Fisker, once the darling of America’s green evolution and the twinkle in Hollywood’s eye, is on life support. This comes after purchase talks with Chinese automaker Geely Automotive fell through. It is a sad story filled with tales of mismanagement, too much ambition, bad luck and more bad luck. But there are many lessons to be learned from Fisker’s demise that apply to your own finances.
Your partners can make you, or break you
The beginning of the end for Fisker started when issues began with its parts suppliers in late 2012. It didn’t help that Fisker and the parts supplier were closely tied together through a partnership that would have paid off handsomely if either company were to make it big. Unfortunately manufacturing problems, and then financial hardship came before any cars were sold.
Lesson: Be careful who you partner with in business and in your personal life. For businesses this is crucial to your success. Mark Cuban stated in a blog post:
“Martin Woodall ran a company called Hytec Data Systems. He was not only smart and a good programmer, but he was the most anal, detail oriented person I had ever met in my life. The perfect partner for me.
Our partnership wasn’t always easy. We had more than our shares of knock down drag out fights. He of course would want everything done with precision and if lack of perfection was an option, he didn’t want to do it. I of course was the exact opposite.”
One of the biggest reasons Mark Cuban’s (he of $2.3 billion net worth) first startup was successful was because he chose to partner with someone who complimented his skills.
The same goes for your personal life. Now this isn’t a Dale Carnegie class, or a relationship advice site so we’re not prescribing solutions to anything besides your personal finances here. But do be mindful of the people you choose align your finances with. Whether it’s a significant other, potential small business partner, or even a roommate make sure that any of their financial problems will not ruin your chances of success. These are, after all, partnerships in their simplest forms.
Control your reputation
Fisker suffered a number of setbacks and bad press due to unforeseen manufacturing and design flaws. This combined with countless delays meant that the automotive press were quick to jump down Fisker’s throat. The Karma was widely labeled as unreliable and unsafe, which may or may not have been true. But really the countless delays and bad press following the Karma’s launch came to a head in a PR nightmare- Hurricane Sandy. On the shores of New Jersey Fisker lost 16 cars to fires caused the by the corrosive sea water reacting with the lithium-ion batteries in the cars. Toyota lost approximately 4,500 cars in the same lot, many of them hybrids fitted with the same type of batteries as the Fisker. No one is talking about the cars Toyota lost.
Lesson: If you’re a start-up your product is everything, and the feedback that people get from your product is more valuable than gold. Same goes with your credit score in personal finance, if you can control the quality of these things you can leverage yourself into a more advantageous position and put yourself on the path to success. Whatever those goals may be for your team, or your family.
Go easy on the tax credits and free government money
The US Department of Energy loaned Fisker $528.7 million under the Advanced Technology Vehicles Manufacturing program of 2007. For Fisker this was the major investment it needed to get the company off the ground. However, the setbacks mentioned above, an inability to create jobs in the locations where it promised to, and delayed deliveries to customers meant that it failed to meets the requirements outlined in the government loans. So the US Department of Energy cut Fisker off, just like that.
Lesson: If you’re a small business relying on tax credits to help you make ends meet, be mindful of the limits to the tax credits and what could cause your business to become ineligible. Same goes for personal finances, a big tax break for your new hybrid vehicle may only last two to three years. After which you may have to pay the full price of ownership. Just be smart with what you do with the savings from tax credits. As they may only be temporary.
If you’re a startup trying to understand how various rounds of funding and hiring will effect your equity check out the SmartAsset Economics Calculator. Consider it one of the many financial tools you’ll need to make sense of complications surrounding starting your own business.
For first time home buyers, and soon other personal financiers, be sure to check out SmartAsset and our first time home buyers guide which can help you make the smartest decision possible, and avoiding exiting before you’ve even made an entrance.
Source: Business Insider, BlogMaverick
Photo Credit: David Villarreal Fernández