With USA Today’s launch of their new section for small business, USA and Main, I thought it would be good to get some of the most persistent myths about small business out of the way. Having worked with thousands of small business owners over my more than 25 years in business, and owning a small business myself, I know how believing these myths can keep you from success.
- People are either born entrepreneurs or they’re not. You’ll hear this a lot if you’re just starting your business—especially from nay-sayers trying to discourage you. They’ll tell you there’s just one kind of person who can succeed—an extroverted risk taker, a natural salesperson, a leader, a visionary. Hogwash. All kinds of people can and do run successful businesses. The key: find the type of business that suits you.
- Fifty percent of businesses fail in the first few years. This is one of the most often repeated ‘alternative facts’ about small business. Yes, within five years, about half of new small businesses close. Few have actually ‘failed.’ The owners may have changed businesses, moved, got a job, or made so much money that they bought a boat and are sailing the seven seas. No, statistics are in your favor. Nearly 80% of businesses started in 2014 were still in business the following year; about half of all businesses are still in business five years later; and a third of all establishments will still be in business after 10 years.
- If you build it, they will come. You’ve worked hard and long to start your business, create an innovative product, perfect a wonderful service. You finally open your doors, put up your website, and—nothing. Just because you’ve created something new, something better, or something cheaper doesn’t mean customers flock to your door. You’ve got to get out there and market, market, market. And then sell, sell, sell.
- Entrepreneurs must work 24/7. Yes, you will work long and hard running your own small business. You’re the one who must deal with emergencies, staff not showing up, the pipes breaking. When you run the show, it’s easy to feel you can’t afford to leave the shop ever. But without some weekends and nights off and vacations, you’ll burn out. Don’t work ‘round the clock every day.
- The first company to market wins. You’ll hear a lot about the “first mover advantage.” For most small businesses, it’s usually better to be a follower than a leader. The company that invents an innovative product spends a great deal of time and money not just developing the product, but also building a market. Typically, it’s the companies that improve upon existing ideas that win big. Google wasn’t the first search engine, iPods weren’t the first mp3 players, and Facebook wasn’t the first social media network.
- You can write off everything as a tax deduction. Sure, businesses can deduct a lot of expenses you can’t as an individual. But don’t imagine you can simply deduct $10,000 worth of expensive camera equipment because you sold two of your pictures to an online stock photo company or you can write off that European vacation because you bought one or two products to sell in your shop. And be cautious before writing off part of your mortgage or rent just because you work from home. You’ve still got to follow the rules.
- As long as you make sales, you’re OK. Yes, you have to make sales, have customers, to be in business. But the three most important financial aspects of a business are “cash, cash, cash.” Managing cash flow is key to business survival. Without cash, you can’t pay your employees, your bills, or yourself. My second client ever was a profitable florist that was going out of business because they couldn’t manage their cash flow. Cash is king.
- You don’t need no stinking business plans. You may hear that since the business world changes rapidly, all you need to do is sketch your business idea out on a napkin or on a canvas. But it’s because the world changes so much that a business plan is more important than ever. No, you don’t need a 35-page perfectly polished document. It’s the planning, not the plan, that helps you stay out of trouble.
Copyright, Rhonda Abrams, 2018
This article originally ran in USA Today on June 13, 2018