What Skills do Entrepreneurs Need to Succeed?

Entrepreneurship is a risky business – 90% of all startups are thought to fail. So what skills does an aspiring founder need to succeed? 

The Harvard Business Review surveyed 141 HBS alumni-founders, most of whom lead venture capital-backed technology startups, to find out. There’s a good reason to heed their advice: HBS are the most successful of all alumni, in terms of founding companies that achieve high private valuations and raise significant amounts of venture capital financing. 

The survey found that no single management skill is better than another; in short that founders need to be management jacks-of-all-trades. For eight out of 10 skills HBR listed, at least 65% of respondents said that an aspiring founder should give high or very high priority to acquiring them. Here are the top five:

Creating a team

Some 88% of the HBS alumni said that setting up a team – choosing co-founders, splitting equity, recruiting advisors and managing a board – was an absolutely priority for a business founder. One told HBR that to be a successful entrepreneur, you must know your strengths and weaknesses, and hire people to cover the gaps. Another added: “If you don’t get decisions about potential co-founders right – for example, if your co-founder is not fully committed – it will likely kill your company.”

Leadership 

According to 82% of the respondents, leadership is another crucial skill for an entrepreneur. A business founder must set out and communicate their vision, manage their company’s culture, resolve ethical dilemmas and cross-functional conflict. 

Product management

In addition, 80% of the business founders suggested that prioritizing features, A/B testing, working with engineering and other functions, was critical to the success of a startup. Many respondents added that, during a startup’s early stages, founders must gain a deep understanding of customer needs, and then conduct rapid iteration and testing to prove product-market fit. One said: “Nothing else matters if you are building a product that no one wants.” 

Team management 

Hiring and firing employees, setting goals, providing feedback, and designing the organizational structure of a company were cited as priorities by 74% of those who were surveyed. Respondents also said there’s a need for founders themselves to be able to take feedback, without being defensive. 

Selling

It should be any entrepreneur’s bread and butter. Approximately 72% of respondents said it was important to be able to sell – how to gauge interest and close a deal, buyer’s journey analysis, qualifying leads, and sales compensation. The HBS founders noted that this encompassed more than just product sales. One said: “Having studied engineering in college, selling was the number one skill set that I was missing when I launched a company. As a founder, you are always selling: first to yourself and maybe a significant other, and then to potential co-founders, employees, customers, strategic partners, and investors.” 

Can an MBA help entrepreneurs develop these skills?

Some will argue these five skill-sets can be acquired in a business school classroom, others will say an entrepreneurial mind-set is best developed on the frontlines of business. 

The world’s most successful entrepreneurs have, in the past, been quick to criticise business schools. Peter Thiel, the billionaire venture capital investor and co-founder of PayPal, will even pay young people not to go to university. But there is value to be had in obtaining a business education, if you want to run your own company. 

Some 44% of MBA respondents to the HBR survey said they were likely or very likely to recommend a traditional two-year MBA program to an aspiring entrepreneur. 58% were likely or very likely to recommend a two-year MS/MBA program that blends engineering, design, and management training. Finally, 34% were likely or very likely to advise a young engineer to pursue further on-the-job training, instead of a business school degree. 

Ultimately, the results show that founders need a wide range of management and leadership skills to succeed. Whether they choose to learn those skills in the classroom or on the job, is up to them. But extreme aptitude in one area alone will not do, it seems.