During the early stages of setting up a business, it’s very easy to get carried away and romanticise about becoming self-employed – what it’ll be like being your own boss and working your own hours, for instance. While it’s great to get inspired by all the attractive features of self-employment, it’s important to have an appreciation of the less glamorous side too. Knowing the most common misconceptions about setting up a business and not falling for them will help to eliminate any nasty, unwanted surprises.
In this week’s blog, we will highlight for you some of the common misconceptions of setting up a business and advise on how best to work around them.
So, let’s dive in and look at some of the most common business misconceptions we all have.
1. An idea = a business plan
When setting up a business, many people confuse their initial business idea with an actual business plan: in reality, this couldn’t be further from the truth. Starting a business without a measurable, achievable and scalable business plan is destined to be a disaster. A recent study cited that 78% of businesses fail due to the lack of a well-developed business plan, so if you want to give your idea the best possible chance of success, take great care in the planning stage. If you are struggling, consider hiring the help of a professional, or read our article about how to write a business plan.
2. It “isn’t a real job”
Just because you may not be getting dressed and commuting to the office every morning, it doesn’t mean that your job isn’t “a real job”. Ultimately, most jobs revolve around providing a client or clients with a service, so it doesn’t make any difference in how this is achieved. Even if you are only making the walk downstairs on a morning, treat every day as if you are at work. Often, a change in mindset is half the battle.
3. You can work whenever you want
While in general terms this may be true, it is important to remember that most of your clients will work a nine-to-five working day, so if you decide to work a nocturnal shift, this might not always be conducive to working closely with your clients. So, while the flexibility may be handy on occasion, be careful not to make too much of a habit of those lie-ins.
Striking a balance between micro-breaks and taking full advantage of new communication lines available between you and your clients can contribute towards an effective flexible work environment. Make sure you are able to make full use of basic virtual office tools such as Skype or GoToMeeting. Concise project briefs and status updates can also go a long way to supporting your success, no matter where you’re working from.
4. You’re too old/young to set up a business
It has been common historically to find most entrepreneurs were from a very similar age group, but that’s certainly not the case nowadays. Now, with the dominance of the internet, the rulebook has gone and people of all stages of life have the tools to start their venture. As long as you plan effectively, age and experience should not matter.
5. People are born entrepreneurs
While it is true that some people are born with natural entrepreneurial instincts and business brains, becoming a successful entrepreneur is a case of nurture not nature. Speaking to Yahoo Finance, Louis Lautman the founder of Supreme Outsourcing said: “If you are passionate and have a great idea, you too can become an entrepreneur as long as you never quit and see your idea through to the end.”
6. You know more than enough about your market
Many people are of the opinion that market research doesn’t matter as most respondents only give you the answer you want to hear. This may be true if you only ask family and friends, so try your best to seek out opinions from knowledgeable individuals who do not have a vested interest in your business. The information received could be the pivotal factor in whether your venture is a success or not.
7. It is all about sales, sales, sales
In the early startup stages, many new business owners are preoccupied with sales, and this can result in generating more orders than they can handle. When measuring the growth of your business, volume is hardly the only measure of success. A sales strategy must be created, including elements such as a backend and cross-sell system. Or perhaps well-thought out discounts and freebies, which may cost extra but should help to maintain profits. Certainly, the profit column is important and gives the best gauge of how your business is performing, but a sound business plan is crucial. Our Guide to Financial Forecasting should help shine some light here.
8. This idea worked, so why not try another one?
Another common misconception many entrepreneurs have is the rush to diversify into a new market or geographical area too soon. In many cases, making a move too quickly can mean you’re taking your eye off your core business: a risky move in the startup stage. The best course of action is to expand steadily, making sure you stay focused on what made your business a success in the first place, and only take the next step when you’re good and ready.
Though becoming a business owner is every bit as exciting as you might think, it’s important to recognise common misconceptions before they start to present challenges of their own. Keeping these particular fables in mind will help you stay on the right track to reach your goals.
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This article was updated on 10/7/17.
Published Thursday January 16, 2014