I don’t think you can learn to be an entrepreneur as such, but I believe you can build your knowledge in particular areas to support your aberrant ventures and pursuits. This knowledge base is often referred to as your EQ (Entrepreneurial Quotient). I realise the term sounds somewhat silly, as if it came straight from the annals of a stuffy Yale or Harvard lecture room, but let’s ignore that for a moment.
The following list contains the competencies I believe make up your entrepreneurial quotient (EQ). This may be helpful to private equity firms as they appraise potential investees and associated founders and managers.
- Financial management – you really need to understand how money flows through a business, from its income statement, through its balance sheet and out via the cash flow statement; plus there are all of those concepts aside from the standard statements, such as cash flow management, working capital management, inventory management, capital structure, etc.
- Sales - you need to be able to sell to gain customers and you need customers to have a real business; grass roots experience with sales gives you the perspective needed to understand why people may or may not buy your product or service, which is paramount to being successful as an entrepreneur with entrepreneurialquotient
- Organisation - as your business grows, the business needs someone with the organisational nous to direct efforts into the most efficient, effective and profitable activities; being organised is key to keeping focused
- Deals and transactions – deal experience gives you clout with external investors; it also helps you appraise opportunities and prepare for capital raisings, exits, acquisitions, etc; understand the potential exists for your venture is also helpful in directing its growth and it shows VCs that you have aligned goals for the business
- Strategy - I personally believe we’re of an age in which people are overly besotted with the idea of corporate strategy, but with that said, a business still needs a strategy to pave a path to its objectives and goals; strategic experience is necessary if you plan to work on your business and not just in it
- Business modelling – this sounds simple in relation to entrepreneurial-quotient, and you sure don’t need to inject innovation into your business model to be successful, but it helps to understand various business models when dreaming of new ventures
- Marketing -most of us are tempted to lump marketing with sales, but it really is a different kettle; marketing is less direct and requires an in-depth understanding of your customer; you should gain experience in learning from your customers as practice will lead to more targeted products and services
If you have any other entrepreneurial quotient ideas, I’m all ears.