Do You Have the Right Stuff to be an Entrepreneur?
Anyone can start a company. However, few can sustain it. Roughly, just one out of every seven companies survives for any appreciable length of time. According to statistics from the U.S. Department of Commerce, only about 15% of businesses survive for 10 years.
Every year in our industry, approximately 12% of the retailers fail. And what of the surviving 88%? The average survivor, according to a World Floor Covering Association (WFCA) report, earns a net operating margin that's less than half the return on U.S. government bonds. These owners don't own an investment-grade business. They own a job - with all the costs of owning a business, but none of the thrills!
Are you, as owner of a retail floor covering store, an entrepreneur or just a jobholder? Storeowners who build a lasting business have the right stuff - the stuff it takes to be an entrepreneur. "Entrepreneur" derives from the French word meaning "undertaker" - as in someone who undertakes to build an enterprise.
A storeowner may have great skills at doing the business, including selling, installing and serving customers. However, an entrepreneur doesn't need those skills, and seldom uses them. Instead, he or she becomes great at building the business; building systems that make a smooth-running business machine. That smoothness motivates employees - even ordinary employees - to perform in extraordinary ways that excite and attract customers.
Recently, during one of my "how to run a small business" seminars, a participant related a true story that confirms this finding. He compared two Pittsburgh Paints stores. The first, a company-owned store that was run by a manager, needed five years to break even. By contrast, a franchised store, run by an entrepreneur, took only three-and-a-half years to produce profits.
In this article, we'll explore two prime hallmarks of an entrepreneur: the drive to build a great enterprise, and the pursuit of knowledge. As you read, measure the strength of your drive and pursuit.
The drive to build a great enterpriseAccording to recent U.S. Department of Commerce figures, 75% of small businesses fail within the first year of operation. However, less than 5% of all franchised businesses fail each year. Why? The franchise's business systems produce results!
Entrepreneurs feel internally driven to accomplish something that works well and benefits others. As Massachusetts Institute of Technology Professor Edward Roberts has found, they don't devise "brilliant ideas that only other brilliant people like themselves recognize. They want to create something significant and tangible - a building, a bridge, a company." They don't want to create just a company. They want to build something that works well.
Entrepreneurs are nearly obsessed with building this enterprise. One reason they behave like men and women possessed, according to Professor Ian C. MacMillan, a long-time student of entrepreneurship at the Wharton School, is that they have experienced a flash of understanding known as "entrepreneurial insight." In their mind's eye, they have seen the great unmet need, the big opportunity.
I know some entrepreneurs in the floor covering business. I recognize them by a trait they hold in common - they want to get it right. Their vision goes beyond just building an enterprise. They strive to build a company with a predictable rate of return.
On the other hand, many retailers have told me that, as much as they'd love to participate, they can't make the time to attend my seminars. I suspect that those retailers are spending more hours a week selling and installing than building and improving their businesses. If so, maybe they need to spend time learning more rather than working more. In which group would you place yourself - among the learners or the workers?
Pursuit of knowledgeWhen they don't know how to increase their profit levers, they find out. Every month, they are reading, learning and applying knowledge to advance their success. Instead of working harder, they are learning what it takes to improve and run the business with less effort.
True entrepreneurs are obsessed with learning. They know that knowledge is power, because it gives them choices and alternatives. They may not know how to build the better mousetrap, but they know what they must do to find out.
How about you? Do you recognize your ignorance? (The most ignorant people don't.) Do you let your ignorance limit you? Or, do you jump up and reach out to learn? How intense is your desire to pursue knowledge?
On a flight last month, I met Jeffery Willis, owner of American National Carpet Mills, which makes carpet for automobiles. As we conversed, I realized that I was talking to a true entrepreneur. Jeff grew up in Brooklyn. At age 15, he tried factory work. He soon realized that he did not want to work in a factory "unless I own the factory."
Willis craved a college education, but had no money for tuition, books, board, and room. After graduating from high school, he boarded a bus with $200 in his pocket and headed to Louisiana. A friend had told him about Southern University. When he disembarked the Greyhound, he was 10 to 12 miles away from school and alone except for a sole companion, a footlocker. He vowed, "This must be temporary."
He was able to enroll and get a dorm room without paying any fees. But, three weeks later, he was called into the administration office. "You need to pay your tuition or you're out," he was told. "You can't stay here."
But, they didn't know they were dealing with an entrepreneur. He was determined to receive an education. He didn't know what he didn't know. But what Jeff did realize was that he didn't know enough to be successful. Determination to succeed was not enough. Hard work was not enough. He needed personal power that only comes with learning and growing.
As a result, Jeff haggled for two jobs at the university. He studied and worked long hours. He vowed again, "This must be temporary." He told me, "My insatiable desire for knowledge helped me prepare for my struggle." Eventually, he graduated with honors and won a scholarship to Oxford University. Upon graduation, he received 30 to 40 job offers.
As Jeff struggled to learn, he kept asking himself, "Are my goals worthwhile enough for me to pay this price?" He had set high goals.
But he's already close to reaching those lofty goals. Not only does he own the company, but he and the employees also give much back to their community. In the pursuit of knowledge, Jeffery Willis is a true entrepreneur.
Typical retailers compensate for their lack of knowledge by working harder. They have made a fatal assumption. "If I can sell or lay floor covering," they say, "I can run a flooring business." I, too, made that bad assumption. I failed to apply the principle that it takes different skills to "run" a business, than those required to "do" the business.
Unfortunately, six out of seven business owners act like their main job is selling and serving customers. The more they do the business, the more they risk the business. Working harder won't produce lasting success. (Re-read that sentence.) No enterprise can succeed unless the storeowner, manage, and all employees are constantly learning and applying true principles and proven practices.
Where do you stand?Apparently, there are more floor covering storeowners with the right stuff than I know. Recently, trainer and speaker Jon Trivers reported that the small, independent floor covering retailer is not doomed to extinction, but is alive and well and prospering in the cities of America. Why couldn't a mega-corporation like Shaw Industries succeed at retailing? Maybe at the helm of their stores stood a hired employee, instead of a passionate and dedicated entrepreneur.
Floor covering retailing is difficult. It takes an entrepreneur to build a lasting enterprise. True entrepreneurs are driven to build a business