The idea of taking a dream and single-handedly building it into a multi-million dollar business empire from the ground up is ingrained in the American psyche.
We romanticize the so-called “self-made” business owner, determined to be her own woman, beholden to no one.
How often have you heard stories about small business owners who seemingly achieved success overnight?
Interestingly, many of these stories fail to mention the challenges that most entrepreneurs typically face on the road to success—long nights, sporadic income, financing issues, just to name a few.
The reality of entrepreneurship is often downplayed. The truth is, most small businesses fail within the first five years and those that don’t typically struggle to break even, let alone make a profit.
You can’t successfully build a sustainable business on your own; you need a bank and/or investors, a business network, suppliers, customers and friends and family who support your endeavors.
In order to succeed in small business you must be able to separate the myths from the realities of entrepreneurship.
Myth #1 – The risk equals the reward.
Reality: The right risk equals the reward.
If you are going to risk it all to go into business for yourself, shouldn’t your business have the potential to compensate you for that risk? Why throw your hat into an already saturated industry.
Create a niche for yourself—something that sets you apart from the rest. Your ability to distinguish yourself from others is what determines your ability to get paid.
Myth #2 – Entrepreneurs are in the business of sales.
Reality: Successful entrepreneurs are in the business of capitalism.
Salespeople run their businesses simply to support a lifestyle, not to build an asset for future generations. Capitalists know how to leverage capital to create scale and reap substantial rewards. Capitalists use other people’s money and talents to position their services and products in the free market and to grow their businesses.
Myth #3 – I can get more clients by offering certain services or products for free.
Reality: Offering your products or services for free devalues those products or services.
Giving away your products or services for free sends a signal to the marketplace that your product or service has limited value. Business people respect those who value themselves. You don’t add value by giving away your products or services. The clients or customers that you want for your business expect to pay for services rendered. And remember, you can’t call her a client or customer until she pays you a retainer or makes a purchase.
Myth #4 – I can do it on my own.
Reality: You can’t do it all alone.
Just as Jordan needed Pippen, every good entrepreneur needs a partner who has a vested interest in seeing her succeed. This can be, but does not have to be, an actual business partner; it can be the venture capitalist or bank that works with you to finance your operations; it can be the supplier who provides you with product; it can be the employees who keep your operations running on a daily basis.
Myth #5 – Marketing alone sells products.
Reality: Marketing may get you in the door, but it will not close the deal.
Good marketing in combination with quality merchandise and services and excellent customer service are what sell products. An expensively decorated office at a high-end location, splashy brochures, business cards and websites may get you noticed, but you have to have something backing it up.
Marketing is wonderful but you can’t market unless you have something of value to sell. Customers keep coming back because they believe that they are getting a quality product and service at a competitive price.
Myth #6 – Sales equals cash flow.
Reality: Bank balances equal cash flow.
The amount of your sales is not a good indicator of your business’s cash flow. The amount of money you have in your business bank account is the most relevant measure of your cash flow.
Your ability to pay your bills is what counts. Selling lots of merchandise without reaping any profit requires you to obtain capital from banks, lines of credit or family and friends to keep your business afloat until cash flow catches up with revenue.
Myth #7 – I can get good advice for free.
Reality: You have to pay for quality advice and information.
We’ve all heard the saying, “You get what you pay for.” Well, it’s true, particularly when it comes to getting good advice. Look to qualified professionals to assist you with your business needs.
They have the education, training, experience and certification to guide you. But don’t expect them to give away their services for free (see Myth/Reality 3).
About the Author
Greg Washington is the owner of Financial Strategists, a business advisory firm located in Olympia Fields, IL . Contact him at 708-850-1386.