A Simple Test for Entrepreneurial Success

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I took a test once where I had to score 100% to pass.  This was to become a licensed EMT, and there was a good reason for the 100% standard.  Since I was being measured on my knowledge of lifesaving emergency medical care, they wanted to be sure I knew every subject on the syllabus perfectly.

There’s also a 100% test for entrepreneurship, and it has three subjects.  If you pass, you have a chance of success.  If you don’t, you don’t.  The subjects aren’t hard, but you need to have perfect scores.  The scores have to be perfect because the real test is much harder than this one.

Now, don’t panic!  You can still be successful without passing all three subjects.  However, you should never try to become your own boss in a for-a for-profit enterprise.  Find another course in life.

The Entrepreneurship Test

1 – Obsession with Money

You need to be absolutely obsessive with all aspects of money.  You must be able to honestly answer yes to all these questions:

1. Do you read every line in your credit card statement making sure there are no incorrect charges?
2. If you find an incorrect charge, do you make sure to get a correction?
3. Do you do the same with bank statements?
4. If you loan money to a friend and he doesn’t pay you back, will you hound him, even if it ends the friendship?
5. If a friend’s store charged you even a little more than a big-box store for the same item, would you go to the big-box store?
6. If you were working in a retail store and someone shoplifted, would you prosecute – every time?
7. If you could buy something for a nickel and sell it for $5, would you do it?
8. Do you know if you finished last month with more or less in liquid assets than the month before?  To within one percent of your net liquid assets?

Answering yes to these questions may not make you a candidate for sainthood, but it will mean you have the money focus that is always necessary, and the ruthlessness that often is.  It also should not prevent you from doing charity or offering promotions.  What you will not do, however, is leave money on the table.

Here’s an example for one of my dad’s businesses.  In the early 1980s, he opened a used paperback bookstore.  He later found out that certain paperbacks from the 1940s and 1950s were considered “classics” and would sell for $5 or $10.  However, we paid our standard rate when buying books – 1/6 of the cover charge.

Being 18, I thought this was terribly unfair.  Buying books for a dime and selling them for $10 – what a scandal!  My dad laughed.  He pointed out that the sellers were perfectly comfortable with the payment they were getting, and the buyers were perfectly comfortable with the price they were paying.  We weren’t lying or deceiving anybody.  Which brings me to:

Subject #2 – Obsession with Honesty

There are, of course, dishonest entrepreneurs.  However, things never end well for them.  At best, they are found out and driven out of business.  At worst, they wind up in prison.

My dad is obsessively honest.  One time we were buying a sweater marked down 30% from the original price of $30.  It should have rung up at $21.  Instead, the register price was $9.  Rather than take advantage of the cashier’s error, he had her get a manager to check.  And, you can imagine how he dealt with crooks who worked for him.

If you can answer yes to any of these questions, you fail:

1. Would you take advantage of a cashier’s error like the one I just described?
2. If the credit card company or bank makes an error in your favor, do you keep your mouth shut?
3. Do you ever take home office supplies (assuming it’s not your business)?
4. Would you ever bill a client for time you didn’t actually work?
5. Do you ever lie to your boss, another employee, or a customer?
6. Have you cheated on a test?

Subject #3 – Obsession with Detail

You must keep track of every detail that might affect the bottom line – which means every detail.  But like anyone, you’ll find some tasks much more interesting than others.  The other jobs still must be done.  Skipping them or putting them off (easy to do when you’re focused on something else) will open you to mistreatment by your employees, customers or vendors, and may also create a reputation for shoddiness and shadiness.

If you can answer yes to any of these questions, you fail:

1. In the last couple of years, have you paid a bill late simply because you lost it?
2. Do you leave your car keys in a different place each time you come home?
3. Have you forgotten an appointment in the last year?
4. Do you not know birthdays of anyone in your or your spouse’s immediate family?
5. Have you been more than a few minutes late to any of your last 10 appointments, except for a valid emergency reason (e.g. the highway was closed)?

Can you succeed without a straight A on this test?

Sure you can.  Most people wouldn’t get an A on the test, and yet many of them are successful.  They are not successful, however, in running their own businesses.

It’s even possible to be successful as a partner in a business without a straight A score.  However, you cannot be the senior partner and final decision-maker.

Image by Angela Radulescu via Flickr

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.