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.

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 isWhether your business is growingHow happy your employees and customers areWhether 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.

Optimism

“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.

Adaptability

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.”

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.

Creativity

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.

Self-Discipline

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.”

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.

Networking

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.

Negotiation

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.

Leadership

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.