You don’t have to be the most intelligent person in the room to start or run a business successfully. Our State of Small Business survey revealed that only 20% of business owners have post-graduate education.
However, specific skills and abilities learned outside of formal education remain essential to running a business successfully. We’ve listed these 11 skills for you in order of importance, as well as some tips for developing them. Additionally, we’ve separated them into soft skills—non-technical, interpersonal skills — and hard skills — demonstrable abilities or knowledge sets.
Soft Skills Needed to Start a Business
Most entrepreneurs will tell you that what’s gotten them the furthest in their careers is sharpening their soft skills. Soft skills are non-technical, interpersonal skills that relate to your approach towards work, life, and relationships. Anyone is capable of mastering these skills, but it takes time, practice, and intention to be great.
1. Determination & Adaptability
The ability to get over, under, and around business obstacles.
Sometimes the problems you have don’t have straightforward solutions. Sometimes new technologies spawn innovative competitors. In those cases, an adaptable person takes the initiative and finds alternative solutions themselves. When Coronavirus and the Chinese New Year caused many dropshipping companies to pause sales, for example, adaptable businesses moved quickly to switch to U.S.-based suppliers.
Being adaptable means being resourceful: knowing how, where, and when to get the information you need. The businesses that successfully switched to U.S. suppliers probably developed relationships with those suppliers beforehand or at very least ensured they knew their names.
But adaptability is only half of what keeps your business alive during tough times. The other half is determination.
Determination is what helps business owners stay motivated even in the face of impending failure. It’s what helps them ignore the words of haters and skeptics.
Being determined blunts the edge of adversity. Most determined entrepreneurs are so committed to achieving their goals, they don’t even realize they’re experiencing a challenge that sunk some of their competitors. These are the people ready to do whatever it takes to make their dreams come true.
Business skills like determination and adaptability allow you to take your business to the next level. They know who to contact if they’re having a problem they can’t solve.
2. Emotional Intelligence
The ability to recognize the emotions of yourself and others.
Emotional intelligence put is the ability to recognize the emotions you and others are feeling. In practice, emotional intelligence helps us cultivate a more enjoyable workplace environment, manage conflict, lead more effectively, and manage stress.
It also increases workplace performance. According to research by Dr. Travis Bradberry of TalentSmart, emotional intelligence is the strongest predictor of success at work, accounting for 58% of success compared to 33 other workplace skills.
In other words, emotional intelligence is the bedrock of the interpersonal skills needed to start a small business. Emotional intelligence will help you hire the right people and keep them. It can even help you improve relationships with clients and even improve the workplace performance of yourself and others.
So how can you improve your E.I.?
- First, practice self-awareness. What are you feeling, and how are those feelings are affecting the people around you? For example, a manager may notice their stress unintentionally sharpening their tone. A manager with high E.I. will ensure their tone isn’t affecting other employees.
- Second, self-regulate. Instead of reacting to an unpleasant emotion, consider what kind of action aligns best with your values. For example, an employee upset about a coworker’s mistake may be tempted to confront them. Someone with high E.I. will wait until they’re calm enough for a constructive conversation before speaking with their coworker.
- Third, practice empathy. Make a genuine effort to understand the why behind people’s actions and words. A coworker could seem distracted today because they’re not interested in their job, but it’s more likely something is happening in their home life.
Finally, having good social skills is also critically important. They help you work positively with other people and manage conflict effectively.
The ability to effectively share your thoughts and intentions and understand the thoughts and intentions of others.
Good communication is often the sum of strong emotional intelligence and the ability to adapt to your partner’s emotional climate. If you skipped those two sections, be sure to go back and take a look.
Communication is foundational from the very beginning. You need effective written and verbal communication skills to get approval and assistance from banks and financiers. When you’re ready to purchase assets, you’ll need to negotiate with vendors to get the best deal. Once you start your business, you need to ensure you and your employees are working towards the same goal by effectively communicating your business vision. The list is endless.
You must learn to communicate clearly and concisely regardless of your mood or the situation. Whether you provide feedback, draft a company-wide email, or develop your brand’s mission statement, clear communication helps you do your job more effectively.
There are several ways to work on your communication skills. Still, if you want to be intentional, you can start by working with an executive coach, asking trusted peers for feedback, or joining a local Toastmasters chapter.
4. Critical Thinking
The ability to make a judgment call or solve a problem by analyzing facts.
The top MBA and executive programs like Stanford, Harvard, and Cornell all contain critical thinking courses—and there’s a reason. The Society for Human Resource Management (SHRM) found that 37% of employers considered problem-solving and critical thinking among the top soft skills candidates lacked [PDF].
Critical thinking involves many subskills, including logical reasoning, analyzing data to discover patterns, applying those patterns to new situations, synthesizing information to create new conclusions, evaluating information for truthfulness, and more. Many modern definitions also include elements of creativity and open-mindedness in their explanation of critical thinking.
With such a broad definition, critical thinking can be the most challenging to cultivate over time. Start by taking an online class or practicing Socratic dialogue on an online forum.
If you feel too busy for that sort of thing, you can challenge yourself in your day-to-day work by asking yourself the following questions:
- What assumptions are present here?
- Am I actively listening to my conversation partner?
- Do I fully understand their point of view and how they arrived there?
- Do I fully understand my point of view and how I arrived here?
- If evidence is being presented, who collected the evidence? Why did they collect it?
- What are the potential consequences of this action? How might this action make other people feel?
Critical thinking, though it seems broad, will affect everything about your business from the very beginning, including. Take the time to improve it if you can.
The ability to create and cultivate positive relationships.
Now that so much socialization occurs online, many people think of networking with distaste or even nervousness. But it doesn’t have to be intimidating.
Porter Gale said it all in her book Your Network Is Your Net Worth: “The new form of networking is not about climbing a ladder to success; it’s about collaboration, cocreation, partnerships, and long-term values-based relationships.”
Networking is more than getting your name out there. International research shows networking leads to greater career protection and guidance, sponsorship, and information and ideas. These connections aren’t just about getting a new job—the “statistic” that 70-80% of jobs are filled through networking is from a ten-year-old NPR interview and is not research-based—they’re about ongoing education, business development, mentorship, and more.
The simplest way to build your network is by practicing. If networking isn’t your forte, look for small business or industry-related networking groups. Don’t worry about whether or not you have something valuable to contribute right away—you’re here to find people who understand your struggles and share your values. You’ll know the right time to chime in.
Business philosopher Jim Rohn said, “You are the average of the five people you spend the most time with.”
Who do you want to be?
The new form of networking is not about climbing a ladder to success; it’s about collaboration, cocreation, partnerships, and long-term values-based relationships.Porter Gale, CMO at Personal Capital & Board Member of Reddit
The ability to entrust the right employees with the right responsibilities.
Many entrepreneurs fail to delegate because they are reluctant to release control. And while having your fingers in every pie is fine—and may even make sense—when your business is small, you have to delegate if you want to grow.
As a business owner, your greatest asset is YOU. The best use of your time is not running your business but growing your business and bringing in revenue. To create time for that, you need to give the responsibility of running and maintaining your business to someone else. Delegating tasks will allow you to do that.
Some tips for improving your delegation skills:
- Ensure the task can be clearly explained, demonstrated, and has a clear deadline. This is where communication comes in—when you delegate, ensure the employee clearly understands how to do the task, why they’re doing it, and when they need to finish.
- Consider employees’ preferences and abilities. Identifying these requires emotional intelligence and good communication, so make sure you review those sections!
- Avoid micromanaging. There’s no point in giving a task to someone else if you end up peering over their shoulder the whole time. Besides, everyone is going to complete a task a little bit differently. That doesn’t mean the outcome won’t be positive! Trust your employees.
- Be willing to outsource. If you have the cash, consider outsourcing tasks that prove to complicated or difficult for you or your employees. There can be a great deal of benefits to outsourcing.
7. Time Management
Whether you’re building your business while holding a full-time job or looking to recover a bit of personal time, balancing the workload of a small business is challenging.
Mastering your time management means maximizing the value of your time. Everyone has the same 24 hours each day—it’s how you manage those hours that sets you up for long-term success.
Successful time management takes determination (to complete tasks when you don’t want to), emotional intelligence (to key into your own mental and emotional needs), and—surprise!— delegation (to clear up your time).
If time management is something you struggle with, there is help. Improving your time management can be as simple as getting organized:
- Visualizing how you’re spending your time, whether on an app, calendar, or written list, can clarify what tasks to prioritize and what to cut. You could also try sorting your tasks into using an Eisenhower matrix.
- If you find yourself lingering on tasks with very little importance, look at Gretchen Rubin’s book, The Four Tendencies.
- If you’re a digital native, several apps that can help you organize.
- Finally, if you benefit from having an external nudge, consider getting an executive assistant for your business or yourself.
For a deeper dive into time management, check out our Time Management Troubleshooting Guide.
Hard Skills Needed To Start a Business
While soft skills are essential for running a business, some hard skills can make your job easier. Hard skills are abilities or knowledge bases you can demonstrate and are usually improved through education or practice.
Do a quick self-check on each of these skills and ask yourself whether you could use some practice!
9. Marketing and Sales
The ability to identify the correct audience for a product and convince that audience of the product’s value.
It doesn’t matter how great your business is: if nobody knows about it, you won’t make any sales. As a result, you have to be able to promote your products and services effectively.
Here are some day-to-day tips for improving your marketing and sales skills:
- Obsess Over Your Ideal Customer. When it comes to marketing, quality of attention matters over quantity of attention. The highest quality attention comes from the people most likely to buy your product: your ideal customers.
An ideal customer, persona, or target customer is the person for whom your product or service is a perfect fit. Knowing the demographics, mentality, and behavior of this person is vital to selling to them. What motivates them to buy your product? What are their pain points? What kind of slang do they use? What’s their budget?
With this information, you can target these people specifically by personalizing your messaging. Understanding your ideal customer may even help you optimize your product or services.
- Work On Your Soft Skills. Most of us believe our purchases are rational, but research shows that 95% of purchasing decisions are made in the realm of emotion: the subconscious. What does this mean? It means that our hearts know whether we want to buy before our heads have made a rational decision. As salespeople and marketers, we can’t only appeal to one or the other: we need both. This is an exercise in emotional intelligence and communication.
Exercising your emotional intelligence also means remaining aware of your feelings. This means staying balanced and knowing your limits—sales can be fiscally and emotionally rewarding, but you have to know when to stop and take breaks. This means getting eight or more hours of sleep if you can. Don’t slack on self-care!
- Systemize. Use a measurable, repeatable sales process. What works? What doesn’t? Is there are point in the process where you tend to lose customers? Evaluate your sales pipeline.
And if you don’t have a sales pipeline or funnel yet, start there. What is the ideal journey a customer will take from first exposure to first purchase? How will the ideal customer first encounter your brand in the “wild”? What about your brand will intrigue them?
The answers to these questions should come directly from audience behavior. Build a reliable, repeatable system to not only create that experience for your audience but to document it, too.
And remember, this is something you’ll improve and optimize over time. If your sales pitch isn’t working, change it (and don’t forget to document the changes!).
- Ask. Avoid making assumptions about your target audience, your sales process, and your product. Instead, test any ideas by asking and experimenting. Becoming comfortable with this process means becoming comfortable with receiving rejection. You’ll also need to be comfortable with failure– after all, sometimes experiments fail.
However, the risk of failure is well worth accurate information. Ask!
10. Financial Literacy
You may not be in small business for the money, but money is inevitably involved. Working knowledge of finances and financial management is needed to start a business, but you don’t have to be a financial planner.
At the most basic level, you should understand how to calculate how much money you spend and earn each month. This is the first step to creating a budget and ensuring your business is sustainable. This kind of financial analysis is also one of the first steps to writing a formal business plan, which you’ll need if you plan to finance your business with an SBA loan.
At a more advanced level, you’ll want to understand what your business’ tax write-offs are so you can save money. You may also want to learn how to use your profits to reinvest in your business or outside assets.
And, of course, saving for unexpected financial burdens, like COVID-19, is a must.
If you’re not great with numbers, an accountant is a great start. Even so, if you don’t know how to read a profit and loss statement, it’s tough to make informed business decisions even with their help. A quick search on the internet can point you to many free resources, but here are our favorites:
- The Small Business Administration’s (SBA) Financial Management for a Small Business Workbook [PDF]. This incredible 22-page PDF contains a pre-test, explanations of the most vital information to increase your financial literacy, and a post-test. It also includes sample statements and further resources.
- If you’re a more digital type, try the LinkedIn Financial Essentials for Small Business course. It was taught and designed by real accounting professors, and with the first free month that comes with LinkedIn Learning, you should have more than enough time to complete the course!
- For a walkthrough on personal financial literacy, including savings, debt, and credit, take a look at the financial literacy guide on Annuity.org.
- If these two resources haven’t convinced you to outsource some of your financial small business needs, check our breakdown on why your small business needs payroll services!
Still getting your business financially off the ground? Check out some of Guidant’s small business funding options!
11. Tech & Data Literacy
In today’s world, tech moves fast. It’s impossible to keep up with every piece of technology your business might use, but you don’t need to. Instead, make sure you have an accurate understanding of foundational technological principles like big data, artificial intelligence, and digital marketing. Knowing what these tools are capable of can help you determine if you want to invest in one.
For example, it’s beyond artificial intelligence to run your entire business, but intelligent software can help you speed up or simplify a task. Many businesses simplify both employee and customer scheduling using AI-driven software.
That said, simply adopting new technology for the sake of its newness isn’t going to improve your business’s performance. Instead, look at areas of your business that could be optimized and explore your options.
As you do so, keep your needs in mind. Financial software used by a large Fortune 500 company may not be the best fit for a small business. Still, there are technological solutions that cater to smaller-sized businesses, like Guidant Payroll.
Choosing the technological solution that suits your needs will ensure the technology makes things easier, not harder. It will also ensure you’re not left in the dust by technologically competent competitors.
Plus, having a basic understanding of the technology used in your business will make you a better manager. If your business purchases a technology, make sure you understand who is using it, how they’re using it, and what other systems it’s impacting.
Hire Your Weakness
No single person can be good at everything, and you’re not expected to. That said, if you’re struggling to address one part of your business, consider hiring someone to take care of it for you.
It’s tempting to think you’re saving money by doing it all yourself, but flubbing up marketing, your tech stack, or your finances can lead to serious business setbacks (not to mention fees!).
For example, a Florida Small Business Development Center (SBDC) conducted a study that found 50% of the businesses in its growth acceleration program were in financial distress [PDF]. Of those, none were doing any financial analyses, and only one could explain gross profit ratio (a key indicator of business performance) and how it impacted their business.
These financially floundering entrepreneurs could have avoided their troubles by hiring their weakness: a financial expert.
You Can Break Into Any Industry!
It’s a common misconception that you need a lifetime of experience to start a business successfully. However, the truth is that if you can master the soft and hard skills listed above, you can apply them to almost any type of business.
This is especially true in franchising. Typically, as a new franchisee, you go through a rigorous training program, which takes you through a deep dive into the product or service. You also learn to find the right real estate, software programs, business accounting, and supplies you need for your business. In some cases, unfamiliarity with the industry is an advantage!
If this interests you, check out our Complete Guide to Buying a Franchise.
It’s Time to Build Your Skill Set
Business owners need to embrace a wide variety of tasks but don’t be intimidated. All of these skills are achievable. The key is not being afraid to tackle something new and getting out there and practicing. Get ready to become a successful entrepreneur today by picking the skill you’re most afraid to hone, and find a resource that can help you start improving.