The 5 Levels of Entrepreneurial Excellence

October 31, 2010 – 11:30 pm | by Matt Ackerson

Think about something that you do well, a talent, a particular skill of yours. For example, maybe it’s running, painting, public speaking, persuading people of something–something you are good at.

Were you always adept at exercising that ability? Chances are, if you’re like most people, even if you had innate talent to perform that ability, you’re better now than you were when you first started.

Entrepreneurship works the same way. You get better with experience. You make mistakes and you learn from them. I know from experience since I am currently working to grow my fourth business, PetoVera.

With each start-up, I have progressed and honed my skills as an entrepreneur. I’ve learned from reading a ton of books and blogs, and even more from actually executing on the ideas that I had.

There are certain entrepreneurs I know personally whose skill-level I aspire to reach. This list of the levels of entrepreneurial excellence is written with a special amount of respect and tribute to their ability. They are sustained or repeat Level-5 entrepreneurs, the most difficult to reach level of business prowess and mastery.

Let’s dive in and define each level:

  1. I have an idea – This is the starting point for many businesses, though there are exceptions. Entrepreneurs or a team of co-founders will come together and decide they have a specific project they want to work on. In some cases they don’t have an idea at all. Some copy other ideas that are already out there in the marketplace. However, many “non-preneuers” get stuck in this stage and simply go on dreaming, never implementing. By my estimation, since this is a low-effort starting point, 100% of entrepreneurs and wanna-be’s reach this level.
  2. I have a product - The second level of entrepreneurial excellence is reached when the entrepreneur has completed a first version of his / her product, a working prototype that can be shown to customers. Only 35% of entrepreneurial minded individuals reach this level. This key step of building a first product sorts out those who are serious about business, and those who only have “a good idea.” The drop-off between the first level and the second is significant for this reason.
  3. I have a market ready to buy! - No matter how fantastic your product may be, it is meaningless if you cannot find a market to purchase what you are selling. How do you do this? Make sure that what you’re selling solves a problem, cures a certain pain point, or meets a need. I estimate that only 15-20% of people with entrepreneurial aspirations make it to this point.
  4. I have a team that will execute and grow the business - Many entrepreneurs lack the social skills required to recruit and manage a team of talented individuals to head up sales, marketing, customer service, product development, human resources, among other roles to be filled. I estimate that 10% of entrepreneurs reach this point.
  5. I have an organization that can operate and grow by itself - Reaching this level takes both will and humility on the part of the business’s founder. The humility factor is key when it comes to hiring someone to oversee the entire business operation, and to ultimately take your place.

    If you reach this level, this means you have built a business with ingrained systems, mechanisms, and a guiding philosophy that will generate positive cash flow and adapt to market changes regardless of whether or not the entrepreneur ever shows up at the office. Only 1% of entrepreneurs ever make it this ideal state. Most who arrive at level four will stop there simply because making a lot of money and running the business is good enough.

Ultimately, (nature vs. nurture arguments aside), to reach the fifth level of entrepreneurial excellence, the secret ingredients are time, effort, and consistency.

What do you think? Are my percentage estimates completely off? Did I leave out a level?

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  1. 4 Responses to “The 5 Levels of Entrepreneurial Excellence”

  2. By Aditya Shukla on Nov 1, 2010 | Reply

    Interesting thoughts.

  3. By Matt Ackerson on Nov 2, 2010 | Reply

    Thanks Aditya!

  4. By R.Gokarn on Apr 7, 2011 | Reply

    Very interesting article. Your percentages might be spot on, or not. Either way, it can only be an indicator.
    You are accurate in your observations about entrepreneurs. Like most things in life, whether it is playing a guitar, learning a new language, being a doctor or an entrepreneur, everything has a learning curve. It gets better with each failure. If you dust yourself off and chug along, you tend to use your experience in future transactions/entrepreneurial endeavours.

    As Winston Churchill said : Courage is going from failure to failure without losing enthusiasm. And he might perhaps have been right.

    Your descriptions of the “levels” might be accurate, however personally I feel that to be a successful entrepreneur, what matter is attitude and a completely different mind set. Products, sales and marketing and systems might be necessary, however they are like the tips of an iceberg.

    I think success in business needs to be defined with a more holistic approach rather than just mundane charts, figures and systems.

    A quick question : 2 companies somewhere in the world started their social networks online around the same time. Each had the same product, perhaps one had a better marketing and sales team, hungry market and team to execute their business. Yet one becomes Facebook and worth several billions while others just wither away.

    So what is missing piece of the puzzle??

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