The world of small business ownership is full of cautionary tales and lofty promises. Some will tell you the path is fraught with potential failure and quote how many businesses fail in their first year. Others seem to guarantee success beyond your wildest dreams if you just follow a few simple steps.
No one intends to outright lie to you about the difficulty or possibility of starting a small business, but myths abound all the same. On top of discouraging you from running your own company or making false promises, all this misinformation makes it more confusing than it has to be.
Allow us, then, to play MythBusters with the entrepreneurial world, dispelling those oft-repeated proverbs of small business ownership that are incorrect. Here are five of the biggest myths about starting and running your own small business.
1. You need to have the appearance of a more established business
One of the earliest pitfalls for a new company is spending too much too soon. Owners sometimes think success relies on having all the qualities of a business that has been around for a while. This usually means significant spending on staff, office space, and marketing materials.
Good small businesses start lean and don’t overextend themselves. Employees are expensive not only in terms of paying their wages but also in the time spent managing and training them. Keep it simple and small early on to prevent unnecessary costs, but be careful not to fall victim to the next myth.
2. As owner, you can do most or all of it alone
Having lean operations are not the same thing as running a business completely on your own. Entrepreneurship may seem like it’s synonymous with flying solo, but not building a support system around you is a good way to limit your company’s growth.
Making smart hires for essential needs—like sales, accounting, and human resources—helps distribute the workload, allowing you to stay focused on growing and planning for the future. Find people who can build these departments and lead them as your company gets bigger. Also, don’t ignore outside assistance on more complicated legal matters like tax and compliance laws, especially if you feel any uncertainty about handling those issues personally.
One mistake can doom you
Search the web for the percentage of small businesses that fail within a year and you’ll be greeted with a wide array of answers (often between 80 and 95 percent, though Google, via the Washington Post, says it’s closer to 50 percent) ranging from discouraging to downright alarming. Based on these numbers, it seems highly unlikely that any business would survive the first year.
Those statistics do prove that starting a business is awfully difficult work, but you don’t have to pitch a perfect game by any means. You can recover from most mistakes that don’t have to do with adherence to laws or regulations. Bad hires can be replaced with good ones, misplaced efforts can be refocused, and business strategies that don’t pan out can be revised. These challenges may delay you from achieving the status you want for a little while, but they don’t have to sink the whole operation.
You have to bring something completely new to the market
The startup world tends to value disruptive, never-before-seen ideas over anything else. But small business success isn’t contingent upon having a one-of-a-kind product or service.
Some of the best small businesses started by taking an existing idea and improving the customer experience. Think about it in terms of professional sports—some athletes excel because of their unique physical talent while others become stars by constantly working harder than their peers. Strive to be the best at what you do by caring about the details.
As owner, you get to call all the shots
This lesson can be a tough one for small business owners to take. A lot of founders are motivated to start a business because they want to be their own boss, set their own salary, and have the final say in every decision. Though that can be the case, there are limits on your freedom as an owner.
If investors helped you get the business off the ground, they have a serious stake in how you’re handling their investment and thus have a say in how you run the company. Though you certainly deserve a nice portion of your company’s revenue, it often takes a while for small businesses to become truly profitable. That can mean paying yourself less than your dream salary for a while. And as you add employees, advisors, and customers, all three will have important feedback about how well the operation is running. That feedback may hold the key to improving, even if it’s not what you thought you would hear.
Starting a business is an incredible achievement, something most people never get to do in their lives. With that, though, comes a lot of responsibility and work. At Paycor, we know small business ownership is full of uncertainty and stress. It’s our passion to provide powerful HR, payroll, recruiting, and compliance solutions that work for small companies and free advice for entrepreneurs on growth, sustainability, culture, and more.
We started with just 15 employees in 1990 and now have over 1,200, so we know a thing or two about starting small and we gladly share what we’ve learned along the way to help your small business grow as well. Contact us to learn more about partnering with Paycor.
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