Given the widespread public interest in entrepreneurs and the frequency with which they are discussed in the media, it is not surprising that stereotypes have developed around them. Not all of those stereotypes are flattering and most are simply false.
MYTH 1: Entrepreneurs Start Business Solely To Make Money
Entrepreneurs start a business for many reasons. They don’t want to work for someone else. This does not suggest that entrepreneurs don’t want to make money; they do. They simply figure that if they start and build a great business, the money will follow.
MYTH 2: It Takes A Lot Of Money To Start A Business
Another false assumption about entrepreneurship is that it takes a lot of money to start a business. Nothing could be further from the truth. Several entrepreneurs started their business with little capital which has become multi-million enterprises over the years. Most people think that it’s impossible to go from broke to a billionaire. But it’s been done repeatedly. Individuals including Roman Abromovich, Francois Pinault, Howard Schultz, Oprah Winfrey, Shahid Khan, Do Won Chang, Ralph Lauren, John Paul DeJoria, Larry Ellison and Mohed Altrad were once flat broke. But they all became billionaires.
MYTH 3: It Takes A Great Idea
Jim Collins’ research, which was documented in the bestseller Built to Last, dispelled the myth that it talks a great idea to start a business. In fact, most of the great businesses that have been successful for at least 50 years – companies such as Walt Disney, Sony, and Merck – didn’t start with a great idea. They started with a great team who simply wanted to create an enduring company. Venture capitalists say that they will make a great team over a great idea any day because it takes a superior team to execute a successful business concept
MYTH 4: Entrepreneurship Is A Zero-Sum Game
Any people believe that if someone is winning, someone has to be losing. In other words, success is a zero-sum game. Fortunately, entrepreneurs don’t think like that. They tend to look for ways for everyone to come out with more than they started with. It is to an entrepreneur’s advantage if the people on the other side of the negotiating table win too because they will then support the entrepreneur’s efforts. And entrepreneurs need all the support they can get.
MYTH 5: The Bigger The Risk, The Bigger The Reward
Students of entrepreneurship often hear that risk is correlated with reward – the greater the risk taken, the greater the reward expected. Certainly, it appears that investors hold that point of view. But the risk is a relative term, and the goal of most entrepreneurs is to reduce the level of risk in any venture. In fact, money people expect entrepreneurs to do things to reduce the risk for them, such as testing the market, writing a business plan, and so forth. And no one expects the business to be worthless because e risk was reduced. It is actually to the entrepreneur’s advantage to reduce the risk for investors so that the entrepreneur can retain the majority of the equity. Sometimes reward is greater, not because the risk is greater, but because the entrepreneur has brought to the business proposition new value that cannot be replicated easily.
MYTH 6: A Business Plan Is Required For Business
There is no question that lenders, investors, and others want to see a business plan before agreeing to deal with an entrepreneur. They have a lot to lose if the company fails, so they need to satisfy themselves that the entrepreneur knows what he or she is doing. But many entrepreneurs have started highly successful businesses without having a formal business plan in place. Other entrepreneurs have put up websites and been “in business” within a day, making money within a couple of weeks.
The truth is that research has not yielded an agreement on the value of business planning or even on what components of business planning are correlated with success. In the earliest stages of start-up, which may be more important than the business plan itself is spending time and resources testing the market for the feasibility of the business concept in terms of actual sales. When such feasibility is determined, a business plan helps the entrepreneur work through the building of a company.
MYTH 7: Entrepreneurship Is For The Young And Restless
Many people believe that if they haven’t started their first business by the time they are 30, it is too late. They think that the energy, drive, resources, and risk involved are suitable only for the young. But many great businesses have been started by older entrepreneurs who had the passion to do something original. Ray Kroc started McDonald’s at age 52, and Colonel Harland Sanders was over 60 when he started Kentucky Fried Chicken. Research supports the conclusion that being older can be an asset when starting a business. Research has found that men and women in the 45- 64 age bracket are responsible for 36 per cent of all the entrepreneurial activity in the United States and for 22 per cent of all the entrepreneurial activity globally. Fifty per cent of entrepreneurial activity is accomplished by men and women between the ages of 25 and 44.
Entrepreneurship is for anyone, regardless of age, who wants to experience the thrill of building something from scratch and making it a success.
MYTH 8: Entrepreneurship Cannot Be Taught
This myth is a corollary to “Entrepreneurs are born, not made.” Both are wrong. There is a lot about entrepreneurship that can be taught, including specific skills and behaviours. People who don’t naturally have the skills of a successful entrepreneur can certainly learn and apply them. What cannot be taught is the passion to achieve. Some have called it the “fire in the belly.” And indeed, what motivates someone to leave Harvard University to start a business (like Bill Gates of Microsoft) or to start by driving a garbage truck (like Wayne Huizenga, who founded Waste Management) cannot be learned. It is simply part of a person’s makeup.
Sometimes passion grows as an entrepreneur moves through the feasibility analysis. As questions begin to be answered and possibilities seem more feasible, passion is sparked.