There are a lot of myths surrounding business, especially when it comes to starting a small business. These myths can negatively impact your mindset and interfere with your ability to succeed as an entrepreneur. Unrealistic expectations are a primary saboteur of small business success. Here are some of the most common business myths and why you should recalibrate your beliefs to conform with reality:
Myth #1: I Don’t Need a Written Business Plan.
You may have an idea in mind that seems great in concept. When you put it down on paper, however, it may portray a very different picture. If you want to start a small business (or if you are planning to buy a business, you need to create a detailed business plan that lays out (among numerous other things) your target market, org chart, funding, marketing plan and anticipated revenue, expenses and capital investment needs, cash flow generation, and primary risks that could disrupt the future stream of earning. A written business plan is also mandatory if you want to seek a business loan or help from the SBA.
Myth #2: I Can Get a Loan with No Money Down.
A lending institution will require you to have some of your own capital in order to approve you for a loan. 25 percent is the norm, though the percentage can vary. When you have your own personal investment in your business, you will naturally take greater care with the finances and be more motivated to succeed. This leads to lower default rates on business loans. Additionally, lenders will require liquefiable collateral for a loan and a cash flow projection showing how you plan to repay the loan.
Myth #3: I Will Draw a Salary from a New Business Right Away.
Don’t expect to immediately earn a salary from a new business. All new businesses require time to become successful (cash flow positive and making a profit). Additionally, invoices due to you may not be paid for 60 or more days, which means you need to be prepared to operate with limited cash flow. The last person to be paid is typically the owner, as employees and business needs always come first. This means you may want to wait before quitting your day job.
Myth #4: It’s Easy to Do My Own Bookkeeping and Payroll.
Just because you can do math does not mean you’re ready to take on your own bookkeeping and payroll. Even small businesses require precise and lawful bookkeeping. When you have employees, this becomes even more complicated. The reality is that as the owner of the business, we need you working on “owner” projects. The accounting and bookkeeping is easily something that can be delegated to an expert, which then frees up time for you to concentrate on building the business versus counting the “beans.”
Myth #5: I Need to Purchase a Building to House My Business.
A common misconception is that you need to buy a building when you start or buy a business. Excessive fixed overhead costs are among the first things that will doom a business. The last thing your small business needs is a heavy overhead burden that will drive up your costs and consume precious cash flow. If you absolutely need a building for production, office, or commercial space, you need to find the best lease terms possible for a reasonable duration until the business is on solid, stable footing.
Myth #6: I Need to Be a Certain Way to Succeed in Business.
You may have an idea of what a successful business person should look like or how they should act. This pressure to fit a specific set of characteristics or behaviors can lead to internal conflict and a sense of inauthenticity among business professionals. However, there is no one-size-fits-all approach to entrepreneurship. Diversity of thought, expression, and innovation is very important for success in the business world. Emulating Steve Jobs’ or Elon Musk’s style is rarely useful because what they did worked for them… and you are not them. On the other hand, there are numerous First Principles that will work regardless of the situation or leader. Be thoughtful about the difference. (The 4-Day MBA is filled with First Principles advice.)
Myth #7: Starting a Business Is More Risk Than It’s Worth.
Many people think that starting a business is a risky endeavor and therefore, may avoid it entirely. No question that starting a business is riskier than buying one that already has customers, revenue, structure, suppliers, and traction. Being a business owner is definitely not for everyone. However, for those who are willing to break a sweat, stay thirsty, and remain coachable, the opportunity to control your own career (and income) is extremely rewarding.
Myth #8: Picking the Name, Logo, and Letterhead is a Priority.
The single most important priority when starting a business is traction… How do we find customers who will try our product or service, pay us some money for accessing it, and then come back for more? Without revenue, there is no business, only a hobby. Without customers, there is no business. Obsessing about the name of your business or the color scheme of your website does not produce customers. Furthermore, the number of examples of extremely successful businesses that simply used the founder's name is breathtaking: Ford, Dell, Wrigley, Ferrari, Lamborghini, Rolls-Royce, Mars, Procter & Gamble, Hewitt-Packard, Heinz, Kraft, Coors… and the list can keep growing. The point is this: Success is not because of the name or logo. Success is the brand that the name represents. Focus on building your brand, and the name will be immaterial.
Are you ready to become a successful business owner? With Keith J. Cunningham’s 4-Day MBA, you can learn the critical skills needed to successfully launch, grow, and ignite your business. Learn more about the 4-Day MBA and take the first step toward business success today!
