As someone who has owned over 30 different businesses in speciality retail, fast food and hospitality, here are some of the biggest myths that I have discovered in relation to owning a small business, especially in the early stages:
Myth 1: That owning a business means that you can work whenever you like.
- The truth is that you don’t own a business … it owns you. If it is right for the business to serve its customers 24/7, then it is up to you as the owner/manager to staff that need, even if it means staffing it yourself – which it usually does. It’s not uncommon for people that own their own business to commit 80–100 hours a week to its survival and success.
Myth 2: That you will make a fortune when you own your own business.
- Many employees look at what their boss charges their customers and thinks that they must be making a fortune. It’s only when they open their own business and see the vast number of ‘mouths that need to be fed’ (expenses) from the revenue received, that they realize that net profit margins are thin, bordering on non-existent.
Myth 3: That the feeling you enjoyed as a customer of the business will carry over to when you become the owner of the business.
- The truth is that the reason you enjoyed the pleasurable feeling as a customer of a business is because the owner of that business sacrificed their happiness/wants for yours. So when you own that business, you will need to sacrifice your happiness/wants for your customer’s benefit, negating any pleasurable feelings that you once held as a customer.
Myth 4: That owning your own business means that you can be your own boss and no longer answer to one.
- In some ways this is true in that as an owner of the business you no longer answer to a boss … it’s more likely that you will now answer to many bosses: customers for a start, then maybe your employees, your partners, your financiers, your suppliers, your landlords and government departments – just to mention a few of the bosses that you will need to answer to and not to forget the business’ ‘bottom line profits’.
Myth 5: That owning a business means that you can set your own salary
- The truth is that the survival of the business is more important than your own wants and desires. So if the business calls for it, then you as the owner will need to sacrifice your take from the business to ensure that the business has the ability to pay its bills and grow. Your salary comes after all other business demands and it will be much less than you anticipate at this point. Your income will ultimately depended on fickle customer decisions and economic forces that are mostly beyond your control.
Myth 6: You will be able to outsource and delegate everything.
- The truth is that some issues like managerial finance, pricing and recruitment can’t be outsourced if you are going to run a financially sustainable business and your profit margins will restrict you from engaging all the consultants and help that you will need. Also, many task just can’t be delegated to key staff and you will find that these tasks will fall to you to perform. Don’t be surprised if some of those tasks include cleaning the bathrooms and putting out the rubbish.
Myth 7: That the business will be financially successful from day 1.
- The truth is that very few business are profitable from day 1. Most businesses take a period of time to become profitable that can stretch from 3 months to 3 years. It’s not uncommon for say a restaurant to take up to 3 years to become profitable while a take-away food bar may only take 3 months. Either-way, if a business owner does not have sufficient working capital to cover the losses incurred until the business reaches profitability, then it will fail due to liquidity problems.
I know that the above myths are valid, because I believed each one of them to my own detriment during my 25 year career in starting and managing small businesses.