In the U.S. alone, over 8.7 million people are self-employed entrepreneurs. That’s roughly 2.6% of the total population. So what do they have that other people don’t? Here are the different entrepreneur types and why they are successful.
The Bureau of Labor Statistics reported that the amount of self-employed individuals has grown by 150k since 2014. However, only 20% of businesses survive past their first year of operation. Running a successful business requires a careful mixture of dedication, determination, business finesse, and ingenuity. Though, even if one has the skills required to run a business, thousands of individuals still fail every year.
Why is the failure rate so high?
Well, there will always be uncontrollable variables such as external factors, bad luck, bad timing, and personal issues. Those factors aside, some people are just not cut out to be an entrepreneur regardless. We’re going to examine what makes up the different entrepreneur types and compare them to famous leaders of the past and present. First, we will cover the basics.
Thanks to science, we can now classify exactly what combination of characteristics makes us human. There are hundreds of studies on personality traits and characteristics, but for now, we’ll focus on two major studies. Here’s a crash course on The Big Five and Myers Briggs.
The Big Five theory was developed in the 1970’s and is comprised of 5 core dimensions:
Those who express openness seek adventure, value curiosity, and gain fulfillment from new experiences.
Conscientious people feel a strong sense of responsibility, enjoy structure, practice discipline, are achievement focused, and generally are the planners in a team environment.
Often called “social butterflies,” extraverts thrive in social settings and seek communication and interaction. Extraverted individuals can come off as assertive, but generally are cheerful, as they want to build their networking and social circles.
Agreeable people exude warmth and kindness. They are known to be the most trustworthy in a group.
The term neurotic is prone to negative inclinations. People who worry often, show obsessive habits, and emanate anxiety often are known to have a neurotic nature.
How do these 5 characteristics play together in the workplace? Livescience describes how different levels of each characteristic may be more beneficial to some than others,
…in the workplace, disagreeable men actually earn more than agreeable guys. Disagreeable women didn’t show the same salary advantage, suggesting that a no-nonsense demeanor is uniquely beneficial to men… Another study found that when neurotic people with good salaries earned raises, the extra income actually made them less happy.
There is speculation that only 5 dimensions is too broad to accurately define personality and characteristics. This is where Myers Briggs comes in as the alternative. Isabel Briggs Myers developed a personality questionnaire based off of Swiss Psychoanalyst, Carl Jung, and the Myers Briggs test was born. The test categorizes people into 16 personality types based on 8 factors (plus an additional 2 factors).
The factors are Introversion vs. Extraversion, Observant vs. Intuitive, Thinking vs. Feeling, Judging vs. Prospecting, and Assertive vs. Turbulent. The final result gives you a four letter title (ENFJ, ISTP, INFP, etc.) with a description of how the personality interacts socially, in the work place, and in personal matters. If you’re interested in either test, you can take The Big Five test here or the Myers Briggs test here.
Which characteristics matter?
Good question. Saras D. Sarasvathy, professor of business administration at the University of Virginia’s Darden School of Business, studied serial entrepreneurs to find out what common characteristics successful people share. She found a simple, yet effective habit in her studies.
Act. Learn. Build.
In other words, try something, learn from those actions, and build that information into your next steps.
The study found that entrepreneur types who demonstrated the Act Learn Build method had higher chances of success. The results may sound simple, but practicing this methodology may prove to be more difficult than you’d think. For example, someone who is not naturally adventurous will be less likely to learn, because learning requires trying a new method or activity. Conscientious people may also experience the same problem with learning but excel at building, because they can integrate new tactics to their plan.
The answer? All the characteristics matter to some degree, but the balance of each dimension affects how effectively you Act Build Learn.
Applying These Principles to Entrepreneur Types
Now that we’ve described characteristics and the core method, we can apply them to the different entrepreneur types. Keep in mind, very rarely do people fall into one classification, so think about the following types on a scale rather than a category.
Entrepreneurs who are driven by innovation seek to change the world for the better. They find fulfillment in bettering lives rather than filling their bank accounts. These are the scientists, philanthropists, and innovators who value progress and discovery over marketability and strategic goals. Although they may lean towards introversion, innovators show a high sense of openness and are generally agreeable.
Famous innovators – Bill Gates, co-founder of Microsoft & Nikola Tesla, inventor of modern electrical current systems
Visionaries think outside the box. They exude creativity and devotion in their ideas. Visionaries want to change people’s lives for the better while keeping a strategic objective in mind. Their purpose may not be entirely selfless, but visionaries make great strides in progress through their devotion to their concepts. Often confused with innovators, visionaries are more conscientious as they work towards an ultimate goal.
Famous visionaries – Steve Jobs, co-founder of Apple & Henry Ford, founder of Ford Motor Company and inventor of assembly line production
We all know that one guy or girl who could sell ice to an eskimo. The hustler is a confident, determined, driven opportunist. They are typically impulsive and not afraid to act. Hustlers are also known for being risk takers, and they tend to base success largely on their personal progress and financial wealth. Due to being highly extraverted, they often have large networks and seek new experiences.
Famous Hustlers – Zig Ziglar, salesman and motivational speaker & Gary Vaynerchuk, author, speaker, and internet personality
Those interested in structure, numbers & figures, and observation are often the builders of a business. Strategists are known for being the realists and planners with good temperament. They find fulfillment in reaching goals, breaking records, and financial success. Strategists value practicality over sentiments and may be the least agreeable of the 4 types. However, their high levels of conscientiousness make for extremely effective entrepreneurs.
Famous Strategists – Warren Buffet, CEO of Berkshire Hathaway & Sheryl Sandberg, COO of Facebook and founder of leanin.org
Sure, there are the entrepreneurial prodigies who naturally have the perfect mix of traits and qualities. However, for the other 99% of us, success comes in understanding and applying Act Learn Build. Thorough comprehension of your personal strengths and weaknesses allows you to exploit your assets. For example, if you falter in one area, build a team to compliment your strengths and increase your success. Whether your entrepreneur type is innovator, strategist, hustler, or visionary, success is attainable. It all depends on your determination to work for it.
If you are an entrepreneur in need of a partner, check out Partner Salary Agreement – 4 Questions to Mitigate Partnership Failure.