R James Macaleer spent 30 years building Shared Medical Systems, Inc, located in Malvern, Pennsylvania. SMS provides data processing and software to hospitals and physician groups in the USA and around the world in over 20 countries. Macaleer and two partners left IBM to found SMS in 1969, with 2 million dollars in venture capital funding. They took the company public in 1976, and eventually sold SMS to Siemens in 2000, when the company had annual revenue of US$1.2 billion and 7,700 employees.

These days Macaleer is a Director of Boy Scouts of America and serves as Director General of the Philadelphia Museum of Natural Science. Drawing on his experiences in building SMS, he is a popular speaker on entrepreneurship to business groups. In this commentary he shares his thoughts on what it takes to be a successful entrepreneur.

This commentary is about entrepreneurship.

The dictionary tells us that an entrepreneur is one who undertakes to carry out any enterprise.

This is not a very good definition.

Most people would define an entrepreneur as one who takes the necessary risks to initiate and grow a new venture or enterprise.

In addition, in the real world we see that there is no set pattern that fits all entrepreneurs, even though most of them share some common characteristics, such as aggressiveness, willingness to take risks, ability to get things done, won´t take no for an answer, etc.

Should you be an entrepreneur?

Or should you work for someone else for a bit longer and then strike out on your own?

Or are you someone who is not well suited for entrepreneurship?

These are questions only you can answer.

Hopefully, what you glean from my comments will help you in your decision process.

Most people are not well suited to be entrepreneurs, and that´s good.

After all, if everyone were an entrepreneur, it would be quite difficult to hire people to staff your company as it grows.

On the other hand, without entrepreneurship progress would come to a screeching halt. So a balance is necessary.

What motivates an entrepreneur and why do they opt for the entrepreneurial environment rather than the safer harbor of working for someone else?

The most important motivation for the entrepreneur is creation and growth.

He or she is primarily motivated to create an entity, and to grow that entity.

Contrary to what might be considered conventional wisdom, very few entrepreneurs are primarily motivated by the desire to become rich. Such an outcome can frequently be the result of a successful endeavor, but those for whom economic gain is the prime motivation seldom succeed, although as with most generalisations, there are exceptions.

I generally classify the exceptions as opportunists rather than entrepreneurs.

You´ll find a lot of this type on Wall Street.

Entrepreneurs are also motivated to be their own boss.

However, you should realise that this can be illusory.

If you have partners, investors or shareholders, you will not always be able to chart your own course. The ideal situation is to have none of these, but in the real world such arrangements are more common than not.

What are the risks of being an entrepreneur?

There is the risk you could lose everything you have invested and everything others may have invested.

If you have accepted loans or equity from friends or relatives, and these investments become worthless, you may find yourself being treated as if you had leprosy.

A second risk is time. There will never be enough of it.

Most entrepreneurial ventures will consume every minute you have, to the exclusion of your family, friends, hobbies, etc.

Such an environment is not for everybody.

While I have not seen any statistics on this topic, it would not surprise me if the divorce rate for entrepreneurs wasn´t higher than the norm.

You may, after jumping into the entrepreneurial fray, find that you are just not cut out for it, for example, you don´t want to spend the necessary 12 - 14 hour days, six or seven days a week.

Or you find it´s a lonely existence that just isn´t your cup of tea.

All this may sound a bit harsh and discouraging, but the more you know about the environment and its risks, the better chance you have of being successful, should you choose the entrepreneurial route

points to ponder

If you decide it is time to go out on your own, here, in no particular order, is my list of points to ponder. Hopefully, these will serve you as good advice on your journey,

- Manage your time, and don´t ever let anyone be the judge of how your time is spent or who you will see and who you won´t. Since you never will have enough time, you will have to set priorities, and you will have to learn to say no, frequently, to people who will want to intrude on your time, which will be your most precious asset.

- Have a sense of urgency on everything. This is particularly important when you realise that a member of your team isn´t producing, or the job has outgrown them. Pull the trigger sooner rather than later, even if the person is a friend or relative. While this might sound like a version of shoot first and ask questions later, most of us wait far too long before terminating a non-productive employee, and then we always wish we had done it sooner. You won´t have the luxury of tolerating sub-par performance, so you´ll have to move quickly.

- Focus on doing a few things well; don´t try to be all things to all people. Peripheral opportunities can be seductive, but they drain resources and managers´time from the more crucial issues. Stay away from them.

- Know and understand the competition. It is frequently difficult to get a firm handle on how many competitors there are, along with details of each, but you don´t want to jump into a market that already has too many players.

- Even with a good sales force, your people will always overestimate their sales forecasts. Don´t put your business in a position where you will go under if the optimistic forecasts aren´t reached.

Along the way you will have financing problems, sales problems, production problems, and problems that you never imagined could exist. Nevertheless, most of your problems will be people problems. It is difficult to succeed as an entrepreneur without very good people skills. You must be, and be viewed as, tough but fair and compassionate. By compassionate, I mean giving a less-then-adaquate performer four weeks severance pay rather than two weeks pay if there are mitigating circumstances. You can´t be Santa Claus and a successful entrepreneur at the same time. But, you also must be able to get people to like and respect you, whether it´s employees, customers, suppliers, stockholders, or whatever.

- Don´t be afraid to change your business as your business grows. Change the organisation, individual responsibilities, products, marketing programmes, etc, to adapt to changing situations. While I don’t recommend change just for change´s sake, in a growing entrepreneurial environment an appropriate slogan is ’if it ain´t broke now, it soon will be.

’The most successful companies anticipate problems so they can be pro-active, not reactive.