7 Myths About Starting a Business

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(Newswire.net — December 12, 2022) — The boom in new business formation signals a new era in the economy. The shift to digital has upended businesses, workers can now work from home, and emerging technologies such as artificial intelligence, DNA sequencing, energy storage, robotics, and blockchain promise to create add $50 trillion in value to the economy, and a whole new set of opportunities have emerged out of the pandemic. It’s an exciting time to be an entrepreneur. Yet, with the high failure rate of startups, it’s very important to have a real understanding of what it takes to start a new business. Unfortunately, many entrepreneurs are plagued by myths about starting a business. Here are 7 of the most common myths.

You Have to be An Expert

We tend to imagine that the best entrepreneurs started off with an exact plan of what they were going to do when they became entrepreneurs. Yet, history has shown that the best entrepreneurs, such as Steve Jobs, and Jeff Bezos, didn’t have a clear idea of what they wanted to do, just that there was an opportunity out there. For example, Bezos started off by wanting to sell stuff online, but it was only from studying the market that he finally figured out that books were the ideal thing to sell.

You Need a Complete Business Plan
This relates to the first part. Early on, it’s virtually impossible to have a detailed business plan like a more established firm. This doesn’t mean you shouldn’t have a business plan. You need a business plan to make your ideas more clear and communicate them to third parties, such as investors, and lenders, but, you simply won’t have the kind of certainty a more established firm will. So, it’s dishonest to have a large, detailed business plan when your business is defined by uncertainty.

You Should Start During a Boom
Some of the greatest businesses in the United States, such as General Motors, Microsoft, and Electronic Arts, were founded during recessions. There is no perfect time to start a business. Ultimately, what counts is the quality of your business idea, not the timing. The timing may make the road to success an initially bumpy one, but it won’t start the best businesses.

You Need a Lot of Capital to Start
One common refrain whenever entrepreneurship comes up is that many people feel as if they don’t have sufficient capital to start their businesses. This ignores the fact that sometimes, too much capital can be a bad thing. It can lead to excessive risk-taking, and a failure to build a strong corporate culture. Starting off small and growing slowly has advantages because it allows you to build a deep corporate identity and test your product and service. 

Instead of working about getting lots of capital, reimagine your business as a “lean startup” in the Eric Reiss mold, and build with the capital you do have.

You Need to Hire People
Many people imagine that growing a business means hiring more people. They feel an impulse to hire staff even when there are options available to grow their business while remaining lean. For instance, you could outsource functions, or automate others, and you may even completely make do without some traditional parts of a business. Hiring staff can actually dilute corporate culture and lead to demoralization of the staff if it is not driven by real needs. British anthropologist, David Graeber, wrote about what he called “bullshit jobs”, jobs that the people doing them thought were unnecessary. He found that these workers felt useless and that their existence within an organization was meaningless.

You Have to Work Constantly
When people think about entrepreneurs, they imagine people who work all day and all night, and never have any time for a personal life. You hear about having to make sacrifices, of putting your business ahead of your family, and spending years sleeping in your office before you can finally take a break. Yet, this ignores that with modern technology, the nature of work and business has been radically transformed. 

The pandemic has witnessed the Great Resignation, in which millions of Americans have quit their jobs to start their own businesses. Many of these people will operate businesses in which they will always be the sole employee. Typically, they use a limited liability company (LLC) business structure and work as single-member LLCs. You can learn more about LLCs here

What these people have done is realized that so long as you are working for someone else, you are, by definition, earning less than you are worth. By organizing themselves as businesses, they can capture more of their value, while also exercising greater control over their schedules. For these Americans, resigning isn’t about taking a chance to work more, but a chance to have a better work-life balance. Indeed, the search for a better work-life balance is the primary driver behind the Great Resignation. 

Starting a new business can be a work to reclaim a greater work-life balance, rather than a rapid fall into workism.

You Have to Wear Every Hat
Entrepreneurs imagine that they have to be the resident expert on every subject in their business, and handle everything. However, this is just the wrong way to go about things. As an entrepreneur, your biggest role is in allocating capital. You have to organize your business in such a way that you are freed to conduct as much strategic thinking as possible. 

The freedom to think strategically demands that you spend as little time as possible on the minor details of your business and that you delegate as much as possible. In single-employee firms, you can create systems automating those functions that can be automated, so that you don’t have to spend too much time on them. This is the key idea behind Tim Ferris’ notion of the “four-hour work week”. 

If something cannot be delegated to an automatic system, you can outsource to a freelancer or some service, or, if necessary, hire more people. It’s not your job to do everything. It’s your job to allocate capital to where it can be most useful.