According to the Global Entrepreneurship Monitor 2019/2020 U.S. Report, there were more than 54 million people starting or running a business they owned or managed during 2019, representing about 27% of working-age adults in the nation. With no shortage of up-and-coming professionals looking to establish themselves in the market, entrepreneurs often face an uphill battle on the road to building a prosperous business. Fortunately, establishing a successful business may be more likely if the person behind it understands the value of certain psychological traits.
An understanding of human behavior and its relationship to business is an important consideration for aspiring entrepreneurs that an advanced degree program, such as a Master of Science in Applied Psychology, can help provide.
What Is the Psychology of Entrepreneurship?
The psychology of entrepreneurship relates to understanding the relationship between successful business leadership and the mental techniques and characteristics that thriving entrepreneurs possess. It is closely tied to organizational psychology, which marries practical business application with the science of the human mind to elevate business productivity and cultivate a healthy business environment, whether that’s for a single entrepreneur or an entire organization.
While the psychology of entrepreneurs differs from person to person, inevitably there’s some overlap in the way entrepreneurs engage with their work. For example, entrepreneurs are typically motivated to solve a specific problem or fill a certain business niche. Entrepreneurs also have a certain level of confidence and autonomy and are typically willing to bet on themselves without taking huge risks, according to the U.S. Chamber of Commerce.
Types of Entrepreneurs
As aspiring entrepreneurs start building their businesses, perfecting their products and identifying their target audiences, they might be surprised to learn that not all entrepreneurial styles are the same. By understanding the different types of entrepreneurs, they could gain insight into their individual strengths and weaknesses and where they should focus their efforts. Though entrepreneurs possess varying characteristics and motivations, some of the categories of entrepreneurs include the following.
Leading the charge, an innovator is someone who aspires to create things never created before. Steve Jobs and Bill Gates fall easily into this type of entrepreneur, each creating landmark technologies that changed entire industries. Innovators are often obsessive about their businesses and face less competition as a result of being the first to do what they’re doing, but they’re also more susceptible to resistance from customers and shareholders who have no benchmark for the viability of their product or service.
Opportunists look for financial opportunities with strong growth outlooks. This entrepreneur type may be less concerned about charting new paths than about buying established ventures or developing products in existing high-growth markets. Opportunists look to maximize profits and then exit the market before the growth wave subsides.
A builder is a type of entrepreneur who worships at the altar of hard work and effort. The builder/hustler’s business strategy is to build out a strong infrastructure with high-talent workers quickly, which can lead to scalable financial growth. Though their work ethic can be perceived as noble and admirable, it’s not without drawbacks. Hustlers can alienate others in the business who aren’t as dedicated as they are or risk burning out somewhere down the line. When successful, however, these entrepreneurs have a high resistance to failure and an inability to give up.
What Drives an Entrepreneur?
Entrepreneurs are distinguished from those around them by the nature of their goals and personalities. The psychology of entrepreneurship extends to the specific traits entrepreneurs demonstrate that motivate them and ultimately lead to their success.
Quintessential entrepreneurs possess a deep source of passion for what they do. This passion will sustain them when they encounter the inevitable barriers and failures that await them along the path to building successful businesses. If entrepreneurs don’t believe that what they’re doing is worth it, they might be tempted to quit as soon as hardship comes their way, wasting both time and potential.
The superior level of confidence that successful entrepreneurs have is what sets them apart from their peers. Believing in themselves, and their business models, is imperative to the longevity of their pursuits. It’s important to understand that for many, this isn’t arrogance, which assumes failure isn’t possible, but instead comes from confidence in knowing that if the entrepreneurs don’t believe in themselves, no one else will.
This confidence will show up in how they present themselves and their products or services to others. In some cases, it can be the determining factor in whether they make a sale or a client trusts them to follow through. The more they succeed, the more confidence they’ll have and the more likely they’ll be to succeed again in the future.
Openness to Experience
New experiences can take many forms — from meeting new people to attending different events or moving to new cities. Traveling is another way in which entrepreneurs pursue new experiences. Exposure to a foreign place or culture provides an opportunity for insight and inspiration that wouldn’t have occurred otherwise. Indeed, entrepreneurs may benefit from being open to new experiences in all aspects of life, not just as they relate to business.
When people are more open to new experiences, they’re better able to find stimulation that can lead to creativity. They may also be more adaptable in the face of change, as they’re not necessarily tied to one way of doing things.
Entrepreneurs can also benefit from a rebellious spirit that thrives on risk. Many entrepreneurs start down that path because they’re unsatisfied with their employers, the policies they’re forced to abide by or the purpose of the business they’re engaged in. To have this psychological characteristic is to rebel against the status quo and to succeed in spite of obstacles met along the way.
Combine Psychology with Business
Of course, not all types of entrepreneurs share the same psychological makeup.
The driving traits behind the psychology of entrepreneurship may depend on each person’s experience, education, vision and goals. However, some qualities may be more valuable than others in helping entrepreneurs succeed. If you’re an entrepreneur, or an aspiring one, understanding how psychology plays a role in determining business success can be critical.
USC’s Master of Science in Applied Psychology degree is unique in its relevance to the modern business world and can help businesspeople of all types improve themselves and their enterprises. Consider the merits of the courses found in the program’s curriculum, such as Organizational Psychology, Psychology of Employee Selection and Assessment, User Experience (UX) Research, and Group Dynamics and Leadership. Discover more about the master’s in applied psychology program today.