Are you sure you want to remove from your connections?
Common Myths About Starting Your Own Small business
Posted on September 27, 2019
SOCIAL MEDIA IS PEPPERED WITH SMALL BUSINESS MYTHS, FOSTERED MOSTLY BY PEOPLE WITHOUT RELEVANT REAL-WORLD EXPERIENCE…
By Phil Friedman
I’ve spent most of my adult working life as an independent small business owner and consultant. Although I haven’t become rich in the process, I have managed to make a comfortable living doing what I like to do. And I’ve never once awakened in the morning dreading going to work.
That said, if you aspire to become a small business operator or entrepreneur, you should understand there are challenges to be faced and hurdles to be overcome which must be weighed in your decision against the numerous myths propagated about the topic, particularly on social media.
What I’m going to tell you here is based on my more than 30 years as a small business owner and operator and in consulting for and working with other small business operators. You are free to accept these observations or reject them, as you wish.
However, in deciding, keep in mind that a majority of what you read online about starting and operating your own small business is an expression of wishful thinking by people who lack even minimal experience with doing what they are counseling you to do. Such people are commonly speaking more to themselves, than to you. Unfortunately for those who listen to these self-serving musings, in the real world, wishing something does not make it so.
None of which is intended to discourage you from trying or say that you won’t succeed and be as content with your lot in life as I have been with mine. No, quite to the contrary, what follows is offered in the firm belief that realism is the best foundation upon which to build a small business.
Early to bed, early to rise, makes a man healthy, wealthy, and wise…
─ Benjamin Franklin in Poor Richard’s Almanac, 1739
It’s often said that small business is the backbone of the U.S. economy. And with the growth of interest in entrepreneurial activity over the past decade or so, small business — which is incorrectly seen as a breeding ground for entrepreneurs — has taken its place in the phalanx of American Mythology.
From the publishing of “Poor Richard’s Almanac” by historical icon Ben Franklin, to the ever-growing multitude of contemporary food and beverage, cleaning and maintenance, and sports and recreation franchisees, romantic flirtation with small business has evolved into a virtual obsession. And, as with most religious creeds, the new cult of small business has created and supports its own body of faith-based dogma.
Myth #1 – Starting a small business is a great way to deal with being unemployed…
Well … not necessarily. And, of course, only if you are both lucky and successful. The real question is will you be?
If you’re unemployed, then you aren’t running a small business now. You may have run a small business in the past, but obviously, you weren’t wildly successful at it … or you’d likely still be doing it, which you’re not.
According to the U.S. Small Business Administration, which has likely compiled more information on small business than just about any other source, starting a small business generally requires at least a modest initial capital investment, whether for facilities and equipment or for operating expense during the early start-up phase, when revenues may be low or non-existent.
However, if you’ve been moving through a period of unemployment, and you’re now being driven by a failure to find new employment, the cold fact is you’re not likely to be in a position to properly capitalize the start-up of even a very small business. And it might well be wiser to take a job (or two) doing something you might not really want to do, while you pay your living expenses and accumulate a start-up fund.
Myth #2 – You can start a small business solely on “sweat equity” …
Sweat equity is what you build up by putting work into a small business start-up without being paid a salary, or anything at all, by the business.
Sometimes it’s thought that a small business can bootstrap itself into existence, purely with sweat equity. Well, sometimes it can. But more often than not, it can’t.
Sweat equity is always required in order to minimize cash outflows until cash inflows reach a level that will support the day-to-day operational direct and indirect overheads involved in running the business.
But here’s the rub. You can do sales work for your new small business without pay, but you cannot pay for telephone and internet service by sweeping floors for the utility company. You can do your own bookkeeping without paying yourself for doing it, but the guy who is going to print your flyers and brochures is not likely to be willing to trade you out for your washing his windows.
There is little doubt that you will have to eat, clothe yourself, maintain transportation, and keep a roof over your head. Yet, most vendors of food, clothing, auto fuel, and housing refuse to take bottles of perspiration in exchange for their wares. So again, your potential for success in starting and operating a small business goes up dramatically, if you have accumulated sufficient available capital to finance that business during its early start-up phase.
Myth #3 – Owning and running a small business is a terrific lifestyle alternative to being employed by someone else…
There is an old saw that goes like this: If you faithfully work really hard as an employee eight hours per day, five days a week, for ten dollars per hour, and do a top-rate job, eventually you will get the opportunity to run your own business, work doubly hard, twelve hours per day, six or seven days a week, and make five dollars per hour.
Granted, the outlook on owning and running your own small business is nowhere near that bleak. But there is some truth in that old homily. There is no getting around the fact that starting and running a small business from scratch invariably requires a greater input of effort and time than simply working for someone else.
Additionally, when you run your own small business, you carry all the responsibility — and risk, and associated worry — on your own shoulders. Often to such an extent that you may find little time to relax and may fall into neglecting personal and family matters. Moreover, you could end up thinking constantly and obsessively about sales revenues, marketing, finding new customers and clients, keeping the office machinery running, getting the computer software up and running, making this week’s payroll (if you have employees), and any number of other things that will work to keep you sleepless — whether you live in Seattle or not…
Owning and operating your own small business can work out to be great, beyond your wildest dreams. But then again, it also might not.
If you don’t have drivers other than simply wanting to be out from under the supervision of a “boss” — drivers such as wanting to be solely responsible for your own success or failure, wanting to develop and implement your own ideas and realize the fulfillment of your own talents, and wanting to work in a field solely of your own choice at something that you ultimately love to do — then you should think more than twice about striking out on your own. Because maybe, just maybe that well-paying, forty-hour-per-week job ain’t so bad after all.
Perhaps you should let somebody else worry about making payroll. Or worry about where new customers and clients are to be found and wooed. Or about the year-end financial statements and paying the company’s taxes. Or defending against the unfair employment practices suit, filed by a labor lawyer whose own three-piece business suit costs more than the car you’re able to afford to drive.
Myth #4 Running a small business provides flexibility in your working hours and the freedom to indulge in “social responsibility” …
This is a myth only a Millennial could love … or believe. True, if you work for someone else, you generally have set hours during which you have to be present at work, and usually on-site — although this is to a degree changing in the workplace with the increased popularity of working online or remotely at least part of the time.
But with a small business, generally, if you’re not on deck, nobody is. And that means you end up more firmly rooted to your work and less able to “shut it down” than you if you were someone else’s employee.
It’s also true that, as an employee, you can at times come under pressure from your employer or from managers to whom you report, to conform to some idea of “corporate social orthodoxy”. Whatever that means or involves. But don’t kid yourself. As a small business owner/operator, the pressure of having to not offend your customer or client base is just as strong, if not more so. At least when your business is in the earlier stages of its start-up.
One of the defining characteristics of small businesses is that it does business at a more personal level and therefore depends heavily on maintaining good public relations. Because the constituency of a small business is so much smaller and likely more homogeneous, as well as more sensitive to personal engagement than that of big business, it’s easier to find yourself in big trouble with significant portions of your customer base, for reasons totally unrelated to the product or service you market and deliver. How that translates into greater freedom to exercise social responsibility is beyond me.
Myth #5 – You can “fake it until you make it” …
Notwithstanding that this was said in print not too long ago by celebrity entrepreneur Richard Branson — or at least postulated by a ghostwriter whom he employed to effect some of his social media presence — it’s not a development strategy of choice for a small business.
As a small-business person, you will have fewer colleagues backing you up, and far fewer covering up for you. So, there is much to “learn on the job.” And your mistakes will be much more obvious to your customer or client base than they would be if you were employed in a large firm — where you can much of the time hide in the bushes.
No siree, in a small business environment, mistakes are not only costly, but they are also so many times more difficult for your reputation to absorb. Which emphasizes the importance of having adequate training, skill, and experience than it is in the context of big business.
“Small Business usually deals with known and established products & services … [whereas] Entrepreneurial Ventures are for new innovative offerings…”
There is a wide variety of myths about small businesses created and perpetuated on social media by people who lack even a passing real-world acquaintance with owning or running a business at all. One of these is the view that every small-business person is ipso facto an entrepreneur. Nothing could be farther from the truth.
Most small-business people seek to provide proven goods and services on a stable, long-term basis to an established niche market, defined either geographically or by market segment. That is one reason why franchising is such an attractive option to would-be small business owners.
Myth #6 – Running a small business puts you in the company of the world’s super-entrepreneurs …
This is pure poppycock. Working for yourself does not, in itself, make you an entrepreneur. Admittedly, this is not currently a popular view, but it is, I submit, an accurate one.
Being an entrepreneur has little or nothing to do with the relative size of the business(es) involved, but instead with the attitudes and approaches of those who own and run small businesses. Entrepreneurial adventurists seek to create new markets, stimulate rapid growth, and profit highly from innovation, whereas most solid small businesses are built on long-term commitment and grinding hard work.
Seeing yourself as a globe-trotting celebrity entrepreneur like Richard Branson may cause you to stand a little taller and straighter, or to puff out your chest a bit, but at the same time, it may actually harm your chances of establishing or maintaining a viable small business.
Myth #7 – Running a small business lets you pursue your “passions”, whilst becoming really rich …
There is no doubt that one criterion of a successful life is whether you can make a living doing the things you would do even if you did not have to work to make a living. But the fact is most people, small business or otherwise, don’t get to earn a living by doing only what they want to do.
To say this is not to recommend compromise on your aspirations and dreams. Rather, it is to increase the probability that your expedition into the territory of small business will be successful — because sound judgments can only be made from a perch named “reality”.
The reality is that virtually all endeavors in life, business-related or otherwise, require doing some things you don’t like or want to do. Excelling in a sport, for example, requires hard training and repetitive, often boring, practice. So too, running a small business may involve at times firing employees — something that few fundamentally decent people in this world care or want to do. Make no mistake, embarking on the road of small business ownership and operation, without first coming to terms with this fact, is to court failure.
Myth #8 Running a small business doesn’t require as much education, training, or skills that running a big business does…
In fact, it may require more. As a small businessman, you will find yourself called upon to perform more cross-functional tasks than if you were involved in working for big business, or in an entrepreneurial context, where you have the luxury of hiring an array of people who are trained and experienced in doing all those things you’re not trained or experienced in.
In my experience, small business is best defined by a management structure that is much flatter than in big business. Small businesses do not generally enjoy the luxury of having differentiated middle managers such as dedicated HR professionals, standalone accounting and financial centers, or purpose-designated marketing departments. So, the owner/operator of small business generally must be a very quick study in successfully performing, or at least directing a wide variety of tasks. This means that he or she needs to be just as well trained and educated as any high-level executive in a big-business — not to mention more adaptable and quicker on his or her feet.
That is not to say every small business owner or operator needs to have an MBA, or even a BBA or BSBA. It’s only to say that, if you are considering entering the world of small business, you should not underestimate what you will need in terms of education, training, and experience.
To be sure, many small businesses are started by people with minimal education, training, and experience. But if they want to stay in business, they have to grow quickly into being able to meet the demands for management skills. For small business really is a get smart or die environment.
Myth #9 – In a small business, you do what you love, and the rest (meaning income) comes to you on its own…
Yea, right. Ya gotta be kidding! Only someone who’s never been in business for him- or herself is going to tell you that. If your single-minded focus is to engage in some recreation, sport, or pastime, while at the same time have a living drop into your lap, good luck with that. Nothing, but nothing in life ever comes easily. So, why would you expect that in the world of small business, it would be any different than it is in the rest of life and the world?
You should also think more than twice about turning a hobby or a favorite recreation into a business. Doing so often leads to less, not more time being available for actually pursuing the hobby or recreation involved. For example, most of us who build yachts generally spend less time yachting than we would or did when we weren’t professional boatbuilders. That doesn’t mean we’re not happy with the mix. Most of us are. But the proper conclusion is that building a yacht provides, at least to those who do it, as much satisfaction as sailing one does.
If you’re thinking of starting a small business that is related to one of your recreational or sporting passions, consider whether that will be true for you, as well. And if you won’t, or don’t derive as much personal satisfaction from conquering business challenges as you might from, say, being a downhill slalom champion, don’t turn your skiing obsession into a small business.
Myth #10 Owning a small business makes you the master of your own fate…
I suppose this one could be true …
– If you think you can simply decide not to pay your expenses.
– If you avoid having anyone work for you, so that you are not facing making a payroll every two weeks or month.
– If it doesn’t bother you to have the city, county, state, and IRS chasing you for not filing your tax returns on time or paying taxes due.
– If you enjoy hassling with landlords over how much your lease requires you to pay, and overall those services the landlord promised you before you moved in, like garbage collection more frequently than twice a year.
– If you are relaxed by thinking about where your next sales are going to come from, or whether your current bid for that big job is too high (and you’ll lose out to the competition) or too low (and you’ll lose money).
– If you’re stimulated by the notices from your accounting firm, internet provider, utility company, and landscape maintenance firm that your rates are going up next fiscal quarter (after you’ve budgeted for the year at current rates).
– If you really think you don’t have to make payments on your floor-planning or another business loan.
– If you can just shrug off the $50,000 in accounts receivable because the debtor just went into bankruptcy.
If… if… if…
Let’s be clear about this. Even if you own and operate a small business, your fate will still be buffeted constantly by forces beyond your direct control — the state of the economy, the weather patterns this year, the price of crude oil, the phases of the moon and which house the Zodiac, and whether you are an Aquarius or a Leo.
A wise man once said that what you own, owns you …
I think maybe it was Willie Nelson, who made millions and apparently blew every penny of it. Or perhaps Johnny Cash, who was not exactly a model of rational thought, notwithstanding being a great Country Music artist. But no matter, really. The point is not to delude yourself that owning and operating a small business will set you free. If you genuinely want to be free, you need to divest yourself of everything, material possessions, family, friends, the entire enchilada.
None of which should discourage you, provided you are truly meant to be a small-business person…
Please understand that I am not here trying to discourage you from entering the world of small business ownership and operation. I am only exhorting you to be realistic in your expectations and your vision of what it will be like.
Unfortunately, the nature of social media in our time is that just about anyone can pose as an “expert” on anything, even when he or she doesn’t have a lick of relevant real-world experience with the subject or topic. If you unquestioningly accept the pronouncements of such people, you are likely to eventually come up hard against the brick wall of reality.
Owning and operating their own small business holds big positives for some people. For others, it turns out to be a lot worse, rather than better than being employed by someone else. In the final analysis, only you can decide into which group you will fall.
The neat trick is to avoid the myths that are propagated and perpetuated about it on social media If you know what to expect and have the cojones to deal with what it takes to run your own small business, you are much more likely to succeed. And if ultimately you decide to forge ahead, then you have my sincere best wishes for luck and success!
Author’s Note: If you found this article of value, you might also want to look at some of my other writing about small business operations, management, and marketing:
To receive notifications of my writings on a regular basis, click the [FOLLOW] button on either beBee or LinkedIn. As a writer-friend of mine says, you can always change your mind later. Connect with Phil on SPN.
As well, feel free to “like” and “share” this article — whether on LinkedIn, Twitter, Facebook, or beBee. I ask only that you credit me properly as the author and include a live link to the original work.