Character Traits of Successful Small Business Owners

Do you have it in you to succeed in small business?

A person looking over plans for a small business

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Starting a small business is no easy feat. Some succeed and some end up closing their doors. For example, for every 100 businesses that first began in March 2020, 18 were closed just one year later, according to the U.S. Bureau of Labor Statistics.

A lot of factors dictate whether your business will be successful or not. Some, such as the economic environment, are out of your hands. But others, like your own character traits, play major roles in the fate of your business.

Key Takeaways

  • Certain psychological traits can play roles in how successful you are as a small business owner and help you stay the course during tough times.
  • Functional business skills are important for day-to-day business management.
  • Social skills allow you to get others on board with building your business.

What Is a ‘Successful’ Small Business?

There's no one definition of what makes a business "successful.” Different small business owners might view it in different ways. But according to a 2018 study of how outside stakeholders such as customers and banks measure success in a small business, it boils down to the following major factors:

  • How profitable your business is
  • Whether your business is growing
  • How happy your employees and customers are
  • Whether your business has a positive reputation in the community

The person running the business has a big impact on these things, and small business owners often share many of the same personality traits.

Psychological Characteristics of Successful Business Owners

"Over the years, I’ve had the privilege to work with thousands of small businesses," Clate Mask, CEO of Keap, a sales and marketing software company aimed at entrepreneurs, told The Balance in an email interview. "There are a lot of really smart and talented people that have started businesses and failed."

Certain psychological characteristics can make you more likely to succeed as a small business owner. These are important because they set the baseline for all of the other traits and skills you'll need for success.


"Something entrepreneurs and small business owners don’t talk about enough is the loneliness and stress involved through all stages of entrepreneurship," Mask said.There are many other challenges you'll face, too. No one can predict a pandemic, war, inflation, civil unrest, or any of the other factors that are out of our control. As time goes on, you'll get thrown new curveballs, too.

The thing that will keep drawing you forward in these situations is optimism: a sense of hope and confidence that the future will be good. Most people experience pessimism to varying degrees, but having an overall positive outlook can help give you strength to tackle business problems going forward.


Another key to dealing with constant challenges is your adaptability. Are you a stickler for paper documents and fax machines when things have moved online with digital forms? How easy is it for you to abandon your old standby business practices in favor of where the world is actually moving? Business owners who have this trait may be more likely to succeed, especially over the long term.

Emotional Resilience

Being generally optimistic and adaptable to roll with the punches is one thing, but staying true to the path in the face of emotional blows is a next-level skill for many people. For example, when you can’t attend a family event because you have to be at your store to get a large shipment of products, you might feel like you’re letting people down or missing out. But without that product, your business wouldn’t be able to make money.

"At some point or another, you’ll disappoint everyone—friends, family, employees, yourself," Mask said. "It takes grit to push through these stages to get to success."

Work-Related Locus of Control

This idea, coined by psychologist Julian Rotter in 1954, refers to whether you believe you have control over your environment—specifically, your work environment. If you personally believe that you have some amount of power to shape your destiny, you're more likely to succeed in business. But if you think your business's chances of success depend more on the whims of the world and not on yourself, then you may not have as much success.

Strong Work Ethic

You can have all of the traits above, but if you don't have a strong work ethic, you won’t even have a successful lemonade stand on the street. Most small business owners want their store or website to grow and make money, and that takes hard work—early mornings, desk lunches, late nights, and even forgoing hobbies.

Functional Characteristics of Successful Business Owners

How you manage the day-to-day operations is another major area that can cause your business to sink or swim.


Machine learning aside, the thing that separates humans from robots is that people can create new combinations of solutions to problems—in other words, we're creative. Being an especially creative thinker plugs right into adaptability because you can create and implement never-before-seen plans to steer your business around obstacles to success.


A lot of people may say they can do the tough things needed to run a business, but when it comes down to it, many don’t. The most successful entrepreneurs are able to create rules for themselves and actually stick with them.

An even more overlooked area is being able to stop when it's required. "As an entrepreneur, we want to work 24/7 on our business," Mask said. "But being able to set boundaries and create balance will pay off in the short and long term."


Working hard is important, but not at the expense of missing your kid's doctor appointments.

Goal-Oriented Mindset

Being able to set SMART goals was one of the most important traits of successful small business owners, according to a 2003 study from the University of Tennessee. Being able to set up a target for where to go helps keep your business from wandering aimlessly, and it's an underrated skill set. Good small business entrepreneurs know how to set short-term, midrange, and long-term goals for all areas of their businesses.

Social Characteristics of Successful Business Owners

"Extroversion" is an oft-touted trait of successful business owners, but you don't need to be a social butterfly to be successful. Introverted entrepreneurs can succeed, too, as long as they can identify and develop the areas that make the extroverts successful at what they do.


You've probably heard the saying that it's not what you know, it's who you know—and it's true. Your customers are what makes your business, but to get those customers, you need a way to attract them, and a good network helps you open those doors.

Being able to develop networking relationships through formal and informal, virtual and in-person networks, will help you succeed.


Networking consistently ranked as one of the most important traits of successful small business owners in just about every study and survey The Balance researched and reviewed.


Some businesses rely on standardized pricing and services, whereas others depend more on flexible terms. If you're a pawnbroker, for example, you'll use negotiation skills a lot more than a baker would. Nevertheless, negotiating is something every small business owner needs to do from time to time, and if you're good at it, you'll give your business a leg up.


Unless you're running a solo ship, you'll need to direct a team. Being a good leader takes time and experience, and involves things such as figuring out your team members’ strengths, how to motivate them, and what to do if they underperform.

Moreover, as entrepreneurs, you'll need to be adept at developing different leadership styles over time. If you're still micromanaging your 500-person team the same way as when you only had five people, for example, your business probably won't be around for very long.

Frequently Asked Questions (FAQs)

What is considered a small business?

A small business is a business with few employees and an annual revenue that is below a certain threshold. It may differ by company and industry, but the Small Business Administration (SBA) has a resource called the “table of size standards,” which can help a small business owner determine their business size.

How do you run a successful small business?

A business plan can help you stay focused on what your business needs to succeed and grow. Stay organized and continue pushing to reach your goals, whether that’s growing revenue or launching a new website. Being involved in the day-to-day as well as the big picture can help you run a successful business, and leading your employees to do good work will also help.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Bureau of Labor Statistics. “Table 7. Survival of Private Sector Establishments by Opening Year.”

  2. National Library of Medicine, National Center for Biotechnology Information. “Dimensions of Entrepreneurial Success: A Multilevel Study on Stakeholders of Micro-Enterprises.”

  3. University of Tennessee, Knoxville. “An Investigation of Personality Correlates of Small Business Success.”

  4. ScienceDirect. “The Impact of Locus of Control on Workplace Stress and Job Satisfaction: A Pilot Study on Private-Sector Employees.”

  5. Walden University. “Strategies for Enhancing Small-Business Owners' Success Rates.”

  6. U.S. Census Bureau. “What Is a Small Business?

  7. Small Business Administration. “Table of Size Standards.”

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