Avoiding Entrepreneurial Failures

Avoiding Entrepreneurial Failures

 

It is the American dream to start a business, achieve growth with that business, and possibly someday pass it along to children or sell it for a profit.  In the article, Boomers Can’t Retire, it was explained how some entrepreneurs have found that they are unable to retire. The American dream may not be as easily attainable as some may think.  The Wall Street Journal article, Venture Capital’s Secret: 3 out of 4 Start Ups Fail, listed some unfavorable start-up statistics:

  • 75% of venture-backed US firms don’t return capital investment
  • Around 30% of start-ups fail completely – 95% if the definition of failure is projected return
  • Nonventure-backed companies fail more than venture-backed
  • 60% of start-ups make it three years and 35% make it ten

Author and Professor at Harvard Business School, Noam Wasserman, has some advice for future entrepreneurs in his book The Founder’s Dilemmas:  Anticipating and Avoiding Pitfalls That Can Sink a Startup.  In his book, Wasserman explains, “Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin.”

The new entrepreneur must consider problems they may encounter with people, as well as possible pitfalls he or she may encounter down the road.  By having foresight, the new entrepreneur can learn to be proactive to change.

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Do Job Candidates Lie on Personality Tests?

 

Companies often use personality tests like the Myers Briggs MBTI, emotional intelligence EQ-i, or others like the DISC to determine if potential employees’ personalities are a good fit for jobs.  I noticed a conversation about whether companies should use personality tests for screening employees. It seemed that many of the responses indicated that people will just lie to get the job.

There is the possibility that any subjective, self-administered test could be manipulated.  However, many of the tests have built-in detectors that try to catch inconsistent responses.  For those of you who have taken these tests, you may have noticed that it seemed like they asked the same kind of questions more than once.  Many of these tests reword things several different ways to determine consistency.

I took a personality test for a job as a pharmaceutical representative in the early 80’s.  Because it was a sales job, I knew that they were looking for sales-related qualities.  It was common sense to figure out that since I was applying for a sales position, I should use appropriate adjectives like motivated or driven to describe my personality.

The problem with lying on the personality tests is that in the end, you will end up with a job that does not really fit with what makes you happy.  Also the company will end up with an employee that is not the best match for the job.  In this economy, many people are willing to do whatever it takes to get any job.  However, the experienced HR professional should do more than just use a personality test to determine a good candidate.  These tests can be useful tools if used correctly.  However, they are just one of many tools.

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Apple and Other Top 10 Company Financial Statements

 

With all of the reports about the successes and failures of IPOs in 2012, there may be renewed interest in deciphering financial reports.  The follow are explanations of the four major financial statements.

  1. Income Statement:  One of the most important reports for a company is their Income Statement.  This may be referred to as the Statement of Income or the Profit and Loss Statement. This report shows profits and losses over a specific period of time.
  2. Balance Sheet:  The balance sheet is also referred to as the Statement of Financial Position. The balance sheet displays a company’s position at a single moment in time.
  3. Cash Flow Statement:  This may also be referred to as the Statement of Cash Flows. The Cash Flow Statement shows information about how money flows in and out of a business.  This may be helpful in determining the viability of a company.
  4. Statement of Retained Earnings:  This may also be referred to as e Statement of Changes in Equity.  This statement explains the company’s retained earnings over a period of time.  This will be reported under shareholder’s equity on the balance sheet.

The following are examples of the top 10 company financial statements:

Income Statements:

Balance Sheets:

Cash Flow Statements:

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