New Jersey Enterpreneur - Small Business, Entrepreneurs and Venture Capital

How has the entrepreneur lost what they have worked so hard to build?   This article discusses some personal attributes of entrepreneurs and small business owners that sometimes result in the loss of their business.

Warren Buffet, noted investor, recently appeared on the Charlie Rose Show on PBS and discussed how he was going about selecting his replacement. It was covered fairly widely in the press that Warren Buffet would be soon choosing a successor to manage Berkshire Hathaway and as a result he had received thousands of applications for the position. While talking with Charlie Rose, Warren mentioned that a critical attribute of a prospective candidate was actually an attibute that should be missing in the candidate---he identified that attribute as self destructiveness. He explained that investing is managing risk and that if a chosen fund manager's performance was 20% per year, 30%, or even greater, there would be no value in those accomplishments if just one investment resulted in a zero, meaning a wipe out of the principal. One major misstep and everything that Warren had built over fifty years could be gone.

I was struck that I had made a similiar observation about this potential flaw in entrepreneurs who also undertake risk. Much to my disappointment, Charlie Rose and Warren did not further explore what contributed to certain investorment managers becoming self destructive to their own success. But clearly, Warren through his experience had learned to be wary of highly successful people who could be prone to such dramatic mistakes.

I gave some thought to what I have seen over the years in small business owners and entrepreneurs that has resulted in setbacks or signfiicant failures due to personal attributes taht undermined their success.  Some examples are:

These are entrepreneurs who have truly mistreated people on the way up the ladder of success. Finally, they meet an adversary or encounter a hurdle that challenges this personal style of accomplishment which finally undercuts their brutal tools and disarms their ability to move forward any further at the expense of others. They often reach a plateau where they can not sustain themselves and have finally alienated all those necessary to support further success.

The success of entrepreneurship can provide a very empowering feeling as the rush of hard earned and hard fought accomplishments becomes heady. The adrenaline stays up and a feeling comes about where the risk associated with new and greater challenges is underestimated. A good example of this is the serial entrepreneur who begins to stray further and further outside his or her core competencies, taking on ventures with poor foundations as they have forgetten what made their first success possible. Unwittingly, they begin to risk more and more with less preparation and knowledge because they now feel they can accomplish anything.

Business environments continually change and the economy expands and contracts, but the thick headed entrepreneur maintains the same strategies in both good times and bad times. This lends itsself to the expression "Insanity is doing the same thing over and over again, but expecting a different result". Many entrepreneurs look back too fondly on their initial success and inappropriately apply the same tools and solutions to new challenges that are significantly different. Often they will resist all those who offer a different perspective or solution since they are so rigid in their conclusion that what worked before will work now.

These are the ice skaters. They have had success by re-writing the rules on the road to success. Success has encouraged them to take on greater and greater risk in areas where there is an eventual accountability. They use other people's money to pay their bills and delay paying their taxes---possibly even mis-stating their obligations. They have accomplished alot, but by not playing by the rules that others follow. They own the big house and four cars, but one day, the lawsuit is filed or the IRS lien is placed on their assets and the stack of cards comes down. You usually read about them on the front page of the business section when all of the shortcuts have finally caught up.

Entrepreneurship is about money and once the venture pays off, the windfall presents new challenges. One of them is greed. When has enough money been gained? The rush of excess money drives some entrepreneurs to change their lifestyles and forget those who contributed to their success, justifiying their taking all the gains for themselves. Many people are often hurt when greed takes over--the busines partner and the family are usually front and center.

Tied somewhat to the feeling of self empowerment mentioned above, the successful individual becomes consumed with "self". Family takes a second seat to their priorities and everyone in their life is there to serve them. Often you see the results of this in the burned out relationships surrounding the "I" person, whether it is the spouse, the key employees or business partner who become overwhelmed by an owner's insatiable ego.

No complaint department is how I describe those entrepreneurs who are marching to their own drummer and have put in place strong shields to prevent any feedback that does not re-affirm their actions, whether good or bad. They are high performing individuals who are able to make progress to a certain point, but can not be held accountable for their mistakes because they have set up deflectors to make sure the issues and criticism falls on everyone but themselves. They are hard to rein in since they never really acknowledge the existence of the problem ever one else is cleaning up.

Hopefully, as your business becomes successful you won't wander into some of these common traps that may eventually lead to a downfall. We all have small elements of some of these flaws that we struggle with day to day to make the right decisions for the right reasons. Success brings power and power can change us. Unfortunately, in some of those instances, there are entrepreneurs for which these are truly character flaws waiting to go off that potentionally can undermine all that has been previously accomplished. Beware, as Warren Buffet is.

If you found this article interesting, you may want to read how the experience of a seasoned entrepreneur is valued by angel investors and venture capital firms: Pete Sampras and Serial Entrepreneurs .

About Jeanne Gray, Small Business Expert & Columnist

Jeanne Gray is founder of NJEntrepreneur.com and has been an entrepreneur for most of her career. She now works with entrepreneurs and emerging growth companies. She may be reached at 908-917-9900 or

jgray@njentrepreneur.com