Entrepreneurship has always been a staple in the American dream. Accounting for 48% of all employment and 97.7% of all exports in the United States, it’s no wonder startup businesses are known as the lifeblood of the country.
As both a booming contributor to our economic culture and the wider economy, small businesses have a long established place in our society. However, startups seem to be going through a new renaissance period, despite the difficulties we have faced amidst the pandemic.
Driven by passion and guided by myths and misleading stereotypes, young entrepreneurs face a unique set of challenges. Who do you believe? What do you believe?
Filtering out the gems of wisdom hidden among the traps of failure can be quite the task, but luckily, there’s real data and experts we can rely on.
Here’s a list of some of the most persistent myths that still thrive in today’s startup culture, many of which can lead you down the wrong path.
1. Create a business you’re passionate about
This is perhaps the most widespread myth found among not only entrepreneurs, but just about everyone striving towards a professional goal.
“If you do what you love, you’ll never work a day in your life” – Marc Anthony
It’s a well meaning quote. It motivates you to get started and choose a path, that’s why it’s survived so long in the public consciousness. But how accurate is it?
Passion only accounts for so much when it comes to running a successful business. The key is to balance your passion against real products and services that people want.
Businesses are often designed to fill a particular demand, whether that’s distributing products you believe in or developing products people need.
Recent research indicates it doesn’t necessarily have to be a field you or your team are extremely passionate about. If you can pinpoint a need in the market and find a way to fulfill it, you’re on your way to forming a successful business.
2. Your business needs to revolutionise the industry
You can’t get far in entrepreneurship and not here the term ‘innovation’. It’s thrown around in countless articles, conferences, events, and just about anywhere entrepreneurs gather. It’s become so widely used, it’s almost lost its meaning.
With this rhetoric, it may occur to you that you need to have a breakout idea and revolutionize your field, even before you officially enter it. But think about it for a minute, how many successful companies did something completely new?
Not Google, nor Amazon, and surely not Apple. They all did things that other companies spearheaded, they simply did them better than anyone else at the time.
As leaders in cutting edge technology have pointed out, there’s more to entrepreneurship than innovation. Consumers are often set in their ways and unwilling to invest in things they don’t understand.
No matter how great a product is, it still needs someone to connect it to the market.
3. Dedicate all of your time to your startup business
As a society, we tend to glorify those who dedicate all of their time to their work. It’s a natural tendency, as humans we expect to see a fair trade. Having invested so much time, you would undoubtedly succeed.
But that’s not really the case. As the data suggests, burnout among entrepreneurs has been linked to underperformance and poor job satisfaction, and even more troublingly, depression and a host of other mental health problems.
The desire to give your all to your work is great, but it’s often a factor of diminishing returns. As with any member of your team, you need to ensure you have the time to recuperate and reenergize.
It’s a snowballing effect. You burnout and underperform, so you work even harder to makeup for it. The answer is simple, maintaining your own health and wellbeing is a natural part of maintaining your business.
4. Your startup business should target BIG spenders
This is one of the most difficult myths to tackle, because it does have some truth in it. Building your company from the ground up, as well as developing your products or getting your supply chains sorted, is bound to amount to a hefty price.
But poor financial decisions have been the ruin of countless startups, just on the cusp of success. For example, Essential Phones was predicted to be among the leading smartphones of the next generation. With over $100 M to back them up, how can they go wrong?
As of 2020, Essential Phones has ceased operations due to, you guessed it, a lack of funding for their next project. Admittedly, they did suffer from their first product flopping and a host of other issues. But they were also helmed by Andy Rubin, a former Google VP, and was initially an investor darling.
This failure to garner more funding comes as no real surprise, but it’s even more pertinent to smaller startups. Only about 40% of startups are profitable, while 82% of business failures can be attributed to financial mismanagement. Being thrifty and spending money wisely is essential to surviving in the long-term, even if that means missing some riskier bets.
5. Focus your business on a wide customer audience
This is a commonsense myth, it just seems to be a logical deduction. Market to as many people as possible, and at least a few of them will be interested in your products. However, the wasted space in-between is where you miss out on reaching real customers.
This myth made a bit more sense when marketing was a hit or miss endeavor. But with the advancements in technology we’ve seen in the past few decades, it’s now easier than ever to get in touch with any given niche group.
Micro-influencers seem to be leading this trend, as they often get more than six times the engagement as bigger influencers.
Whenever possible, making every view and click count is much more productive than reaching a massive audience that’s simply indifferent.
6. Your startup business only has one customer
Most entrepreneurs launch their startups with a particular customer in mind. Whether that’s niche hobbyists or those with a very particular taste, you need to have an idea of your customer before you launch.
However, reaching your widest market share is likely going to mean catering to several different types of customers at once. This means a lot of market research and customer outreach, surveys, polls, and the like.
Discovering who your customers are, and making a corresponding profile for them, can help you design your marketing and products in a way that meets as many of their demands as possible.
Taking your major customer profiles into account is important to your long-term success, as 14% of startups fail because they ignore their customers.
This doesn’t mean you have to consider every single person who may buy your product, but it does mean that you have to approach your customers as a diverse array of people.
7. You have to be ‘Young’ to run a startup business
The stereotypical persona of an entrepreneur is a young, innovative thinker breaking into a new field. Which simply isn’t the case in reality.
Current data indicates that the fastest growing tech companies are led by entrepreneurs with an average age of 45. What’s even more surprising is that a 50 year old entrepreneur was almost twice as likely to be successful than a 30 year old entrepreneur, while 20 year old entrepreneurs had the worst odds.
This isn’t to say that younger entrepreneurs are inherently behind their older counterparts. They often bring other traits to the table, such as a better grasp of newer industries and an inclination to think outside the box.
However, the experience of older entrepreneurs shouldn’t be discounted either. This data indicates that the idea of a successful entrepreneur is more dynamic than what stereotypes may lead you to believe. It’s never too late to get started on your venture.
8. You’ll soon see the fruits of your labour
No matter how you try to fight off the thought, the idea that your startup can become an exceptionally valuable unicorn in the blink of an eye is enticing.
It has definitely happened, but it’s so rare and unexplainable that it’s extremely unlikely. It may not be what you hoped for, but building a startup takes time, and then more time.
You’ll likely work for years before you see real value being produced by your startup alone. On average, it takes about three years for a startup to even become profitable. It’s an arduous journey that few startups make it through.
Is it worth it? Most entrepreneurs will say yes. There’s nothing quite like seeing the company you built with your own two hands take off. But the time it takes to see your efforts pay off may be a bit longer than you initially anticipated.
Few people fall into a startup, many will think it over for quite some time before they take the plunge. It’s important you take your first step with a realistic vision in mind.
These myths may not have been at the forefront of your thoughts, but they’re so prevalent that they undoubtedly lurked in your subconscious. Balancing your expectations with this insight can help you become more prepared for the trials you’ll have to go through as an entrepreneur.
However, there’s nothing wrong with having an optimistic perspective. Few things can stop the entrepreneurs who are willing to put in the work and thought needed to make their company a success.
If you’re looking for help to pick through the startup business myths then why not try my Entrepreneur Mentor program. It’s designed to help support and grow startups, small businesses and even those that have not begun yet.