Watch CBSN Live

The Truth About What It Takes to Be an Entrepreneur

"The very rich," according to a character in an F. Scott Fitzgerald story, "are not like you and me." To that, a character in an Ernest Hemingway story famously responded, "Yes, they have more money."

If only someone could replicate Papa's trick to define what makes entrepreneurs not like you and me. Despite efforts of generations of researchers into how people who found businesses differ from the rest of us, a similarly simple and straightforward explanation has not been forthcoming. The latest attempt, based on analyzing responses to 12,000 surveys administered to both entrepreneurs and the rest of us, does little to resolve the issue.

Psychological assessment purveyor Psychtests in conjunction with Bill Wagner, author of "The Entrepreneur Next Door," put together a quiz that promises to explain to the rest of us "what it takes to succeed." But the result is not itself all that successful. Psychtests examined respondents for seven traits: conscientiousness, drive, optimism, networking ability, risk-taking, self-sufficiency and social skills. Does it really take all that to start and run a business?

Back in 1848, pioneering economist John Stuart Mill said the assumption of risk was the key ingredient in entrepreneurial activity. That analysis seems valid today, so it's hard to see why we need to include an aptitude for networking in the mix.

Whether for one trait or seven, Pyschtests tells us that those entrepreneurs consistently score higher than others. But does taking such a test really help "evaluate an individual's entrepreneurial potential" as the company claims? Not necessarily, because entrepreneurs are not the same as potential entrepreneurs. As one researcher noted back in 1988, it requires different behaviors to create an enterprise than it does to run one you've already created. So what Psychtest may really be telling us is what it's like now to have previously been an entrepreneur.

Another problem is that much of the data from this analysis is self-reported. For instance, it found 41 percent of entrepreneurs rated themselves as being very good at making conversation, compared to 27 percent of non-entrepreneurs. This tells us that entrepreneurs think they are good talkers, but not whether they actually are or not.

Self-description also may be distorted by expectation. That is, these people describe themselves as entrepreneurs. They may be describing themselves, or they may be describing what they think an entrepreneur is like. They could also be telling us what they want us to think, or what they think we want them to say.

Despite the problems, the attempts to describe entrepreneurs continue. The September 2010 issue of "International Journal of Business and Management" had a scholarly article describing a quantitative analysis of the differences between entrepreneurial CEOs and professional CEOs. The authors found entrepreneurs were comparatively more motivated to go for unusual goals, more willing to take risks and accept challenges, better at handling uncertainty, and less inclined to maintain the status quo.

That sounds a lot like what other studies of entrepreneurial psychology have found. Why bother continuing to ask the question of whether entrepreneurs are different from the rest of us? If only Hemingway were here. He could lay the matter to rest by saying, "Yes, They have more entrepreneurialism."

Mark Henricks has reported on business, technology and other topics for The New York Times, The Wall Street Journal, Entrepreneur, and other leading publications long enough to lay somewhat legitimate claim to being The Article Authority. Follow him on Twitter @bizmyths.

Image courtesy of Flickr user Domain Barnyard, CC2.0