Running a small business involves a lot more than juggling logistics. Knowing how to tackle and overcome challenges is an essential aspect of entrepreneurship.
Rather than solely being determined by skill, your success as an entrepreneur is underpinned by your personality and your approach to challenges.
One of the key psychological theories that comes into play is locus of control. But what is this and how does it impact your business success?
What is locus of control?
Locus of control is the extent to which you think you control your life and, in this case, your business. It is a spectrum, with internal and external on either end.
Individuals with an internal locus of control believe that their actions directly influence outcomes. They’re the type of people who don’t wait for opportunities, they make them.
Those with an external locus of control attribute their successes and failures to external factors, such as luck or fate.
Rather than trusting their instincts, they look for clear signs before taking risks.
How does your locus of control impact your business?
As a small business owner, it might feel natural to feel responsible for your business’s performance, but this isn’t the case for every entrepreneur.
- Do you shoulder the responsibility for your business’s performance?
- Do you view problems as opportunities to improve?
- What tools do you rely on to take risks?
- How do you respond to changing circumstances?
- How do you respond to external sources (such as guidance and market trends)?
The answers to these questions indicate your perception of control over your business and how you shape decisions.
Internal locus of control
If you have an internal locus of control, you will typically have the following traits:
- Self-driven and reliant: You will take initiative to shape business outcomes, relying on your own judgement and instincts to inform decisions.
- Resilient: Equipped to face challenges head-on, you view setbacks as opportunities for growth and learning.
- Goal-oriented: A strong focus on setting and achieving ambitious goals, as well as seeking solutions when challenges arise.
- Risk-taking: More inclined to take calculated risks, viewing them as necessary for innovation and progress.
External locus of control
If you have an external locus of control, you’re likely to have these attributes:
- Market sensitivity: You’re highly responsive to market trends and customer feedback, adapting strategies to align with these shifts.
- Collaborative approach: You value partnerships, leveraging external networks for mutual benefits.
- Risk management: You excel in cautious risk assessment and crisis management, making well-informed decisions.
- Global perspective: You think beyond local constraints, understanding and capitalising on global market dynamics.
Bridging the gap: the role of business advisors
Most business owners find themselves somewhere in the middle of this spectrum. Recognising where you stand is key to harnessing your strengths and getting the guidance you need.
For example, if you have an internal locus of control, being too self-assured can result in short-sighted decisions that impact your success in the long run.
Similarly, if you have an external orientation, don’t let your cautious approach prevent you from seizing opportunities.
Getting guidance from a business advisor can provide a fresh objective, to help you see beyond your internal or external constraints.
A business advisor can identify potential risks and opportunities to help you make a balanced, informed decision.
They can also mentor you in how to adapt to market changes, whilst keeping your core business goals in mind.
If you need help with your business strategy, don’t hesitate to contact us today.