Opinion: Five ways entrepreneurs can become more psychologically resilient

(opens in a new window)Kyle Brykman, (opens in a new window)University of Windsor; (opens in a new window)Alex Newman, (opens in a new window)Deakin University; (opens in a new window)Julia Backmann, (opens in a new window)University College Dublin; (opens in a new window)Robert J. Pidduck, (opens in a new window)Old Dominion University, and (opens in a new window)Silja Hartmann, (opens in a new window)Freie Universität Berlin
Posted 27 May, 2022

Entrepreneurship is the (opens in a new window)backbone of any free-market economy. Globally, small and medium-sized businesses (opens in a new window)represent roughly 90 per cent of businesses and employ over 50 per cent of the workforce. They also contribute about (opens in a new window)45 per cent to gross domestic product (GDP).

Yet entrepreneurs face many obstacles that threaten their survival, including financial insecurity and market uncertainties. Unsurprisingly, roughly (opens in a new window)50 per cent of new ventures fail within the first five years.

In this challenging landscape, (opens in a new window)entrepreneurs’ psychological resilience is a key personal resource and competitive advantage. But how can entrepreneurs develop resilience? And why does psychological resilience benefit entrepreneurs?

Entrepreneurs’ psychological resilience

(opens in a new window)Psychological resilience is made up of two defining elements. First, someone must experience adversity, which threatens their performance or well-being. After experiencing this adversity, a person’s recovery to their initial level of performance or well-being is known as positive adaptation. This ability to bounce back after facing an obstacle is resilience.

To understand how entrepreneurs can become more psychologically resilient, (opens in a new window)we conducted a comprehensive review of existing academic literature by synthesizing results from over 80 published articles. We identified the following factors as essential to building entrepreneurs’ psychological resilience.

• Personality: Believing in your abilities and having a strong sense of (opens in a new window)control over life events, being (opens in a new window)“gritty” and passionate about your business.

• Attitudes and behaviours: Positive mindsets, meaning, preparedness and reflection after experiencing setbacks (opens in a new window)further enhances entrepreneurs’ resilience.

• Learning: Participating in entrepreneurial education programs, like (opens in a new window)university business courses, and learning (opens in a new window)how other entrepreneurs successfully cope with adversity and (opens in a new window)learning from their struggles and failures can help entrepreneurs learn how to bounce back from adversity.

• Personal experiences: Resilience also develops from personal experiences, like (opens in a new window)overcoming the initial challenges of starting a business. In addition, (opens in a new window)early childhood experiences can be instrumental, like when parents focus on learning opportunities and allow their children to overcome their own challenges.

• Social networks: Having strong sources of social support, whether through (opens in a new window)business networks, (opens in a new window)formal mentorship programs or (opens in a new window)feedback from potential investors.

What makes resilient entrepreneurs unique?

Being resilient might be a prerequisite for having an entrepreneurial mindset. Several studies show that resilient people are more likely to (opens in a new window)launch new ventures, (opens in a new window)take over existing businesses and (opens in a new window)pivot their business during a crisis like the COVID-19 pandemic.

Psychological resilience is also associated with a host of important outcomes, including entrepreneurial success. Resilient entrepreneurs tend to exhibit (opens in a new window)stronger mental well-being, as psychological resilience helps (opens in a new window)buffer the everyday stressors of entrepreneurship.

Resilient entrepreneurs also tend to (opens in a new window)learn, (opens in a new window)innovate, exhibit more (opens in a new window)transformational leadership and are happier than those without psychological resilience.

Resilience is also associated with objective and subjective assessments of firm performance. One study found that conveying personal resilience in (opens in a new window)crowdfunding campaigns leads to superior financial performance, while another showed that psychological resilience significantly (opens in a new window)improves the probability of venture survival.

5 ways to become more psychologically resilient

Even if you weren’t born with an inherent ability to weather every storm that comes your way, you can still learn to become more mentally tough and adaptable. Here are five ways to develop personal resilience so that you can triumph over the next obstacle you face.

1. Cultivate a (opens in a new window)growth- or learning-orientated mindset. Prioritize learning over short-term performance, seek out challenges, embrace failures and experiment with ideas, (opens in a new window)even if you don’t achieve immediate success. Adopting a (opens in a new window)healthy mindset about adversity (like “it builds character”) can change how you respond to inevitable bumps in the road.

2. Proactively learn from others. Seek out (opens in a new window)formal mentors who can offer advice and knowledge about how to overcome entrepreneur-specific challenges. Invest time in (opens in a new window)reading about how other entrepreneurs overcame adversity while launching and accelerating a business.

3. Develop strong social support networks. (opens in a new window)Social support is critical to overcoming adversity, whether it comes from family, friends, colleagues or mentors. Support networks offer instrumental guidance, like helping entrepreneurs look at problems from new perspectives, as well as emotional support for managing negative emotions and stressful experiences. Find people and organizations you can lean on.

4. Focus on your core strengths and capabilities to achieve success. Believe in your (opens in a new window)ability to manage the unexpected. Dive in passionately to what you are building. (opens in a new window)Passion is the fuel that keeps entrepreneurs motivated and committed to learning, despite obstacles.

5. Participate in (opens in a new window)local entrepreneurship programs. By engaging with local programs, entrepreneurs can find and use essential resources, including specific knowledge and industry connections, to help them bounce back when adversity strikes (or even proactively anticipate challenges).

Like building muscle, building psychological resilience takes time, effort and the right technique. By investing in learning, believing in your capabilities and vision, using failure as fuel for growth and leaning on social support, anyone can become a psychologically resilient entrepreneur.

(opens in a new window)Kyle Brykman, Assistant Professor of Management, (opens in a new window)University of Windsor; (opens in a new window)Alex Newman, Associate Dean (International), Faculty of Business and Law, (opens in a new window)Deakin University; (opens in a new window)Julia Backmann, Assistant Professor, UCD School of Business, (opens in a new window)University College Dublin; (opens in a new window)Robert J. Pidduck, Assistant Professor, Entrepreneurship & International Management, (opens in a new window)Old Dominion University, and (opens in a new window)Silja Hartmann, Postdoctoral Research and Teaching Fellow, Department of Management, (opens in a new window)Freie Universität Berlin

This article is republished from (opens in a new window)The Conversation under a Creative Commons license. Read the (opens in a new window)original article.