Small Business Startup Myths
Millions of people dream of starting up their own business: of being their own boss, making it big, and having a company that that they can point to as their life’s work. But the realities of starting up a small business are sometimes overshadowed by myths which make it difficult to deal with the real challenges that arise in the first few years of operation. Here are some small business startup myths that might keep you from realizing your startup vision:
Myth: I’ll finally have time to do what I want / spend with my family / enjoy life
Reality: Anyone who has successfully started up a small business will laugh you out of the room if they hear your say this. The fact is, there are many benefits (personal and financial) to having your own business, but plenty of free time is not one of them. Granted, you do have a little more flexibility with your time. Many small business owners choose to work late at night so that they can spend time during the day with their families; but there’s still some major sacrifice…namely, sleep. Starting up a small business requires that you work 110%, without exception. Those fantasies of taking long vacations while your business grows itself? Just fantasies.
Myth: I’ll be profitable within the first year because I am hardworking / passionate / good at what I do.
Reality: It doesn’t matter how good you are at your business, how hard you work, or how much of your heart and soul you put into it. All businesses take time to get off the ground, and the majority of them are not profitable for at least the first couple years. You need to be realistic about this for a couple reasons. First of all, you can’t let yourself lose momentum or start to feel depressed just because you’re not profitable right away. Building up expectations like this can damage your business simply by virtue of chipping away at your morale. The other reason is that you’ll have to plan financially. Your budget needs to reflect five years of bootstrapping during your startup. With very few exceptions, no one hits the “big time” in six months, regardless of how talented they are.
Myth: I already know what I want to do, so I don’t need to write a business plan.
Reality: You do. A business plan is going to help you think ahead, plan for all contingencies, work with a budget, keep you focused on your mission, and help you sell your company to anyone else you need/want to have involved—lenders, employees, contractors, vendors, family, friends, etc. Writing a business plan doesn’t have to be rocket science. A simple, small business startup plan can be around 10-15 pages long and follow a simple outline. For an excellent resource on creating a business plan, I recommend the free ebook:
Outline for a Business Plan by Ernst & Young. http://www.techventures.org/resources/docs/Outline_for_a_Business_Plan.pdf
Myth: If I build it, they will come
Reality: You still need to market and advertise your business strategically. That means having a plan and a budget. It also means researching the most effective methods for marketing and advertising. There is no shortage of ways to waste money in advertising, and it can end up being a huge financial drain on a fledgling company. Do you really think 5000 key chains with your logo on them are a wise choice in your first year of business? Do you think the yellow pages are the best place to put an ad, when 80% of your business is done online? No matter how good you are, there is lots of competition and you small business has to establish a presence and reputation to go along with your talent.
Small business is one of the most exciting arenas for earning a living. There is unlimited creative potential and a chance to really make something tangible for yourself and your family. But doing so requires more than just a vision and some chutzpah. You need to be intelligent about how small business is framed in our marketplace, and what kinds of obstacles there are to overcome. You also need to be aware of the tools and support that you have at your disposal. Staying focused on these realities, and avoiding the myths that many fall prey to will only increase your chances of success and longevity in your small business.
I think “THE MYTH” is that you need external financing.
From my own experience, I can definitely vouch for the fact that self-emplyed business people can and do fund everything themselves..
Adam, very good post. I think that the myths you outline are very common. It is very important to not fall into the traps. I recently wrote an article on StartupStudent.com about the values of business plans. It is key to keeping focus.
The hardest part in the initial years is to build up your name. You’re right that no one will just call you. Until you have made a name for your company.
Great post.
Jeremy @ RefocusingTechnology.com
Wow, I wish I would’ve had this post to read *before* I started my business!
I am amazed at the mistakes I made my first year; at 18 months old, I feel like I am just starting to figure out the when, where, how of my business.
However, I am grateful for the mistakes I made, because learning what not to do can be as important as learning what to do. I only wish the economy was a bit more forgiving at this stage of my (very steep) learning curve!
I highly agree with #1. As a business owner you are always working, it’s part of your job. #3 It’s a MUST to create a business plan. #4 is great too. Traffic is the hardest part of making money online, IMHO.
Good post. I think some of your items are myths, but some are pure arrogance on the part of the entrepreneur, like not needing to write a business plan. I wrote a similar summary a couple of days ago on the arrogance issues I’ve seen in startup founders http://blog.startupprofessionals.com/2009/03/startups-arrogance-will-kill-you.html. You might enjoy it also.
Really interesting posts, nice to see some myths debunked. Running a business seems to be taking so much of my free time that I sometimes wonder whether it’s worth it. But it’s good fun.
I very much agree about making a business plan - that’s one thing I always mean to do, never get round to and then lose out because of. It’s great to get all your thoughts organised and in one place.
Keep up the great posts!
TeenageBusinessman
Adam,
These myths need to be kept in mind by all young entrepreneurs. Being an entrepreneur may seem easy from the outset; however, entrepreneurship takes hard work and patience. A successful entrepreneur does not rise overnight. A business plan is essential and marketing is needed to get the word out and gain a following. Twitter can be a marketing tool.
Thanks for the post.
Agree with them all but number three is the one that costs the most people the most money, online or off. Yes, you know what you want to do and with any luck you will be successful. But the million dollar question is _how_ successful.
Without a plan you really don’t know where you are going and where you want to be a year, two, three years down the road. You may chase something that looks profitable and actually earn from it, while someone else passes you by to earn tewn times as much … you must have a plan, with measurable goals, to guide you … fail to plan, plan to fail.
Excellent post! I like the myth you chose to debunk first: free time. There is no such thing. And you hit the nail on the head, it’s not free time, but flexible time. If I need to be off to do something important, I don’t have to ask the boss. I simply reschedule my work to accommodate the the new activity. I could never work for someone else after 18 years working for myself.
I really liked the way you addressed these myths, in my honest opinion people who think some of these myths, are setting themselves up for failure from the beginning! Especially if they are believers of #1 + #3 combined
Great post! Clear business plan, flexibility and patient labour are key factors to be successful.
Myth #1 on your list is the one that sucks us all in…lol. I thought I’d have all this extra time on my hands, turns out I work more owning my own business than I ever did for somebody else. It’s so different though when you are working on something you want to do instead of something you have to do though.
Matt
This is an excellent article. Having dreams and aspirations about starting your own business is very possible. You just have to be realistic about it. I think the most important things to do are have a good plan and take it one step at a time.
We have posted a great video with a panel of entrepreneurs from our program who share some excellent advice on the startup process.
Youtube clip:
http://www.youtube.com/watch?v=Vq8eCMdQaoE
Full video:
http://blogs.mccombs.utexas.edu/mccombs-today/2009/05/as-global-moot-corp-unfolds-alumni-share-start-up-stories-value-of-entrepreneurship-program/
Thanks! Rob Meyer