Business Urban Legends - Part 3 - Myths 3 - 5
Wrapping up my last two posts regarding an awesome article on Entreprenur.com about startup myths, here are the final three myths that they discuss:
Myth #3: If You Don't Grow, You'll Die
Dispelling this myth is important. Most Entrepreneurs feel the pressure when they are writing their business plan to have this grand vision - they either need to go public or be swallowed up by an industry giant or they will be a failure. While both of those things can be good, they don't have to happen to be successful. Sometimes growing too fast can be bad for a company. Personally, had SportsLizard.com taken off faster I would have been a mess - I needed some time of slow growth to work out the kinks. The article says "chasing growth can lead small firms to discount their prices too deeply, take on large contracts that make them too reliant on one customer, or incur crushing debts to service big accounts that suddenly go somewhere else."
Myth #4: If It's Such a Good Idea, Somebody Would Have Thought of It Already
This one has always driven me nuts. I am sure that there were people 100 years ago saying the same thing. When I was a junior in college, I did an internship with a major consumer goods company (the same one that I was an engineer for after college for a year). After about a week of working there I came up with an idea for a device to improve product testing. It would solve a problem that they badly needed solved, but had never been able to figure out an effective way to do so. My idea got some backing from a few key people within the organization so another intern and I were given a $10,000 budget to build the thing. Before beginning, we were asked to consult with the "expert" mechanical engineer for design suggestions. He didn't think it was possible to do what we wanted to do, and then told us that "most of the good ideas have already been thought of." I couldn't believe that someone with his intelligence would say something like that. It drove me nuts. We successfully built that device and I vowed to never think like that.
Myth #5: You Can't Start a Business Without a Lot of Money
I love this one too. People are focused on nice offices and secretaries and company cars. I think you are BETTER off without a lot of funding. Focus on what you need, not what you'd like and continue to run your business this way as you grow. It will establish the shrewdness necessary to run a successful business. Many businesses operate on small margins and can't afford to spend without regard, so why start like that?
According to the article, "the average entrepreneur starting a one-person business plans to get underway with about $6,000, according to a 2003 SBA study."
Most internet entrepreneurs I know started with even less. Do you know how much I started SportsLizard.com with? $3,000. And that included this kick a** computer, not to mention there were things in that 3k that I didn't NEED. If I was starting a similar business today (sans the computer), I know I could do it for under $500.
Like I said, this was a GREAT article. Don't let any of these myths stop you.
Myth #3: If You Don't Grow, You'll Die
Dispelling this myth is important. Most Entrepreneurs feel the pressure when they are writing their business plan to have this grand vision - they either need to go public or be swallowed up by an industry giant or they will be a failure. While both of those things can be good, they don't have to happen to be successful. Sometimes growing too fast can be bad for a company. Personally, had SportsLizard.com taken off faster I would have been a mess - I needed some time of slow growth to work out the kinks. The article says "chasing growth can lead small firms to discount their prices too deeply, take on large contracts that make them too reliant on one customer, or incur crushing debts to service big accounts that suddenly go somewhere else."
Myth #4: If It's Such a Good Idea, Somebody Would Have Thought of It Already
This one has always driven me nuts. I am sure that there were people 100 years ago saying the same thing. When I was a junior in college, I did an internship with a major consumer goods company (the same one that I was an engineer for after college for a year). After about a week of working there I came up with an idea for a device to improve product testing. It would solve a problem that they badly needed solved, but had never been able to figure out an effective way to do so. My idea got some backing from a few key people within the organization so another intern and I were given a $10,000 budget to build the thing. Before beginning, we were asked to consult with the "expert" mechanical engineer for design suggestions. He didn't think it was possible to do what we wanted to do, and then told us that "most of the good ideas have already been thought of." I couldn't believe that someone with his intelligence would say something like that. It drove me nuts. We successfully built that device and I vowed to never think like that.
Myth #5: You Can't Start a Business Without a Lot of Money
I love this one too. People are focused on nice offices and secretaries and company cars. I think you are BETTER off without a lot of funding. Focus on what you need, not what you'd like and continue to run your business this way as you grow. It will establish the shrewdness necessary to run a successful business. Many businesses operate on small margins and can't afford to spend without regard, so why start like that?
According to the article, "the average entrepreneur starting a one-person business plans to get underway with about $6,000, according to a 2003 SBA study."
Most internet entrepreneurs I know started with even less. Do you know how much I started SportsLizard.com with? $3,000. And that included this kick a** computer, not to mention there were things in that 3k that I didn't NEED. If I was starting a similar business today (sans the computer), I know I could do it for under $500.
Like I said, this was a GREAT article. Don't let any of these myths stop you.
posted by Adam McFarland at
3/25/2006 06:16:00 PM
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