7 Myths and Misconceptions about Startups
“You need three things to create a successful startup: to start with good people, to make something customers actually want, and to spend as little money as possible.” – Paul Graham
Paul Graham sums up the three crucial things you need to do to ensure your startup is successful. According to some estimates, over 90% of startups fail. The reasons vary, but a major factor which can hinder your success is the myths and misconceptions circulating about startups.
So much has been written, said and discussed regarding startup businesses making it difficult for the average Joe to filter the information and infer only what matters. This is why it is extremely crucial that you know about the said myths and misconceptions, so that they don’t deter you from your goal. Here are some of the most common ones you will come across.
The First Idea is the Best
Every startup stems from an idea, but rarely is that idea the first one the entrepreneur had. Successful startups are based on ideas that have been refined, defined and selected from a number of options. Therefore, it is a myth that the first idea that comes to your mind while setting up a business is the best one you will get.
What you need to do is constantly brainstorm and explore other avenues before picking the idea which appeals the most to you. Simply speaking, you need to have more than one idea to choose from. Max Levchin, co-founder and ex-CEO of PayPal, tried his luck with four business ideas that failed before he came across PayPal.
Securing Venture Capital Guarantees Success
Financing a startup often proves to be the breaking point for most budding entrepreneurs. If they aren’t able to secure the venture capital they need to get started, they lose the motivation to keep trying. At the same time, securing venture capital does not guarantee success. Though it makes life easier for you since you won’t need to worry about getting the money to execute your business idea, there are other equally effective ways to fund a startup, including crowd funding and angel investors.
Kickstarter.com is a wonderful platform to secure crowdfunding, with successful projects including the Pebble E-Paper Watch, for which over $10 million were raised. A drive to fund a new game from Double Fine Productions also secured $3 million. Securing the money won’t guarantee success, but how you spend the money is what will make the difference.
Being an Entrepreneur Is Easy
Perhaps the biggest misconception regarding startups is that running a business is a piece of cake. You look at people like Mark Zuckerberg and assume that all new entrepreneurs can enjoy the good life, make loads of money and be stress-free. However, reality is the opposite.
People like Zuckerberg have had to work extremely hard for a number of years before they reached a position where they can enjoy the fruits of their labor (you just need look at the Facebook market value). For some reason, there is a lot of glamour attached to being an entrepreneur which can prove to be misleading for any newbie.
Passion Alone Is Enough
Nearly every piece of writing regarding startups mentions that entrepreneurs should be passionate about their business idea. However, this has led to the myth that passion is enough. Though without passion you will not have the required motivation or desire to drive your business forwards (especially during the tough times), being overly passionate could cloud your judgment regarding your business, causing you to push problems under the carpet and overlook weaknesses that can ultimately prove to be fatal for your startup.
It is a combination of your passion, product quality and entrepreneurial skills that take your business to success, not passion alone. Airbnb.com is a perfect example of this. The founders of the website, which launched in 2008, could not pay their rent. So, they turned their loft into a makeshift Bed & Breakfast. As of now, they have raised over $119 million in venture capital and direct people to 250,000 listings for BnB’s among other lodgings in 192 countries.
Your Product Will Sell
New entrepreneurs assume that just because they think their product is great, people will buy it. The truth is that there are so many businesses in the market that offer similar products. This makes competing against them extremely difficult.
Not only do you have to make sure your product is of high quality, but also do your research to check if there is a market for it or not. Also, you have to put into place marketing and sales channels that will ensure that your product reaches the widest possible audience.
You Can Count On Your Partner
This one is for the entrepreneurs working in a team or as a duo. Myth has it that just because one of your partners has the business aptitude and acumen to get the startup up and running you don’t need to have any at all. This is a big mistake that can prove to be costly in the long run.
You need to know at least the ropes of running a startup if not the ins and outs of it. This way, you will be able to contribute towards the planning and strategizing of the business as well as take an active part in running it even if your focus is on something specific.
You Don’t Need a Business Plan
This one is a slippery slope. Startups like Rent the Runway began without a formal business plan. The entrepreneurs there consider a business plan to be ‘a waste of time’. Still, it is an exception rather than the rule. Would you undertake a road trip or a trek without a map or GPS locator in hand? The answer is, quite simply, no.
Starting a business without a business plan is like traveling without directions or anyone guiding you. The risk of failure in this case is high and the chance that you will be able to achieve your goals is minimal. There is no doubt that being adventurous and exploring the horizons is fun, but there is a limit to what you can achieve doing that. Sooner or later, you will have to find the right track and get on it, which is not possible without a business plan.
So, these are some of the most common myths and misconceptions about startups you are likely to come across. It is better to know about them then enter unchartered territories believing something that is wrong. So, don’t let the ones you found out deter you from your goal and always check to see if others are true or not with a little research.
What has your experience been so far? Have you come across any of these problems?
I found this post very useful. Thanks for this post.
Very useful.
Many of life’s failures are people who did not realize how close they were to success when they gave up.
(Thomas A. Edison)
Never give up! Learn from failure. Thanks for this post.