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Personal Characteristics of the Entrepreneur

Characteristics that tend to make some people better at recognizing opportunities than others.

1. Prior Industry Experience

  • Several studies have shown that prior experience in an industry helps an entrepreneur recognize business opportunities.
  • By working in an industry, an individual may spot a market niche that is underserved.
  • It is also possible that by working in an industry, an individual builds a network of social contacts who provide insights that lead to recognizing new opportunities.


2. Cognitive Factors

  • Studies have shown that opportunity recognition may be an innate skill or cognitive process.
  • Some people believe that entrepreneurs have a “sixth sense” that allows them to see opportunities that others miss.
  • This “sixth sense” is called entrepreneurial alertness, which is formally defined as the ability to notice things without engaging in deliberate search.


3. Social Networks

  • The extent and depth of an individual’s social network affects opportunity recognition. 
  • People who build a substantial network of social and professional contacts will be exposed to more opportunities and ideas than people with sparse networks.
  • Research results suggest that between 40% and 50% of people who start a business got their idea via a social contact.


4. Creativity

  • Creativity is the process of generating a novel or useful idea.
  • Opportunity recognition may be, at least in part, a creative process.
  • For an individual, the creative process can be broken down into five stages, as shown below.

Five Steps to Generating Creative IdeasFive Steps to Generating Creative Ideas