The Entrepreneur Insiders network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question, “What should budding entrepreneurs know about building a business?” is written by Steven J. Stein, CEO of Multi-Health Systems and author of The EQ Leader.
Starting a new business from scratch can be very exciting, but it can also produce a lot of anxiety. It takes long nights, startup capital and a lot of willpower to make it successful. Over 30 years into my journey as the founder of Multi-Health Systems (MHS), I’ve learned some key lessons about what it takes to start a successful business.
One of the biggest lessons I learned is to treat building a company like a team sport where each member plays a key role, depending what they’re good at. When I started out, we tried to have a few people do everything, but then we quickly realized we needed expertise — not just in products or services, but in finance, marketing, law, IT, social media, customer service, sales and human resources. Being too weak in one area, like customer service, can sink your whole enterprise.
You also have to learn to live with uncertainty. When we test peoples’ emotional intelligence, we measure their flexibility as one of the predictors of success as an entrepreneur. It’s inevitable that things will change as you grow your business. You can’t plan for every possible disruption that comes your way; you have to roll with the punches. Things will change, so adapt or get left behind.
Another important factor is empathy. According to a survey of 186 CEOs from organizations such as Young President’s Organization (YPO) and Innovator’s Alliance (IA), empathic leaders of growing organizations were more profitable than those with little empathy. Not only do you need to listen to and understand your employees, but you need to understand your customers’ needs. The best entrepreneurs know what their customer needs better than they do.
Take Canada Goose. When David Reiss took over his father-in-law’s coat manufacturing business, he expanded their line of winter coats to make coats warm enough for police officers and outdoor city workers in Canada’s coldest cities. He built a $3 million company expanding into this niche market. When David’s son Dani took over the business, he believed that big down coats could be cool – cool enough that everyone would want one. He was able to read a customer need in the high-end winter clothing business that nobody else had really seen. He expanded the company, changed its name to Canada Goose, got placements in winter-themed movies, gave coats to some movie stars, and suddenly everybody wanted a big, expensive, down-filled coat. When it went public in November 2016, it generated $291 million in revenue and $27 million in profit.
Take the time to listen and pay attention to what others are telling you. If you are unsure of what somebody really means, take the time to ask questions. Empathetic leaders are innovative leaders. Come up with a way to fill the void your customer doesn’t even realize they have.
Successful entrepreneurs excel at testing what works, what doesn’t and the realities they face. You need to be able to look at situations or opportunities and see them as they truly are. Don’t get lost in the details. Make sure you’re not looking at the world through rose-colored glasses. For some people, this comes with maturity, but for others it’s an acquired skill.
You also need to be a good problem solver. Problem solving is not just a matter of logically laying out the pros and cons of a situation, adding them up, and then forging ahead based on the numbers. A study published in Harvard Business Review found that the best problem solvers use their gut as part of the process.
When I decided to publish the first test on emotional intelligence, nobody had heard of it. In fact, I remember giving a talk at a large human resource conference in London when an older gentleman stood up and said, “If you think the English have emotions at work, you’re wasting your time. The British leave their emotions at home. If that’s what you came here to tell us, I suggest you get back on a plane to America.” Thankfully I didn’t take his advice and today, emotional intelligence is widely accepted in the business world as a key part of the management equation.
Entrepreneurs are risk takers. Many of the most successful ones have defied the odds, succeeding where others haven’t. You can accomplish this is by using your gut – your emotions – to take calculated risks.
All of these skills relate, in one way or another, to emotional intelligence. By developing your emotional intelligence you increase your chances of success as an entrepreneur.