It’s easier than ever to start a business. Digital tools that help with processing payments, marketing, and showcasing talent have given entrepreneurs access to larger audiences. There are many reasons to start a business; side income, vacation funds, lifestyle needs and even career changes.
Many think it’s easy to be in business and clients will flow in when they open up shop. This year I’ve talked to over 200 people interested in launching a business. There are a few prevailing myths I’d like to dispel to save you time, money, and pain.
- “There’s a lot of money available to start a business!”
Deep in our American psyche we remember the late night infomercials featuring the guy in the question mark suit jacket selling his book on how to find grants for your business. That was over 20 years ago and times have changed! Do some homework on what lending programs are available and what capital YOU will need to put in before anyone else takes a risk on your idea. It’s a balance and there are no easy paths to free money (without strings of course).
- “I’ll sell a lot of things right away on social media!”
Return on investment with social media is tricky and you have to clearly define your goals. After talking with several marketers, I discovered the sales conversion rates from social media posts can be single digit percent of total sales (or less in some cases). There’s a lot of content fighting for people’s Attention on social media, making it a task to stand out. You should first look at your following, subscriber base, and lists to determine if it’s worth your effort to market to them.
- “Three months of savings will buy me plenty of time to build a customer base!”
I’ve known people to leave jobs with no clients, no lists, and expect to double their income from a new business. In reality six months of operating capital may not be enough to support you and your businesses due to the time takes to develop new, consistent clients. Recently, I had a chance to discuss this with business consultants and small business lenders. They all recommended starting a smaller operation (maybe on the side) and then scaling up before jumping off the employment boat. It’s also easier to finance an expansion than it is a large startup.
These three myths are the most common concerns I address for startups. You need to look at your concept strategically and critically. Know how much things cost, where your break even point is and what your monthly cash flow looks like. Know who you are going to sell to and how you are different from the current competition. Finally, find advisors, mentors, and coaches who can help you with the process. There is a lot of help available in shared work spaces, business development centers, and even Meetup groups. Reach out and find someone you can brainstorm with and map out your idea. Your boat has to have both a sail and a rudder or else you’ll be set adrift, at the whim of a competitive market.