Starting and running a business entails creating products and services. Then there’s hiring contractors or staff, marketing your business, managing work, and accounting for every expense. Aside from the business ownership myth that creating a business is somehow easier than working for someone else, a few other myths about small business ownership are still prevalent.
Some of these are just outright silly, but others could really discourage you and hurt your business if you take them to heart.
Small Business Ownership Myths and Fallacies
All It Takes is a Great Idea
If this were only true, perhaps everyone could be an entrepreneur. But alas, it takes much more than ideas (great or otherwise) to make a successful business.
Besides a great idea, you will also need to:
- Create an effective business plan.
- Develop marketing that effectively introduces your great idea to the world.
- Network effectively to create the partnerships necessary to get your product or service off the ground.
- Handle customer service issues and make improvements as you begin to get feedback.
- Scale your business and add members to your team as you grow.
And these are just a few of things you’ll need to do to create a business that endures.
Finding Investment Will Be Easy
Unless Warren Buffet happens to owe you a big favor, not by a long shot!
Many lending institutions require considerable personal collateral before considering a loan. This leads back to the old standbys of friends and family. We’ll assume for the moment, since you’re looking for funding options, that you’ve already investigated these possible sources.
Another possibility is outside investment, including money from VC (Venture Capital) firms. But there are reasons VC funding may not be for you. In fact, only about 300 of the 600,000 businesses launched annually in the U.S. are venture funded.
Look instead for alternatives like bootstrapping or using funds from an existing business to launch your small business.
You Need an Office and Equipment to Get Started
Some of the biggest businesses today (Microsoft and Google, for instance) started without any fancy offices or equipment. It’s one of those myths that will kill your business even before you start it thanks to the drain that these overhead costs bring to your expense sheet.
For most types of businesses, you don’t need anything except your computer and a table to put that computer on. A phone and an Internet connection are mandatory too. Even if your business really needs commercial space, warehouse storage or the like, you can lease this space instead of buying.
You Should Do Your Own Accounting, Bookkeeping and Payroll
Taxing authorities require you to report earnings, expenses and profits with precision. It’s also critical for your business because your company’s well-being depends upon it.
Your personal earnings will depend on how well you manage your finances, accounting and bookkeeping.
It’s a professional skill and it’s a full-time job. If you try to do all of this yourself, who will you get to run your business in the meantime? Compliance, tax laws, corporate legalese, accounting and payroll are too much for a solo entrepreneur to handle alone.
Leave it to the professionals.
You’ll Need to Hire Employees
Maybe…and maybe not.
Identify the work you need to get done. Then figure out whether you can outsource it to the rest of the world. Telecommuting is on the rise. Elance – a leading freelance marketplace, and only one of the many out there — has more than 2 million freelancers from around the world. Together they reportedly earn more than $500 million annually. And that number continues to grow. All around the world, more and more people are becoming involved in freelancing and telecommuting work.
Freelancers don’t need a place to sit or employer provided equipment. No expensive Internet connections, electricity bills, ongoing training or hand holding necessary.
Companies save about $10,000 per employee thanks to remote workers.
Success is About Repeating a Formula
Apple changed the way we thought about computing. Amazon changed the way we shopped.
Nope, doesn’t seem like the most successful companies in the world have worried much about repeating formulas. Maybe small businesses shouldn’t either.
In fact, in a rather well-known presentation on the subject, author and marketer Seth Godin insists there’s no point in creating the same old thing anymore. Average products for average people are forgettable.
The key to success is to do something different – something everyone will notice.
Dragon Slayer Myth Photo via Shutterstock