Eight traits that drive treps
But buried under the headlines, we have uncovered some amazingly positive facts about innovative companies and the treps who seem to have defied the downturn. In a survey of EY Entrepreneur Of The Year finalists for 2012, we found that many of these men and women are actually growing their companies, creating jobs and building momentum — in spite of challenging economic times.
The survey findings have been published in Defying gravity: high-growth entrepreneurship in a slow-growth economy. And below, we’ve highlighted the eight traits that have helped them flourish in the downturn.
1. Have a unique perspective on risk
Entrepreneurs move forward in spite of real or perceived risks. Their passion to identify an unmet need and then to set out to solve it sets them apart from their more cautious counterparts, who either miss the need altogether or see a need and conclude someone else could or should solve it. This entrepreneurial DNA suggests that entrepreneurs are born not made.
2. Communicate vision and instill passion in great teams
Successful entrepreneurs have the ability to build a strong team at all levels in their organization. Overwhelmingly, they cite “people” as their leading priority. But perhaps successful entrepreneurs really differentiate themselves in their ability to communicate their vision and instill their passion.
Many plan to upgrade talent during 2013 to keep pace with growth, in sharp contrast to well-established global companies, more interested in implementing efficiency and productivity increases that translate into headcount reductions.
3. Demonstrate resilience and rapid recovery
When encountering obstacles, the best entrepreneurs seem resilient. They set a new course and rapidly recover — perhaps much more nimbly than their large corporate counterparts —and learn from mistakes.
Entrepreneurs recognize that a young company is a living organism that must continually adapt to changing customer preferences, competitive threats and technology advances. This is especially true for businesses that are more virtual.
4. Embrace innovation
Entrepreneurial companies are the predominant source of innovation, which is the lifeblood of economic growth and company survival. Too often, more-established companies resist the radical innovation that, while beneficial from a long-term perspective, might displace short-term revenue streams.
Successful entrepreneurs know their agility and propensity for innovation can make them attractive investment or acquisition targets to larger corporations, which increasingly recognize that a partnership and/or acquisition strategy involving high-growth entrepreneurial innovators can complement internal research and development.
5. Pursue what you do best
High-growth entrepreneurs excel at focusing on the things that they do best — instilling vision and passion, building great teams and innovating — and partnering with corporations, to carry out infrastructure and technology needs, administrative functions, sales, manufacturing and distribution, and regulatory compliance.
This enables the high-growth company to focus on doing what it does best and enables more rapid, flexible and cost-effective scalability. Leading entrepreneurial companies must also continually invest in creating and enhancing their brand awareness.
6. Pursue geographic expansion
Most entrepreneurs are continuing business expansion in domestic (US) markets, while more than 20% of all but the smallest companies are expanding in developed global markets.
These ambitions highlight a key point: entrepreneurial companies are vital for economic growth, often accounting for disproportionate shares of job creation. They represent a “meso” layer of the economy — between small businesses, which are mostly static, and very large corporations that experience churn but little net job growth.
7. Secure the right capital at the right time
The Entrepreneur Of The Year finalists have accessed a wide range of funding sources as they have grown their businesses. Angels, friends and family, venture capital and personal funds prevail for lower revenue companies. Bank loans are a consistent financing source across all revenue groups, whereas private equity is important for mid-sized companies.
Many entrepreneurs surveyed understand the importance of good working capital management, indicating that this would be a major focus to “free up cash” over the next two years.
8. Preserve what you’ve built
Successful entrepreneurs look to preserve those company qualities that allowed them to attract their high-performance teams, develop loyal customers, establish their brand and reputation, and buoy enterprise shareholder value.
This holds true regardless of whether they stay to lead or leave to start their next venture. Frequently, on the path from emerging enterprise through rapid growth, entrepreneurs do need to make important decisions regarding their personal goals. Do they stay for the long haul or apply their skills to the “art of the start?”