[This post is part of a series on â€œMental models and beliefs: an exercise to identify yours.â€ If you donâ€™t see a Table of Contents to the left, click here to view the series, where youâ€™ll get more value than reading just this post.]
Do you think about starting a company? Or something else entrepreneurial, like starting and leading a project where you work, a community-based project, or the like?
Do you also hold yourself back? Do you fear it might not go well? Or worry you’re not doing it right? Or feel like you should prepare more for it?
Today I’ll cover four discouraging myths about entrepreneurship and four encouraging beliefs that counter them. Having started a business out of school, presenting on entrepreneurship a lot, and having gone to business school, I talk to a lot of people who want to start businesses. I’m also in the process of starting a new project now, so entrepreneurship is on my mind. Once you’ve started a successful business, you see how much easier and accessible doing so is than people expect.
Surprisingly few of the people who say they want to start business do. I ask many people why they don’t if they say they do.
The four most common reasons people give me for not starting business are
- You need a great idea to start a business.
- Working for an established company helps prepare you for starting a venture.
- I should make some more money before starting my venture.
- Starting a venture is riskier than working at an established firm.
You can see why these beliefs would delay starting a business in favor of just thinking about doing it and working longer at an established firm.
These beliefs could stop anyone from starting a business. Many people use such beliefs to delay starting, believing they’ll start it later, partly training themselves to delay again.
Four models to counter four discouraging entrepreneurship myths
Belief 1: People don’t come up with great ideas on their own. They evolve from okay ideas interacting with the market.
Take any great idea on the market. However great it seems, its creator almost certainly first came up with a lesser idea and only improved it by taking it to market. The improvements may come from suggestions from investors, business partners, friends, manufacturers, or other partners. They may come from comparing with the competition. I suspect the biggest changes come from how buyers respond.
I’m willing to bet not one of the top business ideas in the market, by whatever ranking you want, started as the idea it is today, but rather as a decent idea. I also bet many of the improvements came from some form of listening to the market.
Belief 1a: An okay idea and the abilities to listen to the market and adapt quickly produces a great idea.
Strategy 1: Develop good ideas, take them to market, and learn to adapt quickly.
Belief 2: Running a business is the best way to learn skills to run a business.
Sure, working at an established company helps you learn to run a business, relative to sitting at home doing nothing. But relative to actually running a business, working at an established company holds you back.
Most people don’t marry their high school sweethearts and for most people who want to run businesses, the first one isn’t the big successful one. You don’t realize it at the time, but the early experiences end up teaching you for the later ones.
Belief 2a: The earlier you start your first business, the sooner you’ll succeed.
Yes, that means you may have a business failure or two along the way. Just like Babe Ruth struck out a lot and breaking up with partners led to deeper future relationships.
Strategy 2: View your early businesses as practices. Start small.
Sell lemonade if you want to. You’ll learn sales, accounting, manufacturing, and many parts of running a company. You’ll be doing it yourself.
Belief 3: You can start a company with other people’s money and you can make money while starting your company.
Many companies start with outside investment. If you can show your business will profit, you can show that you can share profits with an investor, meaning you can get investment in proportion to the profits you can share. If you can’t show you’ll profit you’ll have to keep working on your idea and business plan until you do.
Demonstrating your business will profit means creating a business plan with believable financials. That takes time and attention, but teaches you about the business, forces you to know and challenge your assumptions, helps you foresee potential problems, and helps in many other ways.
A business plan doesn’t need to take a long time to write. If writing it needs a lot of research and problem-solving, it likely means your business needed that research and problem-solving, not the plan itself, and writing the plan only revealed that need.
Strategy 3: Write a business plan strong enough to withstand investors’ scrutiny. Try seeking investment even if you don’t need it.
On another note, you don’t have to quit your old job to start your new venture. Or you can work part-time while doing it. Many companies’ early stages don’t have enough work to require your full time.
Belief 4: A founder can reduce their personal risk as much as desired
Many people consider starting a business risky. They also know how rewarding it can be, emotionally from running their own business and financially. In business you can reduce risk by sacrificing reward. In a new venture you can do this by selling shares in the company.
You can also look for ways to cut costs, get early payments from buyers, and other strategies. You can almost always reduce your risk.
On a personal note, I suggest that if you dream of starting a business, you take a bigger risk in your life not pursuing your dreams than by maintaining a stable income. And I haven’t seen working at large, established companies as that stable for the past few decades. They seem to let people go, often with less warning than a business owner would have running their business.
When I use these beliefs
I use these beliefs when I consider starting a new venture, which I’m doing now. I think my idea is decent, but I know it will have to improve. I’ve been marketing the idea already and making a little money from it — not enough to pay my bills, but enough to get a sense of how the business will run and see what customers are willing to pay. I can do that without risking any of my money yet. I’m spending time on it, but I love what I do, so I don’t consider that a loss. Regarding risk, I’m finding other people to work with to divide the work and reward.
What these beliefs replace
These beliefs replace the myths that hold many people back with productive steps to start companies.
Where these beliefs lead
These beliefs lead to early, low-cost steps to start companies. Big steps come later, but they’ll be smaller after doing these early steps. Besides, early steps are still the steps of starting a business.
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