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’s success. According to some estimates, over 90% of startups fail. The reasons vary, but a major factor that 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 incredibly crucial that you know about the 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 has. Successful startups are based on ideas that have been refined, defined and selected from several 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.
You need to constantly brainstorm and explore other avenues before picking the idea that appeals the most to you. Simply speaking, you need to have multiple ideas to choose from. Max Levchin, co-founder and ex-CEO of PayPal tried his luck with four failed business ideas before he came across PayPal.
Securing Venture Capital Guarantees Success
Financing a startup often proves to be the breaking point for most budding entrepreneurs. They lose the motivation to keep trying if they can’t secure the venture capital they need to get started. At the same time, obtaining 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 crowdfunding and angel investors.
Kickstarter.com is a wonderful platform for crowdfunding, with successful projects including the Pebble E-Paper Watch, for which over $10 million was 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 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 had to work extremely hard for several years before they reached a position where they could enjoy the fruits of their labour (you need to look at the Facebook market value). For some reason, a lot of glamour is attached to being an entrepreneur, which can 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 ideas. 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 forward (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.
A combination of your passion, product quality, and entrepreneurial skills will take your business to success, not just passion alone. Airbnb.com is a perfect example of this. The website’s founders, who launched in 2008, could not pay their rent, so they turned their loft into a makeshift Bed and breakfast. As of now, they have raised over $119 million in venture capital and direct people to 250,000 listings for BnB, among other lodgings, in 192 countries.
Your Product Will Sell
New entrepreneurs assume that just because they think their product is excellent, people will buy it. The truth is that so many businesses in the market offer similar products. This makes competing against them extremely difficult.
Not only do you have to ensure your product is of high quality, but you also have to do your research to check if there is a market for it. You also have to put in 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 is that just because one of your partners has the business aptitude and understanding to get the startup up and running, you don’t need to have any. 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 and 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.