7 big myths about starting and growing your own business
“So what’s your unique selling point? Why are you different, better? How can I know that you’re going to carry on doing this stuff?”
I did a quick inventory in my head of our strengths. “Erm. We’re good at hanging on to clients?”
Ok, it wasn’t exactly the strongest answer, given the circumstances.
“Come on guys,” the suitor continued. “Are you doing things differently? Are you selling services that others aren’t?”
The truth was that there wasn’t a single thing we could hang our hat on. We weren’t first in the market. We offered the same service that plenty of others did. We hadn’t come up with a new way of doing things.
And that got me thinking. If we didn’t have these ‘winning’ business ingredients that experts considered essential for success, how come we were doing well?
It took me a while to work out that perhaps these ingredients weren’t that essential. Maybe they were business myths that we’d come to accept as gospel.
And that got me thinking about all the other advice I’d read about building a business. I realised there were lots of things that just weren’t correct. My experience had proved them wrong. Often though, this advice can make building a business seem overly daunting and that’s a bad thing. So here’s a list of the biggest myths I’ve found about building a business. Hopefully, with these myths busted, you’ll be more confident about your chances of creating a successful company.
Myth 1 – You need to be first with a new idea
Lots of business books and blogs talk about ‘first mover advantage’. The preconception is that if you are first out of the blocks, you get a head start. Your business is alive and thriving before others realise what you’re doing.
By the time others try to copy what you’ve done, your brand is established and your market share cannot be broken. Think Microsoft.
Nonsense. First mover disadvantage, more like.
Trailblazers make mistakes because there’s no template to follow, no experience to draw on. They spend too much on R&D, too long finding out how to do something rather than actually doing it.
[Tweet “Trailblazers make mistakes because there’s no template to follow, no experience to draw on.”]
By contrast, followers get to see where the first mover went wrong, and can learn from their mistakes. They also get to improve on the original idea. They’re a lot more efficient.
For every first mover who ends up winning, there are ten that end up as an also ran.
The first widely adopted social network was Myspace. The second was Facebook.
The first popular search engine was Yahoo. The second was Google.
So you don’t need to wrack your brains coming up with a completely new idea. Far better to be inspired by an idea that’s out there and try and make it better, or just do it in a new location.
Myth 2 – Running your own business means being your own boss
Back in 2012 I left the business I’d spend 12 years growing in order to join a corporate one. My friends were aghast.
“Why would you do that, you’re your own boss? Now you’ll have to answer to someone else! How will you stand it,” they asked.
Well the truth is, whether you work for someone else or you run your own business, you always have a boss. Somebody you need to answer to.
If you’re working for someone else then it’s obvious whom you report to. There’s a direct line you need to toe.
But if you run your own business you work for someone else too. If it’s a service business then your boss is your client. It’s their needs you have to fulfill. They’re the people you try to make happy.
And if its not clients then its often shareholders or even the bank. There’s always someone you need to explain yourself to.
So don’t start your own business because you think it you won’t have to answer to anyone. You always will. It’s just the ‘who’ that changes.
Myth 3 – Your products need to be the best on the market
Back when I studied geography there was a concept called the ‘economic man’. This character would make balanced, objective decisions about where to live, what job to take and what products to buy.
The theory was that ‘economic’ man would always make rational choices and logical decisions based on the information available.
The problem with ‘economic man’ is that you can’t find any evidence for him in the real world.
We often don’t live near work, friends or family. We don’t choose the job that gives the best financial and satisfaction pay off.
The reason we don’t follow the model are that we all have feelings and perceptions. How we feel about a product drives us more than an objective evaluation. That’s why companies invest in their brand.
On top of that, we rarely have enough knowledge to make an objective decision. As consumers we don’t sit down with a spreadsheet and check out every feature and every price. We’ve remember a few, and the rest goes on gut feeling.
[Tweet “Having a great product is not a critical success factor, contrary to what many have written. “]
Having a great product is not a critical success factor, as revealed in this article. It helps of course, but it’s not the be-all and end-all.
So if you’re selling a product that is beaten by your peers, don’t give up. There are other things you can focus on to level the playing field, and even tip the balance in your favour.
Myth 4 – You need money to start
“I would love to run my own business. But I just don’t have the money”. That’s a complaint I’ve heard dozens of times from friends and colleagues.
Newsflash: You don’t need money to start your own business.
Now let’s be clear. You can’t take out a lease on a new shop premises, or buy three months’ worth of stock, or hire a developer without a bit of cash in the bank.
But for every business you need some backing to start, there are ten that require almost nothing.
Take one of the businesses I grew – Barracuda, a digital advertising agency. Assuming you’ve got a laptop, the only real costs are your time. So the question of ‘how much money do I need’ boils down to how long you need to live without an income.
Even if you need to invest in marketing, there’s plenty of stuff you can do that won’t break the bank.
For client focused service businesses, you should try to lay the groundwork before your business idea becomes your day job. That way you can win new business and generate an income in the shortest possible time.
Nevertheless, you need to expect at least a short window whilst your income falls to zero, so expect some belt tightening. There has to be some pain before you gain.
So if you don’t have any capital to get your idea off the ground, consider a business idea that doesn’t need any.
Myth 5 – You need to do everything yourself
If you don’t have much cash, or great contacts, then you might be tempted to do every job yourself. That might range from designing your website, to marketing, to product development and customer service. It’s certainly the trap that I’ve often fallen into.
This comes from a twin desire: to preserve what money you have, and a belief that you need to know everything about everything in your business.
But this is a huge myth, and here’s why.
[Tweet “The biggest source of capital in your business is your time.”]
The biggest source of capital in your business is your time. And there’s only a finite amount of that.
You need to make a decision about how best to spend that capital.
It might be that poring over a logo; a presentation or some photography is a poor return for your investment. You might be better off spending it looking after customers or employees.
So a key thing to decide right at the start is: what am I best at? Where does my time deliver the best value for my new business? Understand that, and be laser-focused on using your time capital wisely.
Myth 6 – You need to make lots of money
This might sound a bit weird. But hear me out.
What I mean by this one is that, yes, of course you need to make money, but you need to not spend it too.
Who here remembers the dotcom bubble of 2000? Back then internet companies were raising cash, floating on stock markets and achieving crazy valuations. But it all went wrong when investors lost the belief that their investment would ever yield a return.
The Internet was in its infancy back then, and many of the ideas were immature. Investors were caught up in a gold rush mentality that ultimately floored lots of credible businesses.
There were two main problems with the Internet businesses that went bust at that time. One was that they didn’t make much revenue. But the biggest was that they spent every penny as fast as they possibly could.
[Tweet “Running a business isn’t about how much money you make. It’s about how much money you spend. “]
Starting a business at this time I received my most valuable advice:
It’s not about how much money you make. It’s about how much money you spend. Consider every purchase. Watch every penny. Weigh every decision.
Myth 7 – It’s all about winning customers
Another lesson I learned in the early days was about customers.
When we launched I had the belief that as soon as we landed three or four big clients that success would surely follow. It was all about getting the pitch right, getting the customer in the door.
But a year in, having lost our biggest client I realised an important lesson. It’s not about winning the customer. It’s about keeping them.
The most successful businesses are those with the lowest customer churn. It’s much cheaper to retain a customer than win a new one. And satisfied customers are far more likely to recommend, keeping the sales pipeline flowing.
So try to win as many customers and clients as you can. But know that signing a new one is just the start of the journey. Keeping them is what really counts.
Well if they’re all myths, what should you believe?
Although I’ve disagreed with many a textbook chapter heading here, I reckon there’s a couple that hold true.
1 – You don’t need the best product to win, but you need your product to feel and look good to your customers. It’s about customer perception, and how using your product creates the right brand experience for them.
2 – You can’t build a business without good customer service. Happy customers stay. Happy customers should be your biggest source of new business.
Think I’ve got any of this wrong? Have some business myths of your own? Please leave a comment below.