Monday, January 06, 2014

15 Traits that Define Entrepreneurial Companies...and How to Invest in Them

Professor Joel Shulman of Babson College has sussed out the 15 traits that define an entrepreneurial company compared with a non-entrepreneurial company...and he's betting on them in a big way.

 15 Attributes That Define Entrepreneurial From Non-Entrepreneurial Companies

1. Organic growth opportunities
2. Above average ownership stake among key stakeholders
3. Low SG&A
4. Above average return on invested capital
5. Sustainable growth
6. Manageable debt
7. Active strategic alliances/partnerships/licensing
8. Aligned executive compensation packages
9. Low executive turnover
10. Transparent governance
11. Long duration of key managers
12. Low or no dividends
13. Family involvement
14. High EBITDA Margin %
15. Other significant stakeholder relationship


Professor Shulman, also the Managing Director and Chief Investment Officer of EntrepreneurShares LLC, is so certain of these qualities that he has started a fund (ticker IMPAX) that screens a database of more than 30,000 companies and invests based on these traits. 

That's putting your money with your mouth is!

The only one of Professor Shulman's traits that I would adapt would be expanding #9 from "Low executive turnover" to "Low Employee Turnover."   It's not just executive employee retention that matters.

And if you are looking for employee turnover rates (benchmarks) by industry and geography, be sure to see Nobscot's new app - Employee Turnover Tracker.  It's available for both Android and iPhone devices at a special introductory rate of $1.99.


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