to move forward and leave his job and start Lumedyne. According to Brad, “the first is that no individual person has what it takes to willpower a business to success because so much is out of your control. You cannot control markets, you cannot control your competition, you even cannot control who works for you. You can influence some factors, but in the end, by yourself you can’t get it done.” Second, there will be people who come along and help you on your journey, the key is to be open to this help and be willing to accept it. For Brad, knowing that no single person can succeed as an entrepreneur alone, but that there would be help along the way, meant there was hope for him. In the end, knowing he didn’t have to do this alone was reassuring and gave him the courage to take what he calls a “leap of faith” and start Lumedyne, which was sold to Google in 2015 for a reported $85m.
Returning to school like Brad is an excellent way to build your confidence to take the first step into a startup. However, there are many other ways to gain mastery experiences that can range from working in a startup to launching a new program or project at work, school or in your church or other groups to which you belong. Either way you approach it, gaining mastery experiences is one of the best ways to build a strong sense of confidence in your ability to start and build an entrepreneurial venture. However, there are other valuable ways you can enhance your readiness for entrepreneurship and build your entrepreneurial self-efficacy. Look for more on those over the coming weeks.