Top Ten Most Common Small Business Myths
1. Generous Uncle Sam
Sometimes stated as "the government has grants for startups."
Understand one thing: The government primary function is to take money from you, and your startup, and spend it on itself and on other people. There are some state level programs that might give you some assistance, but there are very strict eligibility requirements.
2. The Small Business Administration (SBA) Loans Money To Small Businesses
The Small Business Adminsitration is a government agency, and as a part of the government, remember the rule from the last myth: The government exists to find ways to take your money and give it to others. The SBA role with loans is to act as a guarantor, or a kind of cosigner on three different loan programs for small businesses.
3. You can get a loan for your startup from a venture capitalist
The reality is that venture capitalists see great business ideas all the time, and that is not enough. VCs need detailed strategy, strong growth potential, solid management, wide appeal for the product, and an exit plan that will let them cash out with a giant profit from the large share they will want of your business.
4. Starting my own business will give me more time
Small business owners quickly find that the one commodity that is most limited for them is time. Remember the government? They will spend a lot of your time making you file paperwork where you confess to the government how much of your hard earned money it should get to take from you. Employees will take a lot of time, as they make mistakes, and require lots of attention. Suppliers will take a lot of time. Renting a location, dealing with utilities, learning about your market, figruing out how to expand your business, dealing with the inevitable complaints, all these things will take lots of time. You'll become very aware about how much time even the simplest things actually take.
5. A small business is a ticket to a lot of write offs
Good philosophy, but the devil (and the tax man) are in the details. Get too aggressive your with your writeoffs, and the tax man will come and visit with a microscope to examine your expenses. The real question you must answer with every writeoff: Is this an expense that is necessary to the business, and is it an expense I would not have if I was not in business.
6. I will be in control of my own paycheck
Well, sort of. After you pay the employees, you pay your suppliers, you pay your landlord, you pay the tax man, you pay the utilities, you pay for computers and the tech who needs to be called at odd hours when the computers break, pay for advertising and marketing, pay for repairs to business equipment, maybe you'll have some money for yourself. Unless you have partners, then they'll want a piece of your share. Most businesses run at a loss in the beginning, so don't plan on a paycheck for yourself for the first year or two.
7. All I have to do is put some products on a website, and I'll get traffic
In the early days of the internet, that was sort of true.... There wasn't a lot to look at, so if you were there, people would come and look. But does traffic do you any good? Not if it doesn't convert. What you need is sales of some kind, not just a lot of people making one click on your website and then leaving.
Today things have changed. There is so much to look at, and so many others gaming the system to get hits for the same topics as yours, you may not get many visitors. You'll need money to pay for google adwords, and other kinds of online advertising, and maybe offline real-world advertisements, too to help people find your website. You may need some expert advice on how to get traffic, and that will cost some money for what is called SEO, or search engine optimization. Then, you'll need to carefully measure your different sources of traffic, and see if they are generating enough profit from sales to pay for the cost of generating the traffic.
8. I'll make a profit in 6 months because I am an expert
Most businesses don't see a profit for two or three years. And the exceptions to that rule are the businesses that don't see a profit ever. Have patience, and an independent nest egg, to take care of you until the business is solid. If you have another job, you might not want to quit it just yet....
9. I don't need a marketing plan, everyone wants my product
The cause of many business failures is a lack of marketing plan. a marketing plan helps you understand how you are presenting your business to the world. A marketing plan describes how you are finding new prospects to buy your product, which often involves advertising. A marketing plan also describes how you complete a sale to a new prospect.
10. I'm not looking for funding, so I don't need a business plan
A business plan is a roadmap for you to run your business. It helps you understand your business, the market you are in including your competition, and the needs of your customers. Your business plan should include potential problems, and your unique ways of getting around those problems.
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