Startup Sunday
As I mentioned in an earlier blog post, I'm in the midst of a project that involves interviewing entrepreneurs around the world. These conversations are challenging some of my assumptions about entrepreneurs -- in a good way -- and highlighting some of the myths about entrepreneurs that I encounter every day.
The sad thing is, these myths about entrepreneurs kept me from launching my own business for over a decade. I thought that I wouldn't succeed because I didn't fit the image of a small business owner that I had built up in my head. I hope that by identifying what I see as the biggest myths about entrepreneurs, I can encourage readers to revisit their own preconceptions about entrepreneurship.
Entrepreneurs Are Swashbuckling Risk Takers
One of the experts I talked to this week captured the conventional wisdom about entrepreneurs when he said that we are not swashbuckling risk takers, as many people assume. Instead, we take calculated risks and always bear in mind the extent of our possible losses.
This jibes well with my own experience. When I launched my freelance writing business, I wasn't about to take out a huge business loan (even if a bank would've given it to me) and spend a lot of money on office space, equipment and professional services. I just wasn't comfortable with that amount of risk.
What I was risking in going out on my own was my time, which I valued at $80,000 -- the annual salary of the job I turned down in order to start a freelance writing career. I told myself that I would give it a year and evaluate how close I came to that income target when deciding whether to give it another year. However, if I had been offered a staff job making twice that much, I probably would've taken it, and foregone the entrepreneurial life.
Entrepreneurs Need Lots of Funding
Another of the popular myths about entrepreneurs is that the first thing we do is take out a business loan or find a half-million dollars in venture capital funding, because start-up costs are so high.
A friend of mine launched her consulting business by renting an office downtown, hiring a graphic designer to create a logo, paying for a custom-built Web site and printing up glossy brochures about her services. While I'm sure that many people could handle this kind of expense, she couldn't -- within a year she had folded her practice and taken a job doing consulting for someone else. I know that the monthly rent and high start-up expenses brought her to that crucial decision earlier than needed.
In fact, I started my business with about $50 in expenses: for business cards and a domain name. I built my Web site myself on free blogging software and worked from home. I also appropriated a $700 personal laptop for work use, so you could count that expense as well. Because I had only my normal household expenses to pay in the start-up year -- not any additional business costs -- I was able to get by as my income grew. Perhaps if my friend had taken a path closer to mine, she would've been able to survive on her own long enough to build up a client base, establish a healthy cash flow and see a clear path to a successful consulting business.
To be sure, some businesses need to start at a certain medium-sized scale in order to make the products or provide the services they want to offer. But the more entrepreneurs can keep our costs low in the early years, the better chance we give our business to take root and grow.
Entrepreneurs Succeed Overnight
A popular media story line is the overnight success. Heather Armstrong gets fired for blogging about her work and her blog Dooce becomes an online destination that supports her whole family. Bill Gates tinkers a little bit with some software code and becomes a multi-billionaire computer mogul. Mariah Carey belts out a tune as she's pumping gas and becomes an international superstar.
Most instant success stories ignore the many years of unpaid writing, engineering or experimenting that helped these entrepreneurs hone their craft or develop new and innovative ways of solving customers' problems. And even when success is achieved more quickly than you expect, there will come a point when the would-be entrepreneur must deliver on the once-in-a-lifetime opportunity. That's the best place to focus your effort -- working to develop the skills and resources you'll need to implement your business idea -- rather than hoping to be an overnight millionaire.
Photo by Clinton Steeds via Flickr
Great post Katherine, as always.
I certainly concur with these being myths also.
From my point of view, I believe everyday living is risky. Having a job is risky. Having more control over my own day is far less risky than waiting for the pay check, in the hope that it does come on a regular basis. Any "project" that's considered is done so through a ROI and risk management filter. Nothing is done blindly, unless of course I have to go with the flow, and when I just wing it!
Certainly when I started the entrepreneurial mother™ (and aCE talentNET for that matter), I had no start up capital either. What I did have was the support of those around me, and a dogged determination to DO stuff. The rest falls into place, one way or other.
Overnight success? HA!
That is so true. Many overnight successes, once the surface is scratched, have been in the game a long time. The overnight success part is more about the rest of the world catching on (especially if media driven) when the offering hits their collective radar, and not a whole lot more than that really...
That's my experience at least...
Posted by: the entrepreneurial mother™ | Monday, April 19, 2010 at 11:59 PM
I started my business 2.5 years ago and I am pretty sure there are a lot of people close to me that still attach me to the above myths.
I also started with nothing but what I already had available and the support of my family. As far as risky is concerned, I feel working for myself is far less of a risk than having someone else in control of my destiny.
Whether I fail or succeed is determined by no one but me.
Posted by: The Work at Home Wife | Tuesday, April 20, 2010 at 06:38 PM
This is a really good post and I agree totally that they are very real myths that people do have. The reality is somewhat differnet thank goodness :)
Posted by: Brigitte Mehr | Thursday, April 22, 2010 at 06:10 AM
I couldn't agree more. I work with entrepreneurs frequently, and have a freelance writing business myself. The entrepreneurs I know who have seemingly achieved overnight success are those who are working through the night to make it happen, as many keep their day jobs until their business has truly taken off (a decidedly un-swashbuckling tactic). Thanks for debunking some pervasive myths!
Posted by: Amy Reinink | Thursday, May 06, 2010 at 05:54 PM
So right -- and I also love the insight of the commenter above, that sometimes working for yourself is less risky than working for someone else!
Posted by: Catherine | Thursday, May 06, 2010 at 10:58 PM
After 20 years running my own business as a freelance writer, I absolutely agree with you that these are myths. I would never consider myself a risk-taker! However, I have to be honest when I talk about freelancing with others that I have been supported in this business because of the steady income of my husband and ongoing health insurance coverage through his employers. I think it would be a bigger risk for someone who is the sole support of themselve and their family because of the fluctuation of income.
As to the "overnight success" aspect -- I always tell people that in my first year as a freelancer I made about $1000. It's been a long, rewarding road since then!
Posted by: Michele Lerner | Friday, May 07, 2010 at 08:39 AM
I agree with Michele -- I'm just starting as a freelancer, and I'm getting really good work, but it wouldn't be possible without the support and benefits from my husband's salary. Otherwise, I would be looking for another full-time job, and another boss!
Posted by: Jennifer Sergent | Tuesday, May 11, 2010 at 05:55 PM