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The Role of Passion in Growing and Financing a Business
Published on May 10, 2011
Read 'The Role of Passion in Growing and Financing a Business' at 'Time to Start Up,' the small business blog by BizFilings.
Entrepreneurs, almost by definition, have a dedication to their businesses - they see them as extensions of themselves and, thus, have a relentless zeal to pursue them until success is achieved.
However, this same degree of passion that allows entrepreneurs to devote so much of their time and effort can be something of a double-edged sword, as passion gives way to bias or poor judgment.
"There are two sneaky things about the passion trap, it tends to operate at a subconscious or unconscious level, so we're often not aware that these cognitive biases or these filters are at work, and we actually believe that the world or the marketplace is confirming our thesis about the business," author and investor John Bradberry told Inc. magazine.
With startup activity at a 15-year high, according to the Kauffman Foundation, the need to have a balance between passion and objective judgment is essential, especially with financing strategies difficult to grasp.
A recent study by Hiscox USA found the underestimation of monthly expenses to be the primary mistake made by entrepreneurs forming a company. While financing seems to be a fundamentally mathematical aspect of launching a company, the mishandling of it can be routed in passionate assertions that a business will sell itself or survive on its own merit.