Feb 14th, 2009
Entrepreneurs Don’t Always Make The Best Investors
Today’s guest post is by Trisha Wagner, a freelance writer for DestroyDebt.com, a debt community and debt forum. Trisha writes regularly on the topics of getting out of debt and personal finance. Mahalo Trisha for your guest post; please visit DestroyDebt.com for more from Trisha!
Not everyone has what it takes to become an entrepreneur. Entrepreneurs by their very nature are people who tend to think outside the box and for the purpose of their business this is an awesome trait that is not easily emulated. The same traits that make entrepreneurs successful business owners can be their downfall when it comes to investing. Here are a few reasons why entrepreneurs may not make the best investors:
Optimism: Entrepreneurs are optimistic, sometimes to a fault. When starting a new business or working through the tough times that business owners often face- the only thing that gets many people through is the absolute belief that things will get better. Entrepreneurs truly believe if they work hard enough and with enough conviction rewards are surely on their horizon.
Investors-not so much. Investors must always be on the lookout for a potential downslide and be prepared to act accordingly to assess the risk.
Committed to decisions: In order to maintain their leadership position and make their business thrive, entrepreneurs are very decisive and once a decision is made they often remain steadfast and committed to that decision.
While investors should be able to make and stick to decisions regarding their choices, they should also understand that if it seems their decision may not be the right one, making changes can and will be necessary.
Being Aggressive: To turn a thought or dream into a functioning business requires some level of aggressiveness. Many successful entrepreneurs have had to take some major risks to get their business off and running. A good example are the people that leave a good paying job to pursue their dreams, although many more fail than succeed the thought driving them remains the same–you’ll never know unless you try.
Investors must know when to take chances and act aggressively AND when to proceed with caution.
Never take no for an answer: You have to be persistent and be willing to push forward regardless of the possibility of failure if you wish to launch a successful business. And once that business is launched you must maintain the “never give up” attitude to keep things moving forward.
Investors must know when to call it quits. You must know when an investment is going south and be willing to admit defeat and get out.
While many entrepreneurial traits may indeed hinder their owners from being great investors one size does not fit all. There are several entrepreneurs who are able to separate the traits that drive them to create, build and maintain successful businesses and also keep a level head for investing. That being said, it remains a good idea to be aware of how the separate personality traits can be beneficial for one aspect yet detrimental for the other. If you are blessed with the spirit of an entrepreneur and recognize that you may not be the best investor you may want to consider having a professional assist you with your investments so you can focus on what you do best, building your business.
