Entrepreneurship fallacies

March 23, 2011
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Thinking about starting a business? New York Times blogger Jay Goltz lists his top fallacies of entrepreneurship. In sum:

1. “Any business has a 50-50 shot at succeeding.” Accurate, maybe, but failure rates vary dramatically depending on how the business is executed.

2. “It’s all about finding the new thing.” Most new businesses are not big new ideas.

3. “Starting a business now offers more stability than holding a corporate job.” Hah.

4. “I want control of my own destiny!” The essence of business ownership.

5. “I want to set my own hours.” Possibly the “cruelest” fallacy.

6. “I’m going to start my business as soon as I raise the capital.” Much easier said than done.

7. “Do what you do well and delegate the rest.” Better to delegate and be a jack-of-all-trades.

8. “I’m tired of making money for other people.” You’re self-centered.

Anything he left out?
 

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  • Fallacies
    He forgot "You can take time off work any time you want" and "I want to be my own boss". In reality it is harder to take time off work because no one fills in while you are gone and your customers are now your bosses. Everyone thinks that because you own the business you are free to do as you please and nothing could be further from the truth.
  • "People Will Flock to My Door"
    So many entrepreneurs I talk to are astounded that passing out a few business cards and putting a sign on a window and maybe their car just isn't bringing in the prospects like they expected. Networking can make a big difference and you should be out meeting as many people as possible, and free (as in no dollar cost) social media is part of most brand building processes. However, every business must have a marketing plan with a budget in dollars, and I see way too many businesses who think a $500 annual marketing budget is going to launch a $500,000 business. Maybe it will but you'd be better off going to the casino because your odds are much better. There is no hard and fast rule for advertising and marketing during start up, but don't be surprised if you are spending 30-50% of your first year revenue in acquiring clients.
  • Watch your money
    "If I have an accountant and a lawyer, I don't need to understand my own books and the tax laws."
  • Retarded
    Clearly, Jay Goltz has never actually started a business himself.

    Starting a business IS more secure and stable than a corporate job because you actually do control your own destiny. It's completely up to you whether your company succeeds or fails. With a corporate job, you're at the whim of the company and have little to no control over your own destiny. Work hard for a company and you might get promoted or a slight raise; work hard for your company, and see the reward of increased profits.

    I've been setting my own hours for a decade, and I love it.

    Being tired of making money for other people isn't self-centered, it's innate to every human being. Why spend all your effort to help executives leverage your work into higher paydays for themselves? When you own your own business, you leverage your work for your own benefit, which is exactly as it should be.

    Have fun in your lifelong rat race Mr. Goltz. Call me when you retire at 80.

  • Reality check
    There are four key ingredients to success in starting your own business:

    1) Energy - plan on many, MANY 14-16-18 hour days;
    2) Capitalization - you need sustainable reserves for a minimu of 6 - 12 months;
    3) Location, location, location - make sure market size / traffic counts / visibility contribute rather than undermine your efforts;
    4) A thorough, multi-outlet, coherent and funded marketing plan - a better mouse trap is worthless if not enough people hear about it.

    Radical innovation is highly-overrated due to the exploratory market development. New things are untested and require a lot of consumer indoctrination. Find success other places, understand why it succeed, then introduce a compelling innovation on it. This saves a lot of time and money in market research.

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