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What do you need to start your own business?
For many would-be entrepreneurs, it’s a question that hovers like a cloud overhead, intimidating and ominous.
Answering it means facing fears — fears around money, experience or knowledge. The worst are fears of the unknown. What if you never learn everything necessary to grow a successful business? What if a force out of your control kicks your business to the curb?
Don’t let these myths hold you back!
What if succumbing to these myths about entrepreneurship held you back from doing something truly remarkable?
For those feeling nervous, here’s the good news: You’re likely more of an expert than you know. And what you don’t know yet, you certainly will soon.
If you’ve been letting fear influence your decision to become an entrepreneur, here are three myths you can put to rest that could be standing between you and your dreams:
Myth 1: You need a business degree to own your own business
This is absolutely false, and you don’t have to take our word for it.
Recently, TSheets by QuickBooks surveyed 1,067 U.S. business owners about their business background. They found that 46% of self-described small business owners said they didn’t have a business degree. In fact, before starting their own business, respondents cited a variety of experiences. Some entrepreneurs were originally even stay-at-home parents or unemployed.
Despite their differences in background and education, the majority of small business owners said they still felt “very confident” in their abilities. Just 5% said they didn’t feel confident as business owners.
A Harvard MBA isn’t the only answer
Feeling like you need a diploma to be successful is a tough impression to shake. But if jumping into an MBA isn’t feasible, other options might help boost your confidence. One is to get your certificate in business administration, a program offered by many universities and community colleges for non-traditional students. And with more colleges and universities offering online courses, you can complete your courses from almost anywhere.
How to find a business mentor
Finding a business mentor is easier than you think. If you don’t have any successful entrepreneurs in your social circle, change social circles. Just kidding, one suggestion is to expand your network with an online platform like SCORE, a nonprofit resource partner of the U.S. Small Business Administration (SBA). SCORE’s mentors are volunteers who provide invaluable business advice for free.
For Canadians, Futrepreneur Canada is an outstanding mentorship organization that offers business advice, as well as support and encouragement. Plus, talking to a stranger can sometimes be easier than talking to a friend — even one you trust — particularly when the conversation turns to financials.
Myth 2: If the economy fails, you will too
This is a tough one. Among survey respondents, the economy was the 4th most popular response when asked about their top concerns as business owners. And with good reason!
Today’s generation of workers wasn’t just alive during the Great Recession, most felt its effects personally. Around 1.8 million small business owners were forced to exit the marketplace between December 2008 and December 2010.
Seeing themselves or someone they cared about lose their livelihood, it’s no wonder so many hesitate to jump into entrepreneurship today when rumors of another recession are on the rise.
Temper fear with facts
Let’s put that 1.8 million figure in perspective. Looking back, 45% of businesses that started in 2006 — two years before the Great Recession — survived their first five years. Of those started in 2011, 51% survived their next five years.
While the difference between 45% and 51% may not seem like much, it’s actually hundreds of thousands of businesses. It’s worth considering that there are over 30 million small businesses in the U.S. today and around 400,000 started every year. Not to mention that in Canada, there are over 100,000 new business opened every year.
Today, the U.S. Small Business Administration (SBA) says, “About half of all establishments survive five years or longer.” That’s not much different than the number of businesses that dealt with the latter years of the recession. In Canada, 63.3% of small businesses survive their first 5 years.
While recessions or other economic downturns are inevitable. Holding back for fear of a bad economy could be a mistake, especially when there are better options for weathering the storm.
There are ways to survive a recession
The SBA, for instance, has several recommendations for getting through an economic crisis, including managing your inventory carefully, monitoring cash flow, and building up capital reserves.
Canada’s BDC has its own suggestions to recession-proof your business, including growing your customer base, focusing on solid financial management, expanding internationally and offering new products or services.
To do that, though, you’ll need to invest in good backend systems. It might seem cheaper to manage all your new business needs and expenses on a DIY spreadsheet. But the truth is today’s cloud-based AI solutions have gone well beyond desktop office applications and will actually save you both time and money in the long run.
(Pro tip – Fees for business-related software are tax-deductible)
Myth 3: You can’t raise the money you’ll need for your business
How terrible is it that an empty bank account may be all that stands between you and your dreams? If you could only convince someone to lend you the cash you need.
Good news — there are tons of options for folks looking to get cash to start their own business. It all depends on how much legwork you’re willing to put in and how persistent you are in your endeavor.
Here are three options for raising money as an entrepreneur:
Angel investors: An angel investor is someone who provides financial backing to a small business, often with a one-time investment, though sometimes in the form of ongoing support. Angel investors often provide more favorable terms to small business owners, as their goal isn’t so much to make money off the deal as it is to see the business succeed. Like you, they are someone who believes in the business for what it is and what it can do.
While angel investors don’t have to know you personally to get attached to your cause, most are historically family members or friends. The main drawback of an angel investor who knows you personally; however, is that doing business with family and friends can get awkward. Drafting up a formal contract may help alleviate some of that awkwardness, at least until you’re able to pay back the investment.
Venture capitalists: If calling upon people you know doesn’t appeal, venture capitalists may be a better bet. But be warned — getting one to invest is going to be tough. In part, that’s because venture capitalists don’t generally get in on the ground floor. Instead, they’re the investors you call upon when you’re ready to commercialize a business you’ve already started.
Additionally, they’re looking for investment opportunities they see as earning massive returns, which means they’re more likely to support completely original ideas. Finally, be warned that venture capitalists aren’t investing for free. Ideally, most would like to see their returns in shares of the company, which means they not only want a piece of the profits. They may want a seat at the decision table as well.
Microloans: Not every small business needs hundreds of thousands of dollars to get started. For many, a cool $10K would be plenty. So how about getting a microloan? The SBA has a microloan program, specifically for small businesses. Entrepreneurs who qualify can get up to $50,000 for things like working capital, supplies, inventory, fixtures, furniture, machinery, or other equipment. Interest rates vary between 8% and 13%, and depending on the loan, entrepreneurs may be able to pay back the money over six years. For business owners who don’t qualify, many other microloan programs can help, particularly for those who’ve been in business a while and are simply looking for the capital they need to expand. In Canada, the BDC offers loans of up to $100,000 for qualified entrepreneurs.
To win big, you have to take big risks
Starting a new business is scary. So is growing an existing small business. But holding back could present the most frightening reality of all: a life lived with regret.
Before you write off the dreams that terrify you, take a second look at the myths about entrepreneurship that inspire those fears.
Like shadows in the dark, chances are good that first impressions are a lot scarier than what’s actually true, but what challenges remain are worth the fight.
As Bill Gates, a man who faced his own share of failure and success once said, “To win big, you sometimes have to take big risks.”