Discussing a few of the myths that cloud the
concept of starting a small business, going over
the most common myths that typically surround the
small business owner and discuss their merits and
the facts in each instance. In short many of the
things you will hear and run into are not facts –
they are urban legends, misconceptions about
starting a business that have been repeated so
often now that many people believe them to be
true even when they ought to know better.
To give you an example and discuss a few of the myths that cloud the concept
of starting a small business. Let us go over the most common myths that
typically surround the small business owner and discuss their merits and the
facts in each instance. In short many of the things you will hear and run
into are not facts – they are urban legends, misconceptions about starting a
business that have been repeated so often now that many people believe them
to be true even when they ought to know better. In many cases as with the –
SBA has money to loan- myth there is a kernel of truth once you get past the
* There is free money available to help you start your business
If something sounds too good to be true it not only probably is I can
guarantee you it is! Our government only gives away money to foreign
interests with whom they feel they can buy loyalty or concessions – not to
their citizens. While it may be true that some state governments have
policies in place to help people such as veterans, minorities or people with
disabilities those special programs have very specific requirements that you
have to meet before you are eligible. If someone claims otherwise, especially
if they want to charge you a fee for a ‘list of lenders and free grant
providers’ run do not walk away from them!
The Small Business Administration has millions of dollars of money available
to loan directly to small business
The SBA is an independent agency of the executive branch of the federal
government, and the government is not in the habit of giving anything away.
That includes loans, believe it or not! The SBA is a great resource for small
businesses, and does act as a guarantor for one of three different loan
programs that can be of use to the small business owner, but they themselves
do not provide or arrange for the loans.
The three loans they act as guarantors for include the Seven-A (7a), the Five-
O-Four (504) and the Seven-M (7m) or micro-loan as it is known. Details about
these different loans which the SBA will guarantee and oversee compliance
with for small businesses are not in the scope of this article.
What the SBA does in these types on situations is to help arrange financing
through various lending partners including local banks and nonprofit
corporations and to oversee compliance on the part of the small business with
the loan terms, thus assuring to the lenders that the loan will be repaid.
* People are lining up to loan money to startup companies
Venture capitalists DO exist, and while in some cases they have been known to
finance startup companies that is not what they principally do, nor would it
be wise to do so. Since a venture capitalist entire purpose of investing into
a company is to make money and more then half of the startup companies
created every year go belly-up just leaving that money in the bank earning 5%
would do a better job them financing startup companies hand-over fist.
One of the rules of thumb that investors use is that a good three year track
record needs to be in place, along with a great business plan and the
potential at least for robust growth before they are willing to put their
hard-earned money on the table. If you can show a great strategy with strong
growth potential and have a product or service with a national client base
that has so far been untapped you may be able to get them to bend a little –
but the thought that investors are actively looking for someone to give their
cash to is definitely an urban legend!
* Starting your own business allows you freedom to choose your working hours
Only someone who has never had a job like raising kids, or farming that has
tasks to be done whether you are sick or not would ever come up with a saying
like this, and yet it is one of the most common business-owner myths out
there. Unless you have so much money that you don’t need your business to
succeed any ‘freedom’ you have will be going right out the window the moment
you open your small business or shop! You may have a bit more flexibility in
the scheduling of your free time, but starting a small business will
definitely cut into that free time if you plan on making it a success.
* There are many write-offs you can take on things you otherwise can’t write
The IRS and the government do NOT give away money. Remember that – that is
the reason for myth number one and two above, and unless you enjoy being
audited it’s never a good idea to write off any expenses not 100% related to
your business endeavors even if they are used in relation to the business as
well as your personal life. The best rule of thumb is to ask yourself whether
or not you would still have this expense (say your car for instance) if you
were not running the small business, and if so in any form or fashion then it
is not a legitimate write-off.
Some common write-offs which are normally allowable include any computer and
business software, rent, salaries and monies paid to independent contractors,
advertising costs and even a percentage of vehicle costs if its use can be
tied to the business in question. In some cases strict rules apply, such as
whether you use the computer for personal use as well as business etc. so
checking the law first is a good idea!
* The right business sells itself and doesn’t need a marketing or business
plan to succeed
This is very common now in the post ‘dot-com’ era, but remember folks there
is a reason it’s the “post” dot-com era and not the dot-com boom. There is
simply no substitute for a valid business plan and understanding what is
necessary to sell your product or service to the public. Anyone trying to
tell you something otherwise is likely selling something he wants you to buy
from him right now before you go broke and give up the idea of starting your
own business! A related myth is that if you aren’t getting a loan or looking
for investors you don’t really need a business plan. While business plans are
necessary to get investors the purpose is not that but to ensure you
understand what it will take to be successful, and that you have a linear
outline for how to achieve those goals.
So now hopefully you see the type of information and assistance considered in
business startups – a little hope in the midst of all the hype out there.
Remember as mentioned earlier, in many cases as with the -SBA has money to
loan- myth there is a kernel of truth once you get past the misconceptions,
but as is always true anytime money is involved you should always be certain
whether a trusted friend and advisor or a stranger. After all it IS your
money you stand to lose not theirs!
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