It is not easy to be an entrepreneur. The odds are very often stacked against you. Depending on which criteria we use, research consistently shows that anywhere between 40 per cent and a staggering 90 per cent of startups fail. A weak management team and running out of money rank among the top contributing factors.
But then getting funded is not easy either. Articles suggest that entrepreneurs secure investment from as little as 6 per cent of investors they approach for funding, a far lower success rate than many founders might anticipate.
Perhaps it is easier to tackle the question of a stronger team then? When we think of founding teams, diversity immediately comes to mind. Stanford school of thought emphasises the importance of having cofounders with different functional backgrounds as an essential factor of startup success. But what if this diversity came from within the entrepreneur?
Our recent study published in Journal of Small Business Management sheds light on the importance of developing diverse skills within yourself as a key to entrepreneurship. Here are some findings that show us how being the jack-of-all-trades pays off in starting new business and in getting you closer to your goals.
- Having diverse skills means you are more likely to be confident, open to new ideas, and willing to form teams. Broadly skilled individuals tend to put more effort into pursuing entrepreneurship. A more diverse range of skills gives you the ability to evaluate opportunities from multiple perspectives and to better approach the complexities you will be facing.
- Working in a team with internally diverse individuals whose skillsets overlap even if just so slightly, makes the communication easier. They understand each other better since they share knowledge and insights about the issue at hand but can still provide different perspectives to each other. By building a team of jack-of-all trades you do not need to compromise between choosing team members who are thinking alike and those who offer diverse perspectives.
- Jacks-of-all-trades attract other jacks-of-all-trades in forming new venture teams. You are more likely to be engaged with like-minded collaborators who are attracted to your capabilities and confidence – they have more faith in your ability to pursue a business opportunity. By being and working with jacks-of-all-trade, you are ensuring the most-wanted diversity between and within the cofounders.
- Passion is not a buzzword, it provides a boost with real benefits. Passion in entrepreneurs fosters a clearer and stronger identity that positively impacts the startup process. Passion serves founders well in handling the ups and downs of launching a startup. It makes them more likely to actively seek opportunities that accelerate the business as well as implement novel ways to solve problems. Furthermore, passion for development helps entrepreneurs nurture and grow founding teams by focusing on collaborations with the right partners.
A team of diverse and passionate individuals, and not solo entrepreneurs, is more likely to successfully attract investors, because they are more likely to succeed. In fact, team quality is one of the first criteria that early-stage investors consider.
After all, business opportunities come and go, you will pivot many times, but only the right team can make things happen. Diverse perspectives make you more likely to uncover new opportunities, while critical tasks such as business plan writing, networking for resources, or hitting those developmental milestones are best done with a team.
Time and time again we see that it does take a village when it comes to growing startups. There has been much debate over whether it is more important for entrepreneurs to have hard technical skills or soft interpersonal skills.
Now we see that honing a broad range of skill sets within you the most critical. While diversity is usually observed on the team level, entrepreneurs who first develop diversity internally on the individual level are better suited to the critical roles of forming teams and attracting investment.
This better equips jack-of-all-trades types to succeed where others fail.
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