Human Capital and Why Start-Ups Fail

Is It the end of the road for your Small Business?


  1. Lack of resources,

  2. Inexperienced management, and

  3. Limited capital,

can cause  a small businesses to suffer high mortality rates.

A study by Amy Knaup– in the Monthly Labor Review–titled Survival and Longevity in the Business Employment Dynamic Data, (may 2005) reported that after two years, 34% percent of new companies have failed and that after four years 56% have failed. Yet I feel the best position for me is an “Entrepreneur”.

Cover of "Essentials of Entrepreneurship ...

Cover via Amazon

According to the book Essentials of Entrepreneurship and Small Business Management by Norman M. Scarborough, Small Business Start-Up‘s take Intellectual Capital. In fact the book calls it a Key Source of a company’s Competitive Advantage and it  is comprised of:

Human Capital Structural Capital Customer Capital

Human Capital, is the talent, skills, creativity and abilities of a company’s workforce. Your Human Capital shows up in the innovative strategies  plans, and processes that the people in the organization will develop and then passionately pursue. Structural Capital, is the accumulated knowledge and experience that a company possesses.  It can take many forms including processes, software, patents, copyrights, and perhaps most importantly, the knowledge and experience of the people in the company.Customer Capital, includes the establishes customer base, positive reputation, ongoing relationships, and goodwill a company builds up over time with its customers. Essentials of Entrepreneurship and Small Business Management by Norman M. Scarborough

Intellectual Capital is at the core of  designing a Competitive Business model and building a solid strategic plan.  The key to building a successful business is using your strengths as a foundation and partnering with others who balance out your weaknesses.

Doing this takes an introspective look at yourself and it takes listing out your weaknesses.  This may be more difficult for some so I have included a copy of

“MY Strengths and Weaknesses” when it comes to Working for myself or someone else. 

Do You Prefer to work alone or in groups?

Although I work well with others, as an introvert I find that working in groups with two of more people drains my energy, therefore I prefer to work alone.

Do you prefer doing repetitive task or do you prefer doing a variety task?

If I have to do repetitive work–I have the patience to do it– however prefer multitasking. I often find myself multitasking but I can work on a project from start to finish until it is done.

Do you prefer creating new ways of doing things or do you prefer to have systems already in place?

I prefer to have a large portion of my work incorporate creative writing, and creative thinking.  As an entrepreneur I am often challenged with finding creative ways to get things done with limited resources.

How do you feel about change, do you like it or dislike it?

As an Entrepreneur I rely on change and hope for it. Growth in business calls for constant change and a real affinity for it. Today I could be meeting with CEO’s from top organizations trying to sell them my product. Tomorrow I might be dealing with a crisis with a vendor or client.  Being an entrepreneur means wearing multiple hats.

Do you consider yourself a problem solver?

I prefer to teach others to solve their own problems and then they can go on to teach others to do the same, so yes.  My company’s philosophy is “Great teachers don’t develop students they create teachers.”

What do you like most about the Industry your are thinking of entering?

In my line of business–Professional Development Training and Consulting–I  am often gathering information and disseminating it.  As a public speaker and blogger I  often take challenging topics  and explain them to various audiences.  Of the two I think the fun comes in trying to explain Maslow’s Hierarchy of needs to someone who has never heard of it, and seeing the expression on their face when they finally get what you mean.

What do you think is the “Best” thing about being an Entrepreneur

As Entrepreneur’s my partner Cecilia Stanton and I are the sole decision makers and I think that’s the best thing.  In my opinion too many cooks will spoil the soup.  I prefer to have a voice in the decision making process.

Before You Start Your Business…

Do a Self Inventory and try to find way’s incorporate your strengths and weaknesses into your business model, this will help you


What You Do!

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