9 MIN READ
If you’re contemplating striking out on your own as a financial planner, then you’ve probably spent some time studying other successful firm owners and the personal qualities that have contributed to their success...and you may have noticed some similarities.
While no two entrepreneurs, or their success stories, are the same, they most likely display some similar personality traits that have helped them become top-shelf versus bottom-of-the-barrel business owners.
You've probably heard the startling and not at all encouraging statistics about how many new business ventures fail (between 50%-80%, depending on the source). With those kinds of odds, it’s not at all uncommon to second-guess yourself, no matter how strong your value proposition or well-developed your business plan.
At the end of the day, entrepreneurship involves more than a good idea or effective implementation of a well-thought-out business plan. There are also factors related to mindset, disposition, and personal habits that can make or break your business.
So, what traits set successful entrepreneurs apart from successful managers or other kinds of leaders? And how can you hone those traits, especially if they don't come naturally to you?
There are a number of no-brainer traits that are sure to get you far in any role. Passion. Determination. Motivation. Consider these traits table stakes for business ownership.
Let’s dive a little deeper into some of the less obvious qualities that may impact how you run your business and how successful you are as a firm owner.
The Big Five
When talking about how personality affects your work and life, a good place starting place is the “Big Five,” a widely respected model that identifies five distinct personality factors:
- Openness. Those who score high on openness tend to be adventurous and seek out new experiences. They are generally creative types with a wide range of interests. Those low on the openness scale tend to be creatures of habit who dislike change and prefer the here and now to the more abstract and theoretical.
- Conscientiousness. Those who are more conscientiousness are generally organized, like to plan and be prepared, are goal-directed, and have good impulse control. Those low on conscientiousness avoid follow-up on tasks, are less detail-oriented, may get easily distracted, and tend to act on impulse.
- Extraversion. Extraverted individuals are energized by social situations, tend to have a wide social circle, and are typically more expressive and animated. Those low on this scale tend to focus energy inward and may prefer solitude or one-on-one interactions to large social events. While introverts may enjoy or seek out social situations, they generally need some time to recharge afterward. It’s a common misconception that introverts are shy or don’t enjoy people as much as extroverts do. Introverts simply may need a little more solo time between interactions.
- Agreeableness. Agreeable individuals care about others’ needs and enjoy helping people. Words to describe those who are more agreeable include trustworthy, patient, loyal, helpful, cheerful, and sensitive. Those lower on this scale generally care less about what others think or feel, and can come off as rude, blunt, or abrasive.
- Neuroticism. Neuroticism is related to emotional stability and self-confidence. Those high on this scale can be moody, nervous, unsettled, pessimistic, and critical. Those lower on the scale are more confident, self-assured, and tend to worry less.
We all fall somewhere on the continuum of each of these traits, and it’s important to note that no one is entirely one thing. It helps to view these types of assessments as frameworks for thinking about personality, rather than as a means of putting everyone into tidy little boxes.
If you’re interested in testing where you fall on the Big Five Personality Test, click here to take the assessment.
So where do successful entrepreneurs generally fall on each of these measures?
A review of recent literature on personality and entrepreneurship by economists Sari Pekkala Kerr, William R. Kerr, and Tina Xu shows some interesting patterns among those who gravitate toward entrepreneurship and metrics related to performance outcomes in firm ownership.
The team analyzed multiple research studies comparing the Big Five, also known as the OCEAN Model (and several other outlying traits) among aspiring and successful entrepreneurs.
The research showed some interesting patterns, as well as notable distinctions between those who simply gravitate toward entrepreneurial endeavors and those who have demonstrated success in this area.
Most of the research studies noted in this paper used managers as a control group—a cohort who is presumed to have responsibilities similar to entrepreneurs but who lack the entrepreneurial mindset necessary for business ownership.
Entrepreneurs have consistently been found to rate highly on openness, which comes as no surprise given the element of unpredictability that can often come with a new business venture.
Entrepreneurship brings challenges that must be met with creative problem-solving, hence this is a shared trait for both those aspiring and successful entrepreneurs. Openness to experience has also been correlated with long-term firm performance, including firm survival, growth, and profitability.
Openness also correlates with higher levels of intelligence and leads to engagement with new learning experiences. (Openness to Experience and Intellectual Ability by Michael Hogan Ph.D.)
Takeaway regarding openness: Know that as an entrepreneur, you’re going to be facing the unexpected on a regular basis. Use this as an opportunity to be creative in your problem-solving, a skill you can improve over time with regular practice.
In your current role, you likely have a healthy amount of openness already, but if your current venture has you second-guessing yourself or if adaptability doesn’t come naturally for you, here are a few tips to keep you from shutting down.
- Avoid knee-jerk responses to challenges: When you’re up against a problem you didn’t realize you’d be facing, take some time to think through options, and know the best one may be one that comes to you over time, or one that emerges through brainstorming with colleagues. You may want to join a mastermind group to help you work through unexpected challenges.
- Maintain an open mind: Especially in the beginning stages of firm ownership, when uncertainty is more likely, make sure you don’t feel artificially locked into some of the decisions you need to make to get your firm off the ground. For example, if you find that your selected niche doesn’t feel like a good fit for you, don’t be afraid to switch or expand it to find what works. Thought you’d love working with doctors, but finding that your favorite clients are all women in the military? Don’t be afraid to switch gears if it feels right.
- Practice creative problem-solving: When faced with a roadblock, ask “What if?” “Why?” “Can I use an unexpected strategy to solve this problem?” This is a particularly helpful technique for career changers, who may be able to generate insight based on previous professional experience.
If you are naturally open and adaptable, ensure that you have enough creative time built into your schedule. Too much routine may feel stifling to you, so regularly set aside a few hours or even full days for creative time. Thinking about your business outside of the office can lead to revelations you may not have had while chained to your desk for hours.
While you might associate high levels of conscientiousness with entrepreneurial endeavors across the board, studies show inconsistent results on this factor for those who are simply drawn to entrepreneurship (but may not enjoy success).
High levels of conscientiousness are related to the financial productivity of firms and long-term viability.
Takeaway regarding conscientiousness: While vision, creativity, and innovation are important for entrepreneurship, follow through and hard work are what turn those dreams into a reality you can use to actually pay your bills.
Avoid the temptation to chase after every bright shiny object that crosses your path and stay grounded in your commitment to business ownership. If you tend to be impulsive or engage in risk-taking, remember that every new idea probably seems bright and shiny to you before it becomes tarnished by the reality of buckling down and doing the work.
You can’t do it all...all at once. Entrepreneurs tend to be a creative bunch, and it’s a trait that can serve you well. Just be sure to temper new creative endeavors with some good old sweat equity and follow-through.
Results on extraversion versus introversion among entrepreneurs are mixed. While some entrepreneurs may find success with a more assertive, energetic approach, others may capitalize on the characteristic thoughtful, low-key energy an introverted business owner can bring to the table. The great news is you can find success no matter what your preference on this one.
Takeaway regarding extraversion: Be aware of who you are and what energizes/drains you. One of the benefits of entrepreneurship is that you can structure your business around your ideal lifestyle and daily routine.
If you’re more on the introverted side, be aware that a long day of meetings and personal interaction is going to sap your energy; schedule in some solo work time so you can recharge while still getting work done.
If you’re more extraverted, don’t be afraid to slow down and take time to observe, listen carefully, and process ideas before executing. You’ll likely love your one-on-one time with your clients, so focus on that and consider offloading or outsourcing the work you may not enjoy as much: admin projects, plan development, etc. An administrative assistant or paraplanner can help with the tasks you are likely to dread and put off, which will make you happier and more efficient in your business.
Interestingly, entrepreneurs tend to score somewhat lower on the agreeableness scale. This may be a result of the fact that most entrepreneurs don’t mind rocking the boat a little and may sacrifice going with the flow and people-pleasing for ultimate goal achievement. Having a vision and carrying it out sometimes means stepping on a few toes.
Agreeableness has also been found to increase the likelihood of exit from entrepreneurship; those who focus more on others and what they might think might find they don’t enjoy some of the more “tough-minded” rather than “soft-hearted” decisions and tasks that come with owning and running a business.
Takeaway regarding agreeableness: Be honest with yourself about who you are and how important it is to you to please those around you.
This is not to paint all entrepreneurs or firm owners as cold and uncaring, but know that there are times when you’ll need to prioritize the success of your firm over other factors, which can involve learning how to be comfortable shrugging off what someone else may think about your decision-making.
A healthy amount of ignoring others’ opinions might serve you well here. And remember that many traits are neither “good” or “bad,” it’s just who we are. If you’ve been told you’re abrasive or blunt, this could be an opportunity for you to use your headstrong personality to your advantage.
In the end, you want to shoot for a healthy balance between seeking advice and external opinions and knowing when to trust your gut and tune out the peanut gallery.
While neurotic individuals can be highly successful, perhaps due to an obsessive, detail-oriented nature (see Personality: What Makes You the Way You Are by Daniel Nettle), entrepreneurs have been found to be slightly lower than the norm on this scale.
Perhaps this is because the type of success that can be achieved by neurotic behavior—obsession over small details, hyper-vigilance, overworking—leads to stress and burnout rather than any real long-term enjoyment of success. Entrepreneurship requires a long view strategy that is better served by a balanced approach.
Takeaway regarding neuroticism: Even if you’re not prone to neuroticism, business ownership can bring this out in even the most laid-back of individuals. Many entrepreneurs compensate for the fear that comes with firm ownership by overworking to deal with constant elevated stress.
You’ve heard the self-care sermon before: take time to eat right, exercise, spend time with family and friends. But this advice can bring even more pressure.
“How do I find time for the gym, meal planning, and maintaining close friendships when I’m overwhelmed by the pressures of business ownership? I’m already too busy.”
This is the time to take it easy on yourself. It’s ok to say no to other obligations, especially as you are just getting launched. Prioritize the experiences and activities that are meaningful to you by putting them in your calendar and treat these time blocks as you would a scheduled appointment with a client. This can help you maintain your mental health and be fully present while you are working with clients.
If you’re less social for a while, or less perfectly fit, grant yourself some grace (and know that your friends and family will too).
One Final Takeaway: Considerations for Staffing Your Business
If you’re reading this as the owner of a solo practice, it still may feel overwhelming to have to “be all things.” You are who you are, and this post is not intended to suggest that you can—or should—change your fundamental nature.
My hope is these suggestions help you think about how your personality may contribute to running a successful firm, and to point out areas where you may find that focusing some extra effort ultimately pays off.
If you’re hiring staff, I recommend selecting people who complement your skillset (don’t hire your clone, as tempting as it may be).
XYPN’s co-founders each bring a different, complementary approach to the table, and we regularly recognize and embrace the well-balanced leadership approach their well-balanced differences create. (If you’re not sure what I’m talking about, check out our “Meet Our Team” page, which respectively lists founders Alan Moore and Michael Kitces as the “Director of Speeding Things Up” and the “Director of Slowing Things Down.”
If you’re extremely extraverted and want to spend all your time one-on-one with clients, consider hiring someone to handle the admin and/or plan development side.
If you know that follow though is not your cup of tea, your first hire may be someone who brings you back down to earth and who naturally thinks though the steps you’ll need to execute your new ideas.
The diversity that results from hiring a variety of personalities will result in a broader overall skillset across the firm, and therefore, a greater chance of overall success.
About the Author
Kate Ross has spent the last ten years of her career developing educational materials for financial professionals and brings a passion for instructional design and curriculum development to the XYPN team.
In her free time, Kate can be found front row at a concert, camping in the woods, floating a river, or hiking in the mountains near her home in Montana.