Being a Smart Business Owner Isn’t Enough

How smart do you need to be in order to be a business owner? In their book The Smartest Guys in the Room, Bethany McLean and Peter Elkind tell a fascinating story about how a bunch of smart people were not able to figure out how to keep their house of cards from toppling.  Sure, they were smart, but being smart just isn’t enough for a business owner.

In fact, most business owners are not the smartest people in the room.  A study by Northwestern Mutual Life Insurance Company involving more than 5,000 entrepreneurs showed that they were generally not the smartest students in the class.

What qualities are most helpful to a small business owner:

• Ability to persuade. You have to persuade bankers to give you money, employees to work well, customers to keep coming back, and your family not leaving you.  Maybe that’s just basic social skills, but it means you have to relate to people, get them to buy into your passion and your ideas, and give you what you need to succeed.
• Ability to keep your head. A lot of crazy things will be thrown at you, from employees stealing, to banks reneging on the money they promised to loan you.  You must be able to stay cool, figure out how to work around the latest problem, and stay on course.
• Ability to work in a team. The small business owner today isn’t working up in an office all alone.  You need a group of people to help you move your business forward.  This means finding good people, letting them do what they do best, and listening to them before you make decisions.
• Ability to change hats as necessary. Michael Gerber says small business owners wear three hats – technician (your skill and experience in a job or profession), manager (keeping things running), and entrepreneur (visionary and motivator).  You must either find people to help you with the parts of your business you don’t like or don’t do well, or you will have to do them yourself.
• Ability to create an environment of ethical business practice. Warren Buffett says he looks for companies with integrity above all.  If a company has integrity, it’s because of the owner.  If a business doesn’t have integrity, it is also because of the owner.  Creating an environment of ethics and integrity in your business is essential.  Even if you don’t succeed, at least you will be able to sleep at night.

So, if you aren’t the smartest person in the room – or in your class – don’t worry.  Get out there and find people to help you, learn how to persuade people, and create a business of integrity.

Image: sxc.hu