There are many misconceptions about who entrepreneurs are and how they function. Jeffrey Timmons, author of New Venture Creation, cites the following fifteen myths and the reality behind them:
Myth 1: Entrepreneurs are born, not made.
Reality: While entrepreneurs are born with certain native intelligence, a flair for creativity, and energy, these talents by themselves are like unmolded clay or an unpainted canvas. The making of an entrepreneur occurs by accumulating the relevant skills, knowledge, experiences, and contacts over a period of years. It includes large doses of self-development. The creative capacity to envision and pursue an opportunity is a direct descendant of at least ten or more years of experience.
Myth 2: Anyone can start a business.
Reality: Entrepreneurs who recognize the difference between an idea and an opportunity, and who can visualize potential, start businesses that have a better chance of succeeding. Luck, if involved, requires good preparation. Starting the business is often the easiest part. Surviving, sustaining, and building a venture so its founders can realize the reward is often the hardest part. Perhaps only 5% to 10% of all new businesses that survive five or more years produce an eventual capital gain for the founders.
Myth 3: Entrepreneurs are gamblers.
Reality: Successful entrepreneurs take carefully calculated risks. They try to influence the odds, often by getting others to share risk with them and by avoiding or minimizing risks. They often slice the risk into smaller, quite digestible pieces. Only then do they commit the time or resources to determine if that piece will work. They do not deliberately seek to take more risk or unnecessary risk. However, they do not shy away from unavoidable risk.
Myth 4: Entrepreneurs want the whole show to themselves.
Reality: Owning and running the whole show effectively puts a ceiling on growth. Solo entrepreneurs usually make a living. It is extremely difficult to grow a higher potential venture by working single-handedly. Higher potential entrepreneurs build a team, an organization, and a company. Remember that 100% of nothing is nothing. Rather than taking a large piece of the pie, work to make the pie bigger.
Myth 5: Entrepreneurs are their own bosses and completely independent.
Reality: Entrepreneurs are far from independent. They have to serve many masters and constituencies, including partners, investors, customers, suppliers, creditors, employees, families, and those involved in social and community obligations. Entrepreneurs, however, can make free choices of whether and when they care to respond. Moreover, it is difficult and rare to single-handedly build a business beyond $1 million to $2 million in sales.
Myth 6: Entrepreneurs work longer and harder than managers in big companies.
Reality: There is no evidence that all entrepreneurs work more than their corporate counterparts. Some do and some do not. Working long days and working on weekends are typical for all successful business people.
Myth 7: Entrepreneurs experience a great deal of stress and pay a high price.
Reality: Being an entrepreneur is stressful and demanding. However, there is no evidence that it is any more stressful than numerous other highly demanding professional roles. Entrepreneurs find their jobs very satisfying. They have a high sense of accomplishment, are healthier, and are much less likely to want to retire than those who work for others. Three times as many entrepreneurs as corporate managers say they never plan to retire because they enjoy their work so much.
Myth 8: Starting a business is risky and often ends in failure.
Reality: Talented and experienced entrepreneurs pursue attractive opportunities and attract the right people and the necessary financial and other resources to make the venture work. Businesses fail, but true entrepreneurs do not. Failure is often the fire that tempers the steel of an entrepreneur’s learning experience and street savvy.
Myth 9: Money is the most important start-up ingredient.
Reality: If the other pieces and talents are there, the money will follow. However, it does not follow that an entrepreneur will succeed if he or she has enough money. Money will definitely not guarantee success. Nevertheless, ensure you have sufficient funds or access to funds to survive the start-up phase. Money is to the entrepreneur what the paint and brush are to the artist -- an inert tool that, in the right hands, can create marvels. Money is also a way of keeping score, rather than just an end in itself. Entrepreneurs thrive on the thrill of the chase. Even after a true entrepreneur has made substantial money, he or she will often work incessantly on a new vision to build another company.
Myth 10: Entrepreneurs should be young and energetic.
Reality: While these qualities may help, age is no barrier. The average age of entrepreneurs starting high potential businesses is in the mid-30’s. There are also many examples of entrepreneurs starting businesses in their 60’s. What is critical is possessing the relevant knowledge, experience, and contacts that greatly facilitate recognizing and pursuing an opportunity.
Myth 11: The quest for the almighty dollar is the sole motivation for entrepreneurs.
Reality: Entrepreneurs seeking high potential ventures are driven more by building enterprises and realizing long-term capital gains than by instant gratification through high salaries and perks. A sense of personal achievement and accomplishment, feeling in control of their own destiny, and realizing their vision and dreams are other powerful motivators. Entrepreneurs view money as a tool and a way of keeping score.
Myth 12: Entrepreneurs seek power and control over others.
Reality: The quest for responsibility and achievement, rather than power for its own sake, drives successful entrepreneurs. They thrive on a sense of accomplishment and outperforming the competition, rather than a personal need for power expressed by dominating and controlling others. By virtue of their accomplishments, they may be powerful and influential, but these are more the by-products of the entrepreneurial process than a driving force behind it.
Myth 13: If an entrepreneur is talented, success will happen in one or two years.
Reality: An old maxim among venture capitalists says it all: The lemons ripen in two or three years, but the pearls take seven or eight. A new business rarely establishes itself in less than three or four years.
Myth 14: Any entrepreneur with a good idea can raise venture capital.
Reality: Venture capitalists fund only 1% to 3% of the ideas submitted to them.
Myth 15: If an entrepreneur has enough start-up capital, he or she can’t miss.
Reality: The opposite is often true. Too much money at the outset often creates euphoria and a spoiled-child syndrome. The accompanying lack of discipline and impulsive spending habits often lead to serious problems and failure.
Excerpted from Business Start-Up Guide © 2002, Tycoon Publishing