Create an Entrepreneurial Mindset: 3 Things You Can Do Right Away to Increase Profits
Just hours away from meeting our marketing deadline for one of the largest financial events in the country, and we still didn’t have a contract for one of the programs we planned to offer. There was agreement on the general terms and costs, but we did not have a contract.
We had two choices: (1) Wait until the contract was signed before moving forward with the marketing or (2) Move forward without the contract and hope everything works out with the program as planned.
Delaying the marketing however would cost us tens of thousands of dollars in lost revenue in a very competitive market. But if things did not work out as planned with the program and we moved forward without the contract, we may end promoting a program that we couldn’t fulfill.
“What’s the worst that can happen if we went ahead with the marketing?” one of my colleagues asked.
“We would have to call perhaps as many as 20 people who registered for that particular program and offer them another program,” I responded.
It was clear; the risk of delaying the marketing was far greater than waiting any longer. We moved forward with the marketing even though we didn’t have a contract so we wouldn’t risk losing sales.
My colleague, who is also a business owner and fellow consultant, has what we call an entrepreneurial mindset. It is one of the most sought-after skills small business owners look for in their employees, and unfortunately it is one of the most elusive. As one business owner told me, “Many people have the skills to either do the job or learn it, but what I need is someone to think and make decisions without coming to me constantly for the answers.”
“Many people have the skills to either do the job or learn it, but what I need is someone to think and make decisions without coming to me constantly for the answers.”
Fortunately, the entrepreneurial mindset is a skill that your employees can learn and develop.
We have taught more than 1,100 students how to apply the concepts of the entrepreneurial mindset at CCBC’s Center for Business Innovation as they prepare to launch new business ideas. The skills involved such as innovation, persuasion, collaboration and adaptability are also listed as “the skills companies need most,” according to the latest research from LinkedIn.
An entrepreneurial orientation as it is described in the academic literature has become more critical to the success of businesses, especially among small businesses in competitive markets, since the 1980s. Entrepreneurial orientation is the ability to be innovative (experiment and create new ideas), proactive (look for new opportunities in a market), and accept risk (engage in risky ventures), according to Professors Jeffrey Covin from the Georgia Institute of Management and Dennis Slovin from the University of Pittsburgh. They found employees who were innovative, proactive and willing to take risks increased the financial performance of their firms in a study published in the Strategic Management Journal in 1989. Since then, those three skills have been shown repeatedly to increase business’ profitability and return on investments, according to the International Journal of Human Resource Management.
So how can you foster an entrepreneurial mindset among your employees? Here are 3 things you can do right away:
1. Encourage innovation. You want your employees to experiment and come up with new ideas. This can be done in a formal brainstorming session or it can be done on the fly as ideas come up. Your reaction is critical. If more research is needed, ask: How would this help our customers? How have other companies implemented something similar? What are some of the obstacles? If this were your company, how would you test it?
2. Promote proactivity. You want your employees to look for new opportunities. Ask your employees: What challenges or problems are our customers are experiencing? What can we do to help? What are other businesses doing to solve these same challenges? What can we offer that is different and leverages what we do best?
3. Be willing to take risks. This is where they are looking to you for guidance. You must set the example. But instead of giving a yes/no decision, you may first ask the following questions: What are the risks involved? Do we have any evidence this idea would be profitable? What additional research would we need to make a decision? And when the time comes, be willing to take a risk.
Notice that in each of the action items, you are the one asking the questions. This is critical as you try to make an organizational shift from an employee-mindset to an entrepreneurial mindset. So instead of employees constantly looking to you for your answers, you are teaching them to problem-solve on their own and think like an entrepreneur.
The secret is to give them the tools to think like you. Instead of responding with answers, ask them: What would you do? Teach them to ask the same questions you ask all the time – and more importantly, how to think like you so you can trust them to solve problems and make decisions.