Do you dream of starting your own business? Do the successes of Uber, Facebook, Tesla, Airbnb leave you yearning to become an entrepreneur – especially a stinking rich one? With all these success stories being aired from social media to the evening news, most of us don’t get to hear about the reality of what business ownership is – and is not.
This week we are going to review 14 common misconceptions and one raging truth about starting your own business.
Frist the misconceptions:
Not always true. My website has a pdf of many, many different businesses you can start for under $2,000, and some I started with literally no money at all.
You can start your dream business with virtually no money.
I have clients that got their customers-to-be to finance them. They had a great concept and got their customers to pre-order and make a down payment. This is how almost all TV shopping networks work. They pitch a product, get orders with a credit card, then, once they have enough orders they make it, ship it and charge the customer’s credit card. If not enough people but the product they send the customer an “out of stock” notice and cancel the purchase.
You could try this to with your product. Just make sure you actually deliver everything you collected money for.
Everyone thinks that if you love to do something, you will get to do more of it when you run a business. I found this to be completely wrong!
Yes, I do get to do more of what I love, but I also get to do a lot of things I don’t like that much. When you start and run a business, you have to do or manage so many functions -- from marketing to accounting to employees to customer service and more. At the end of the day, you actually spend less time doing whatever it is you enjoy doing. Your job as an entrepreneur is not to do one singular task, it is to run a business.
So, if you love to wear multiple hats and are excited by the idea of managing all aspects of a business, plus you think that it is a good fit for your skills and experience, you are headed in the right direction. If not, proceed with caution.
I personally don’t like giant business plans. Something simple that effectively outlines your mission, vision and marketing tent-pole efforts with some data matrix around how you’re measuring your success and you should be good to go.
I’ve witnessed many entrepreneurs get bogged down in the mud of insisting they need a full business plan to start their businesses, even going so far as to hire someone to write it and filing for a trademark before they begin. I’m of the philosophy that you should test out whether your business is even viable before you sink money into it.
Get a solid two- or three-page outline of your business plan and then get to work. Don’t get trapped in business plan analysis paralysis.
You actually don’t need to know exactly what you’re doing to get started. Time has proven that continuously. From Amazon that was not started by a book store owner, to Zappos that was not started by a shoe store owner, to Uber that was not started by a taxi company, to Airbnb that was not started by a hotelier, the list of companies started by people who had little experience in that industry is endless.
I have started a business where I have deep experience and others where I have had virtually no relatable experience. I quickly found out that by going into a businesses I knew nothing about, I could easily make some very dumb mistakes. But I also found out something else. I discovered that everyone else in business, including all the established players, make plenty of dumb mistakes too. They just made different kinds of mistakes, and maybe not quite as many.
Seriously, it doesn’t hurt to have some experience in any business you go into. But for many businesses, experience is not necessary, and you can usually pick up the experience you really need along the way. Besides, any business can be learned, especially if you break it down into digestible pieces.
I find there are things that are generally more important than experience in almost any business. There are a few key business principles that, if you can master, will go a long way to helping insure your business success, even if you don’t have a lot of experience.
Let your curiosity overpower the myth that you have to know exactly what you’re doing to get started.
You should try to keep your current job until your business is well established.
For most people, I recommend you keep your current job until your new business becomes established. Even if your business needs to be staffed throughout the day, you may be better off, initially, keeping your own day job and perhaps hiring hourly help to staff the firm during your working hours, while you do the more critical work at night.
You are usually better off developing a small business slowly and carefully. First, study how to run a small business. Then, plan the specifics of your own business slowly and carefully. When you finally do launch your business, I recommend starting out as small as you possibly can, testing, analyzing, revamping, and testing again, until you are ready to really roll it out.
These days, with the power and opportunities that exist on the Internet, and the many service business opportunities available, it makes more sense than ever before to run a business on a part-time basis. Even a larger, more complex enterprise can be conducted part time.
When you have a job, a handful of people have control over what you get paid, your hours, who you work with and other professional decisions. When you are a boss you have increased the number of bosses that you have exponentially because every single customer has that control. Now, you have hundreds, maybe thousands of people you need to report to, who have control over whether you get paid, when you work, etc.
And if you have lenders, investors, a landlord or a franchise parent company, well, they all have control over you, too. You have now even more people to report to than ever before -- not exactly the picture of being in control.
Owning your own business means you have many, many bosses.
This is one myth I quickly debunked when I started my first business with my husband. Staff is expensive to keep, cost time to manage and are in most ways the biggest expense any business will have on the books. The longer you can keep your business under your core leadership, the better.
Also, in my experience, when you can outsource to agencies or freelancers, for most businesses that’s almost always better. Keeping yourself free of staff overhead costs when you’re starting a business will help you be successful.
I would say this is the most damaging myth of all about starting a small business. In fact, the greater you think your idea is, the greater the chances for risk and failure. Generally, you are better off avoiding wild, new, exciting ideas. Your chances of creating the first successful business on Mars isn’t that feasible.
Your chances of success are much better if you take an existing business concept and refine or modify it in such as way that it is meaningful to customers. Look at some of the biggest and most exciting businesses of our times, such as Facebook, for example. Friendster and other social media sites had the same business model, but Facebook made it much more appealing. Microsoft wasn’t by any means the first company to develop operating systems for PCs, but they became the standard by getting IBM to adopt their system. Walmart wasn’t the first large self-service discount retailer, but they put together a vastly more efficient business model than their competitors. The examples go on and on.
We have more products and services available to us than we would ever want or need, which makes today’s new business landscape very different than it was just 50 years ago. If there is a gap in the market that customers are desperate for a solution to and willing to pay for, that’s a darn good reason to start a business.
Remember, Ray Kroc didn’t pursue McDonald’s expansion because he was bored or unfulfilled; he did so to meet a customer need. If you want to do something all about you, seek out a hobby or maybe get a job, but don’t start a business. Successful businesses are all about serving customer needs.
There is a reason the word "scheme" usually follows the phrase “get rich
quick.” Businesses take a long time to build, sometimes three years or more to even get their legs underneath them. Business ownership is not a magic bullet for financial security and you should be prepared to be in it for the long haul. It’s called “work” for a reason.
Just because you can do something, doesn’t mean that you should, that you will be successful, or that it is the best choice for you given your goals, circumstances and opportunities. You have to look at the rewards of your opportunity and see if they justify the risks -- both financial and qualitative risks.
Far too many people trade their salary and risk their savings for an opportunity where they are making the same or less money, working more hours and have more stress. In the game-show world, they call that trade a “zonk.” Don’t get zonked. Make sure that the risk-reward tradeoff makes sense for you and that you have the opportunity to significantly improve upon your current situation or do better than other situations that could be available to you.
Wrong. The only timing that will ever be right is now. In fact, countless entrepreneurs have started their businesses at the worst possible times in history, and the worst possible time in their personal lives.
Many successful businesses today were started at what would look like exactly the wrong time. Microsoft was founded in 1975 near the end of a recession and later re-incorporated in 1981, just as the recession of the 1980s kicked off. These were two horrible times to start a business, but that hasn’t stopped Microsoft’s success.
The timing will never be right -- that’s why you need to start right now.
Entrepreneurs tend to work long hours most days. In startup mode, that’s simply what’s required. However, you have to be aware not only of your cash burn rate as a startup, but also your personal burn out rate.
If you grind yourself into the dust day after day without relief, you’re going to get sick and unhealthy, and that’s going to affect your success. You don’t have to work 24/7 to run a successful business. While you will need to work hard, and there will definitely be periods of seriously intense work, you also need to balance that with good sleep, good food, plenty of movement and some fun sometimes.
Entrepreneurship is hard work, but it’s supposed to be enjoyable, too.
This might appear to belie the earlier myth about not hiring staff, but the truth is that you don’t have to do it all in your business. It’s important to delegate and outsource some of the daily tasks and responsibilities of the business so you can have breathing space from time to time. Doing it all will mean burning yourself out and it’s a common mistake I see amongst new entrepreneurs.
Keep your sanity and learn not to do it all.
And now the one REALLY BIG truth: The rule of time and money.
Here’s the real truth about starting your own business: Everything is going to take two to five times longer than it should to complete (your legal contracts, getting revenue, getting your website up, you name it), will cost two to five times what you have budgeted and will be two to five times more difficult to execute than you expect.
Even if you think you are being conservative or realistic, you probably are underestimating the time, money and effort required to make your business a success.
Entrepreneurship is not for the faint of heart, so make sure to proceed with your eyes wide open and a reality check on what you are getting into before you make that leap.
But don’t let the myths about small business hold you back. It’s probably a lot easier than you think to start a successful small business. Just about anyone can do it, if they have the desire.
So if you really want to start a business, get going on your plans today.
Until next week,
April 30, 2018
Join me every Wednesday on my podcast “Unlocking the Secret to Living Rich”.
If you have questions or comments you can contact me at my email email@example.com or find me on Facebook, Twitter or Instagram @cindybbrown777
Who is Cindy B. Brown? Cindy is a CPA, MBA, CFO, and board member of public and private companies, business consultant, entrepreneur coach and a foremost expert in the field of business mastery. Cindy’s purpose is to motivate, educate and inspire people to live their richest life. She is the host of “Unlocking the Secret to Living Rich”.