Over the years I’ve come across plenty of articles and discussions about what qualities make a good entrepreneur. Equally over 30 years in the financial services industry I’ve also had occasion to watch different money personalities in action.
So, do certain money personalities make better entrepreneurs? Let’s examine this from a few different angles.
1. Ability to save for a financial runway
As a new business or start-up there might be months of development ahead before there’s any potential for generating income. And when you do start generating income it might be some time before you can pay yourself the kind of salary you could be earning as an employee. The ability to be disciplined enough to save up a bit of a buffer is therefore very important as is a level of comfort with not earning a salary for a while.
2. Be biased towards action
Being a procrastinator who doesn’t know where to begin; a perfectionist who takes too long to finish something; or a ‘big picture thinker’ who can’t move beyond planning to implementation – these are all traits that can cost you money. Successful entrepreneurs are biased towards action. They identify and solve problems quickly, make decisions and seek advice early.
3. Prepared to take calculated financial risks
No business will survive very long if the founder spends money on gifts to reward themself every time something goes right or to cheer themself up when things go wrong. However, you do need to be prepared to invest money in growth as this is key to scaling up a business.
4. Take personal responsibility
Successful entrepreneurs realise the buck stops with them and that includes with regard to the financial health of the company. While finances might not be your thing and you rely on the services of a bookkeeper and accountant, you do still need to be able to read financial statements and understand what they are telling you about the business. These tell you how your business is performing and provide an early warning sign if there’s a problem looming.
5. Be comfortable with change
In business if you’re not changing you’re standing still and that’s not a good thing. Successful entrepreneurs are not afraid of change, but they also don’t get themselves into debt without having a plan to pay it off. It’s important to have a realistic growth plan and a strategy to help you fund it.
Understanding the role money personality can play in business decision-making can be very important and should be considered when choosing a business partner. It can also be useful when pitching to an investor. Some investors are more risk averse than others and knowing their expectations and comfort level with when they will get their money back can help you identify the right investor for you.
About Lynette Murray
Lynette Murray is the founder of ActonLendingSolutions part of the ActonAdviceGroup and the author of “Pretty Rich”, a book about Money Personality. ActonLendingSolutions provides lending advice tailored to your unique situation, whether you’re a first home buyer; a property investor; or wanting to refinance to consolidate debt, renovate or manage changing family situations. As senior adviser, Lynette Murray has over 30 years’ experience in the financial services industry, specialising in financial planning for over 15 years.
