As an integral part of the introduction to the SCORE Business Fundamentals Workshop, we introduce six myths assumed by many of our clients as they consider starting a new business. Jack Welch, the former CEO of General Electric Co., promoted a business practice that is a response to the myths presented in this article: "Face reality."
Myth No. 1: If you go out on your own, you won't have to work as hard or for such long hours.
Reality: You'll probably work harder and longer than you've ever worked before, but you'll enjoy it more. Exhaustion fades at the moment you proudly say, "I did this!"
Myth No. 2: You'll be able to deduct everything, so you don't have to pay taxes.
Reality: Taxes are based on net income, which can be lowered by subtracting expenses related to the business from gross income. Strict regulations apply, so keep good records and learn how to make the tax system work for you.
Myth No. 3: If you work independently, you won't have to report to a boss.
Reality: You don't have a single boss - you have many bosses. These are the clients and customers, each of whom has specific needs and demands. Your challenge is to keep all of them happy.
Myth No. 4: Business owners get to do the work they want to do and only what they find interesting.
Reality: You'll have to wear many hats and juggle many skills, some of which may bore you. Others will be very challenging. You'll have to develop an interest in every aspect of the business, whether or not you find it interesting.
Myth No. 5: If you choose to be self-employed, you'll be limited in what you can achieve, since you'll be working alone.
Reality: The limitations are created mostly by the space between your ears. Be realistic, but don't trap yourself with self-imposed limitations. You can make a difference.
Myth No. 6: All I need is a good idea to be a successful entrepreneur.
Reality: A good idea is a great start, but it takes hard work, research, planning and successful implementation strategies to turn your idea into a profitable enterprise.
We can add a seventh myth that is often quoted by the nay-sayers: that 90 percent of new businesses fail within the first four years after startup.
In reality, 67 percent of new businesses are still in business after four years.
Further, a sampling of small business startups indicates that if the small business owner had four or more sessions with a SCORE mentor, the success percentage jumps to 90 percent.
There are five primary reasons new small businesses fail:
Lack of capital at startup.
Poor cash flow management.
Not seeking the advice of a mentor.
As Jack Welch urged: "Face reality."