A recent paper from Ernst & Young and the Kauffman Foundation looks at the cadre of 636 E&Y Entrepreneur Of The Year finalists from 2012 to see what makes them tick. These companies are high-growth and tend to produce disruptive innovations. They’re also not small – in the U.S. 95 percent of firms have fewer than 50 employees, while in this group only 18.2 percent fell into that size range.
In looking at these finalists for the Entrepreneur Of The Year (EOY) awards, eight key findings on why these companies succeed came to light that could be of use to other entrepreneurs and to would-be entrepreneurs. Here they are for this week's installment of Practically Friday:
Have a unique perspective on risk
- As Magnus International Group founder Eric Lofquist put it, "It's funny – looking back, I never thought any of it was risky. Feeling so strongly about something: I didn't consider it a risk." That type of attitude drives the EOY entrepreneurs to meet unmet needs and solve problems with their businesses instead of sitting back and letting someone else do it.
- Communicate vision and instill passion in great teams.
Demonstrate resilience and rapid recovery.
- As Liberty Global president Mike Fries stated, "I don’t think you can really be successful without staring into the abyss at least for a little bit. Every entrepreneur has that moment, and your goal in life is to not have it a second time." Mistakes in high-growth companies are the price of progress, while in more-established companies they often just lead to the blame game.
- Established companies are often resistant to radical innovations that may benefit them in the long term but harm their revenue streams in the short term. Successful entrepreneurs know that innovation is the lifeblood of company survival and economic growth.
Pursue what you do best.
- Partner with existing corporations to handle infrastructure and technology needs, sales channels, administrative functions, regulatory compliance, or manufacturing and distribution (to name a few) so your high-growth company can focus on what it does best and scale more rapidly and cost effectively.
Pursue geographic expansion.
- The majority of the EOY finalists surveyed included geographic expansion in domestic and international markets as part of their growth strategies.
Secure the right capital at the right time.
- Funding sources differed by companies' level of revenue, and EOY entrepreneurs accessed a wide range of finance options to grow their businesses.
Preserve what you've built.
- As these high-growth companies grow and mature, EOY finalists were most concerned with preserving their company culture, attracting and retaining top talent, protecting and enhancing their company’s brand and reputation, and retaining their best customers.
As Bryan Pearce, director of Entrepreneur Of The Year put it, "Our Entrepreneur Of The Year finalists and winners have 'cracked the code' for achieving extraordinary growth in challenging economic times. Their exemplary way of doing business creates jobs and enriches communities while demonstrating how it is possible to defy the gravitational undertow of economic stagnation."