If you own or are looking to start up your own small business, you’ve probably already heard your fair share of myths about the small business world. These urban legends can be disheartening and negatively affect the potential for your small business’s success. They can lead you to make wrong or rash decisions and diminish the credibility of your company. While there are many to choose from, here is a list of the top 3 most commonly heard myths regarding small businesses.
Myth 1: I can start by business and receive a loan without putting down any money up-front
Reality: If you’re not going to put down money, you’re going to have to put up capital (i.e. your property), and the normal amount is somewhere in the neighborhood of 25%. Additionally, business owners who invest money in their company up-front are more likely to feel as though they have more at stake and, as such, are willing to work harder to keep their business afloat. Also, lenders will ask you to propose your realistic cash flow projection to show how you are planning to repay your loan. This brings me to the second small business myth.
Myth 2: If I have a plan in mind, there is no need to write up an official business plan.
Reality: No matter how smart you are or how good your memory is, this is never going to be a viable option. Without taking the time to sit down and write out your business plan, you are liable to omit important information that will, sooner or later, result in massive damage to your company. Laying out a foundation that includes your marketing strategies, funding options, organizational structure and anticipated revenue is not optional. And, drawing back to myth 1, if you are planning to receive a loan, lenders are undoubtedly going to require this information before investing in your business venture.
Myth 3: If my business is going to be a success, I need to buy an office before I get started.
Reality: Many successful business owners either started or continue to work from home. It is not necessary to start your business in a huge, high rise office suite downtown. The less overhead you have to dish out, the better, regardless of whether it is coming out of your pocket or someone else’s. If possible, start your business from home. Later on down the road, you can decide if it is a good idea to expand into an office building or a free-standing suite.
Keep in mind that this is not a compilation of all of the false myths surrounding small businesses. There are many other myths that could harm your endeavor, so keep an eye out for false claims and be careful about what advice you take to heart and from whom that advice stems.