Becoming your own boss is the dream of many. Thanks to capitalism, the entrepreneur is alive and well in America. They enter the small business world with a dream and lots of desire. There are many misconceptions about starting up a business. Knowing what hurdles you are likely to face can save you time and aggravation. It is not a quick and easy path to the pot of gold at the end of the rainbow. Overcoming the many obstacles is simply a matter of discovering accurate information and then making informed decisions. These barriers can be navigated. The proof comes from the thousands of small business owners who have created thriving and profitable businesses.
Myth 1. Since I’m using my own funding, I don’t need a business plan. The reality is that creating a business plan is the first step you need to take. It doesn’t matter what type of business you are starting. Having a plan ahead of time can alert you to roadblocks that you will need to find solutions for. Take some time to consider all the elements that go into starting a business. It would also be wise to create a backup plan as well. The more research and effort you put into your plan ahead of time, the smoother the sailing as your business moves forward. Make your plan flexible. As you gain experience, make appropriate changes to your plan to keep yourself headed in the right direction.
Myth 2. I don’t need a marketing plan since this product/service sells itself. The truth is you need a plan for every aspect of your business. Marketing is about the most important area of any business. You specifically need to know how to effectively market your product. And you need to know how much it will cost and how to budget for that expense. Your business will fail without a solid marketing outline. Take time to know your prospective customer.
Myth 3. I will be profitable in a short time because I am an expert at what I do. The fact is that the majority of owners don’t see significant profits for well over a year. It is unlikely you are an expert at everything involved with running a business. Therefore you will have to find ways to learn about what you might not know first hand. That is why a plan is required from the start. Expect it will take time to establish yourself and your brand or type of service.
Myth 4. I will be able to write everything off. This somewhat of a misconception. Yes, you can write off many business related expenses. And that is where you need to be sure that it is directly related to the running of your business. Many newer entrepreneurs expect to be able to include many personal expenses as well. It would be wise to define the expenses you will incur in your business plan. This will also assist you in determining your overall capital outlays. Doing some research into the types of expenses you can deduct will help you avoid a tax audit.
Myth 5. I will be able to get a government grant to start my business. Afraid not. There is no such program that lends directly to any business. At least not on the federal level. Some states on the other hand may offer assistance for certain qualified persons such as veterans or the disabled. The best place to find out about funding resources is an Economic Development Corp office in your area. These offices are usually specific to a region or state and can offer information for starting up a business. Simply type in your state and the words “Economic Development” and do a search on Google.
Myth 6. I can get a loan from the SBA. Not quite. The SBA does not directly lend money to small businesses. They are the guarantor of three types of loans. These are the 7(a), micro-loan(7m), and the 504 loan programs. The SBA can help facilitate financing through several of its lending partners. Some of these include local banks and community development organizations. You can get information from the SBA regarding all these types of loans as well as guidelines to starting up a business.
Myth 7. Venture capitalists loan money to startup businesses. Nice try. The truth is that unless you have at least a 2 or 3 year track record, you will not even be considered. And to top it off, unless your business has a rock solid business plan and expected robust growth ahead, this is not an option. VC’s are more likely to fund a venture if it has a regional or national client base.
Myth 8. If I create a web site, I’ll get traffic. Yes, a well designed, focused, content rich site can do wonders for your business. It needs to be information oriented and easy to navigate. But it also needs to be something that people are looking for. You will need to pay strict attention to search engine optimization. How you will go about constructing your site should be part of your marketing plan. Since you can create a well built site for a reasonable cost, it is worth the time to explore this option. And worth the time it takes to develop an attention getting site.
Myth 9. I’ll have more time for myself. Guess again. You may be finding that you don’t have enough hours to do the work you need to do. Starting a business is extremely time consuming. At least, with a well thought out business plan, you can use your time more constructively. Forget the regular workday mentality. Be prepared to spend many hours every day in the creation of your business. It will be your new life style.
Myth 10. I can set my own salary. Not right away. You absolutely have to leave money for expenses and future growth. Having a solid cash cushion can see you through the tougher times. Taking cash out of your business right away will leave you little to fall back on. You want to keep saving any profits and plow them back into your business. Until you are on solid ground, forget lining your pockets with cold hard cash. One of the main financial concerns for your business is cash flow. Without it, your dreams will dry up.
It comes down to planning and research. You will need both unless you have unlimited funds to throw into your startup. You will need them to gloss over the many mistakes you will make. Or, with the proper preparation, you can start up your business knowing you have given yourself a great chance to succeed.