The entrepreneur is the hero of capitalism, the object of envy and admiration, the mainspring for the private sector, the stuff of commercial legend, the source of new companies, new products, new industries. Yet entrepreneurship is treated like a mystery. Myriad books aim at managers and claim to improve their management. But nobody teaches entrepreneurship - possibly because nobody believes it can be taught. It can be.
The entrepreneur, or enterpriser, turns a business idea into a new business, or injects new vitality into an old business. At every stage - from the thinking that produces the Big Idea through planning to implementation and beyond - the entrepreneur can benefit from the examples of others, people who have been there before, from clear precepts and practices. In fact, that's how many entrepreneurial successes have learnt their way to wealth.
True, there are also entrepreneurs who have apparently never needed a lesson, who have acted from instinct rather then intellect. Track their ascents, though, and their actions invariably follow a pattern, are based on logic and observation, and are controlled by methods which can be easily understood, described - and imitated. If it sounds too simple, so it should. As Mr Bernstein, the factotum for Citizen Kane, remarked: 'It's no great trick to make a lot of money, if all you want is to make a lot of money.'
So what explains the many business failures, or the failure of far more would-be entrepreneurs even to start on the road? Many dream, but don't act; they are Walter Mittys, unwilling to make the sustained efforts, on all dimensions, that success demands. Inability to understand what those efforts entail, and how to make them, is also what explains the innumerable setbacks of those who start and fail.
One basic question faces every firm. Do you want your business to grow, or are you broadly content with what you've got? In the first, expansionist case, according to a new study, you could be either 'value-builder' or 'empire-builder'. If growth doesn't appeal, however, your type might be 'controller' or (more likely) 'life-styler'.
Life-stylers agree with this statement: 'I am not very keen to grow the business much beyond its current size since to do so I would need to change the ownership structure and/or contol of the firm.' If that's your style, perhaps the traditional image of the smaller firm, it's out-of-date: you're in a small minority.
So is anybody who echoes this statement: 'I am not very keen to grow the business much beyond its current size since to do so would make it too difficult for me to keep track of the firm's operations.' These are the no-growth controllers, who, along with life-stylers and other reluctant heroes, account for well under half the small firms (in printing, software and instruments) studied by Michael Hay and Kimya Kamshad of the London Business School.
Most firms are bent on growth, including those (a quarter of the study) who want to build value rather than empires: 'I am very keen to expand the business and then find a buyer to buy me out'. The biggest group are the idols of all those Thatcherites who hold that the dynamism of smaller businesses is the lifeblood of free enterprise: 'I am very keen to expand the business and continue to run it myself.'
The big question, though, is whether dynamic attitudes have dynamic results. Apparently not: in the year studied, 11% of the firms grew not an inch, while 35% suffered a drop in sales. Since the great British recession was still in full swing, that's not too dismal a result; economic gloom must have contributed to the largest confessed restraint on growth -'intensity of competition.'
Too much competition far outweighs other, more familiar complaints about the outside world, like inability to find adequate finance. All-in-all, though, external problems seem to be greater barriers to growth than the common (and commonly reported) internal problems: lack of management resources, preference for smaller and more manageable size, reluctance to dilute ownership or take on new debt, and lack of successful innovation.
The firms pay more lip-service than service to innovation. Without innovation, though, you can't expect to grow in a climate of intense competition - and that's a permanent feature of the new economy. Innovation, however, involves risk, to which both growers and non-growers seem averse, especially proprietors; 30% are 'unwilling to pursue any risky growth strategies'. That compares with 18% of the non-proprietorial managers, a more thrusting bunch altogether.
All the same, only a fifth even of the managerial types agree that 'Growth is everything: we cannot survive in this business unless we grow. Success only comes from taking big chances, and I would risk a lot for a strategy which promised to deliver strong long-term growth.' Those rather intimidating words may help explain why some three-fifths of the firms replied in favour of relative safety, taking a 'medium-risk option' - if growth prospects are 'reasonably good.'
But growth isn't their leading objective, anyway. In all three industries, more firms ranked profit as 'very important', with growth second (though quite close), followed by market share, steady employment and value for sale. Looking at all this, the LBS Business Strategy Review argues that 'a key reason' why many smaller owner-managed firms don't grow is dead simple: their owner-managers have other objectives.
They still compare well with firms in a similar pre-Thatcher survey in one of the same industries: printing. That enquiry divided firms into sheep and goats, successes and failures. A fifth of the latter, very significantly, had no objectives or unclear aims. Over half picked continuity as their objective, with a mere 14% opting for profit and hardly anybody (4%) for growth. The successes, in stark contrast, divided equally between profitability and growth - and you need both. Winning profitable growth assures continuity and a winning life-style. Nothing else does.
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