What are the 4 entrepreneurial competencies?

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Successful entrepreneurship takes hard work, dedication, and a wide skill set.

Are you thinking about setting up your own business? If the answer is yes, you're not alone. The pandemic may have laid waste to great swathes of industry, but it's fueled an extraordinary surge in startups and new small businesses, as those laid off from affected firms explore new opportunities.

Reports from the U.S., Japan and across Europe show record-breaking levels of business registrations. For example, figures from the U.S. Census Bureau show that new business registrations in July 2020 were 95 percent higher than during the same period in 2019.

But what does it take to be a successful entrepreneur? Whether you've seen an exciting gap in the market, or feel forced to reassess your career following job loss, this article explores the skills you need to make it as an entrepreneur. It also signposts resources that you can use to develop the skills required for success.

What Are Entrepreneurial Skills?

Entrepreneurial skills are those normally associated with being an entrepreneur, although anyone can develop them.

Being an entrepreneur usually means starting and building your own successful business, but people with entrepreneurial skills can thrive within larger organizations, too.

Many researchers have studied entrepreneurial skills, but found no definitive answers. Some common themes are:

• Personal characteristics.
• Interpersonal skills.
• Critical and creative-thinking skills.
• Practical skills and knowledge.

Regardless of how you define it, entrepreneurship isn't easy. So be prepared to do the "hard yards," even after you've learned the skills we describe below.

The following sections examine each skill area in more detail, and look at some of the questions you'll need to ask yourself if you want to become a successful entrepreneur.

The Personal Characteristics of an Entrepreneur

Do you have the mindset to be a successful entrepreneur? For example, entrepreneurs tend to be strongly innovative in outlook, and they may take risks that others would avoid.

Examine your own personal characteristics, values and beliefs, and ask yourself these questions:

• Optimism: Are you an optimistic thinker? Optimism is an asset, and it will help you through the tough times that many entrepreneurs experience as they find a business model that works for them.
• Initiative: Do you have initiative, and instinctively start problem-solving or business-improvement projects?
• Drive and persistence: Are you self-motivated and energetic? And are you prepared to work hard, for a very long time, to realize your goals?
• Risk tolerance: Are you able to take risks, and make decisions when facts are uncertain?
• Resilience: Are you resilient, so that you can pick yourself up when things don't go as planned? And do you learn and grow from your mistakes and failures? (If you avoid taking action because you're afraid of failing, our article, Overcoming Fear of Failure, can help you to face your fears and move forward.)

Entrepreneurial Interpersonal Skills

As an entrepreneur, you'll likely have to work closely with others – so it's essential that you're able to build good relationships with your team, customers, suppliers, shareholders, investors, and other stakeholders.

Some people are more gifted in this area than others, but you can learn and improve these skills.

• Leadership and motivation: Can you lead and motivate others to follow you and deliver your vision? And are you able to delegate work to other people? As an entrepreneur, you'll have to depend on others to get beyond the early stages of your business – there's just too much to do by yourself!
• Communication skills: Are you skilled in all types of communication? You need to be able to communicate well to sell your vision of the future to a wide variety of audiences, including investors, potential clients and team members.
• Listening: Do you hear what others are telling you? Your ability to listen and absorb information and opinions can make or break you as an entrepreneur. Make sure that you're skilled at active and empathic listening.
• Personal relationships: Do you have good "people skills"? Are you self-aware, good at regulating your emotions, and able to respond positively to feedback or criticism? Our article, Emotional Intelligence, offers a range of strategies for developing these crucial attributes.
• Negotiation: Are you a strong negotiator? Not only do you need to negotiate favorable prices, but you'll also need to resolve differences between people in a positive, mutually beneficial way.
• Ethics: Do you deal with people based on respect, integrity, fairness, and trust? Can you lead ethically? You'll find it difficult to build a happy, productive business if you deal with staff, customers or suppliers in a shabby way.

Critical and Creative-Thinking Skills for Entrepreneurs

As an entrepreneur, you need to come up with fresh ideas, and make good decisions about opportunities and potential projects.

Many people think that you're either born creative or you're not. But creativity is a skill that you can develop, and there are many tools available to inspire you.

• Creative thinking: Are you able to see situations from a variety of perspectives to generate original ideas? Tools like the Reframing Matrix can help you to do this.
• Problem solving: You'll need sound strategies for solving business problems that will inevitably arise. Tools such as Cause & Effect Analysis, the 5 Whys technique, and CATWOE are a good place to start. You'll find these and many more in our Problem Solving section.)
• Recognizing opportunities: Do you recognize opportunities when they present themselves? Can you spot a trend? And are you able to create a workable plan to take advantage of the opportunities you identify?

Practical Entrepreneurial Skills and Knowledge

Entrepreneurs also need solid practical skills and knowledge to produce goods or services effectively, and to run a company.

• Goal setting: Setting SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound) will focus your efforts and allow you to use your time and resources more effectively.
• Planning and organizing: Do you have the talents, skills and abilities necessary to achieve your goals? Can you coordinate people to achieve these efficiently and effectively? Strong project-management skills are important, as are basic organization skills. And you'll need a coherent, well thought-out business plan, and the appropriate financial forecasts.
• Decision making: Your business decisions should be based on good information, evidence, and weighing up the potential consequences. Core decision-making tools include Decision Tree Analysis, Grid Analysis, and Six Thinking Hats.

Take our self-test, How Good Is Your Decision Making?, to learn more.

You need knowledge in many different areas when you're starting or running a business, so be prepared for some serious learning!

Be sure to include:

• Business knowledge: Ensure that you have a working knowledge of the main functional areas of a business: sales, marketing, finance, and operations. If you can't fulfill all these functions yourself, you'll need to hire others to work with you, and manage them competently.
• Entrepreneurial knowledge: How will you fund your business, and how much capital do you need to raise? Finding a business model that works for you can require a long period of experimentation and hard work.
• Opportunity-Specific Knowledge: Do you understand the market you're attempting to enter, and do you know what you need to do to bring your product or service to market?
• Venture-Specific Knowledge: Do you know what it takes to make this type of business successful? And do you understand the specifics of the business that you want to start?

You can also learn from others who've worked on projects similar to the ones that you're contemplating, or find a mentor – someone else who's been there before and is willing to coach you.

As an entrepreneur, you must also learn the rules and regulations that apply in the territory or territories that you're operating in. These websites may be useful:

Tip 2:

Working in a business like the one you want to launch is a great way to learn the ropes. But be aware of non-compete clauses in your employment contract. In some jurisdictions, these clauses can be very restrictive. You don't want to risk your future projects by violating the rights of another entrepreneur or organization.

Is Entrepreneurship Right for You?

Before you proceed with your plan to become an entrepreneur, assess your skills against all of the questions and considerations above. Use a Personal SWOT Analysis to examine your Strengths and Weaknesses, your Opportunities, and the Threats that you may face.

Be honest with yourself about your motivations and the level of commitment you're prepared to give to your project. This could prevent you from making a costly mistake.

As you work through your analysis, you may feel that you're ready to plunge into your exciting new venture. Alternatively, you may decide to wait and further develop your skills. You may even decide that entrepreneurship isn't for you after all.

Becoming an entrepreneur is an important career decision, so avoid the temptation to act impulsively. Do your homework. Reflect on your needs, your objectives, and your financial and personal circumstances. Entrepreneurialism can take a huge amount of time and dedication, so make sure that it feels right.

While there's no single set of traits or skills for being a successful entrepreneur, there are many that you can learn to help you succeed.

These can be divided into four broad categories:

• Personal characteristics.
• Interpersonal skills.
• Critical and creative-thinking skills.
• Practical skills and knowledge.

Examine your own strengths and weaknesses in these areas and assess the time and commitment you'll need to get "up to speed."

Take time to decide whether this is the right path for you.