I was asked about common myths of business ownership that people still believe in 2019. I came up with a list of 10 common myths. Do you agree?
- That the business idea matters. As if ownership ought to depend on having the big idea. As if people steal ideas, or that’s even possible, much less a problem. As if somebody could sell an idea without doing any work. As if any idea is original. As if anybody owns an idea.
- That being first is important. Being better matters. Being different matters. But the second and third and nth market entries quite often do better than the first. Apple wasn’t first, and neither was Google, or Facebook, or Amazon.
- That passion and persistence make all the difference. False. They can get a business through hard times if all the main factors are right. It’s dumb to throw your life down the drain of a doomed business; and throwing your life down with it won’t save it, either, unless the main factors work.
- That new businesses are supposed to use other people’s money. As if getting funded is an end in itself, the big win. Only a tiny minority of new businesses land outside money to spend. They are the exception, not the rule. Banks aren’t supposed to take risks on new businesses. Investors are looking for the rare big wins, not normal good businesses.
- That business owners are their own bosses. Their customers are their bosses. Their employees are in many ways their bosses.
- That it’s good to have the lowest price. Low price only generates high volume for lumps of coal and similar commodities. In the real world, a low price strategy is extremely capital intensive. Real businesses are much better off with high price and high value.
- That profits guarantee cash. Maybe on the long run, sure; but not necessarily in the short run, and meanwhile, businesses can die. Fast growth can mean cash stuck in inventory and accounts receivable. It’s great if you manage the cash.
- That business owners are risk seekers. Some are. Most aren’t. They deal with risk because something else is more important.
- That entrepreneurship and education are opposites. Fat chance. Ideally it’s not school or business, but school and business, or school and then business. School doesn’t teach how to do business; it teaches how to find and digest information, how to get things done to meet deadlines, how to do assigned tasks, how to read, how to understand, and how to think.
- That all business owners work extremely long hours. Business owners often do, employees sometimes do but shouldn’t have to. Smart leaders realize productivity fades with too much time and lack of a life outside of the job.
(This was first posted as my answer to “What are some common business myths that people still believe in 2019.”)