This is truly the age of the entrepreneur. All over the world and in all sectors of business, thousands have shown the two necessary attributes: enterprise and enterprise.
The former refers to the risk-taking attitude required to get the venture going, in other words, building an enterprise - hence the latter.
In most cases a prime mover is needed, even if the venture is more akin to a partnership than a military style hierarchy. But trouble can lie ahead when the prime mover gathers self-confidence and power as the enterprise becomes more successful, and this won't work indefinitely.
There are three types of entrepreneur. See if you recognise yourself in any of these:
1. Those who create new concepts – Type A.
2. Those who obtain new concepts and go further with them through good management – Type B.
3. Those who can create new concepts and go further with them too – Type C.
Those definitions are courtesy of David Jones, a British retail guru who classes himself as a Type B.
He is best-known for his work at Next, the fashion outlet created by George Davies whose flamboyancy and dynamic power led to conflict with the more down-to-earth Jones.
Davies has done well for himself since his dismissal from Next, though – Asda, now owned by Wal-Mart, paid a princely sum for him to design a new range of clothing, and Marks & Spencer did the same, buying him out for $125 million.
The key point is that Davies stuck to his Type A the second and third time around. Sound advice for any would-be entrepreneur is 'know yourself as you really are'.
Type B entrepreneurs, though, have the ability to 'execute' – in other words, make things happen and get things done – by knowing and using the facts, getting talented people to work hard and working the hardest of all themselves. These kind of people are invaluable but also rarer than Type As.
The incredible 120-fold rise of Next shares from just 7p was a reflection of both Jones's executive skill and the condition of the company he had inherited from Davies.
Jones has one regret – he wishes he could have taken the company private and gained much greater personal reward. Stores tycoon Philip Green, for instance, was revealed in October to have received a bonus of £1.2 billion, surpassing Lakshmi Mittal's £1.1 billion dividend the year before.
The key word is opportunity. The entrepreneur might not necessarily be more skilled than those less successful but the difference is spotting opportunities and seizing the chance.
You must balance your adventurous opportunism with sensible accounting based on sound cash flow and continuously apply a trading formula that maximises sales profit. Hence Jones's formula for Next:
1. Aim for consistent, long-term growth in earnings per share.
2. Don't compromise on quality.
3. Offer customers a good choice of quality goods and services.
4. Maximise customer value by passing on all reductions in cost through price cuts and higher quality.
5. Expand on the basis of strict financial criteria only.
While there is obviously more to management than these five rules, they can serve as a guiding light for the ambitious entrepreneur who wants to achieve ambitious results.
There also exists a Type D entrepreneur: he cannot create a concept or obtain one, and cannot manage a concept's development. If you are not one of those, you must prove it.