Wednesday, February 04, 2015

Trading and Investing as Entrepreneurship

Abnormal Returns recently posted a number of thought-provoking links regarding startups and entrepreneurship.  One of the articles posted summarized the lessons learned by a Shark Tank winner.  She noted something that I have also observed among friends who have started businesses:  "Being an entrepreneur is a grind."  The failure rate among startups is high.  During the early phase of the business, the entrepreneur necessarily fills a number of roles, from research and development to production to sales.  It takes an unusual dedication and conviction to pour oneself into an enterprise where success is far from assured.

Many times we hear about trading as a business.  Not so often do we consider trading as a startup.  Each trader is an entrepreneur, seeking superior returns in a crowded business world.  Every startup begins with three basics:

1)  An idea - A new product or service that has the potential to deliver unique value and profitability;

2)  A vision - A way of turning the idea into a living, breathing business;

3)  A plan - A blueprint for pursuing the business, bringing on partners, and making the venture successful.

It is the power of the vision and deep belief in the idea that fuels the effort needed to get a venture off the ground.  It is the power of the plan that grounds the vision and attracts the right human and financial capital to the growing enterprise.

So let's look at your trading as a business startup.  Here are some questions you might expect from would-be venture capitalist investors:

1)  What is the core idea behind your trading business?  What makes you unique and distinctive?  What will provide your edge in the marketplace?  What evidence do you have that you truly offer value?

2)  What vision animates your trading business?  How are you turning your core ideas into sustainable and scalable processes?  How are you making your vision sufficiently compelling that others would want to join your venture or invest in it?  

3)  What is your business plan?  How are you acquiring the resources--information, teamwork, finances--needed to make the business a success?  How are you ensuring that you are succeeding at each phase of the business, from researching new opportunities to managing risks to expanding your opportunity sets?

Most important of all:  Do you work like an entrepreneur?  Do you find yourself consumed with the power of an idea and vision?  Or is trading your hope for avoiding a life of work?

There are those who fill jobs and those who pursue careers.  Then there are those who follow a calling.  Jobs and careers belong to us, but we belong to our callings.  

Further Reading:  Proactive Personality and Entrepreneurial Success