Don’t let these myths stop you from embarking on your entrepreneurial journey
Many people dream of launching their startup, but misinformation and fear keep some from following through. According to Gallop’s research, about 50 percent of new US companies fail in their first five years. Five years of work, money and hope — and it all just disappears, five times out of 10.
The research identifies that the success of a new business has a lot to do with the person starting that business. And with so many companies failing, there’s a lot of advice out there targeted for budding entrepreneurs. Don’t accept every piece of information you read online as gospel! Before you dive into the world of entrepreneurship, debunk some of the common myths to build a thriving startup.
Securing venture capital guarantees success
Funding is one of the essential elements responsible for a startup’s growth. Startups seeking funding often take the venture capital route believing that it is a pioneer to success. However, various reports and studies suggest that venture capital funding is not a prerequisite in early-stage startups. Venture capital, in simple terms, means an essential funding funding source for early-stage or emerging startups that exhibit high growth potential in exchange for an equity stake.
According to research conducted by Harvard Business School senior lecturer Shikhar Ghosh, about 75 percent of startups fail to return investors’ capital. “Venture-backed companies tend to fail following their fourth years — after investors stop injecting more capital,” says Ghosh. For entrepreneurs looking for alternative means of growing their business, bootstrapping, angel funding and a business loan could be the best options.
One idea is all it takes
The biggest myth about the startup world is that all you need is a great idea. In reality, other crucial factors like cash flow, product and business model define your startup’s success. If you neglect a single aspect, you have a higher chance of failing. Always remember that a startup does not run merely on a great idea. Market timing also matters. Reid Garrett Hoffman, the former Executive Chairman and co-founder of Linkedin, believes his first venture SocialNet.com failed, because it was way ahead of its time and people were not ready for it.
Founders have no bosses
It is time to get rid of the notion that founders work without bosses. Unfortunately, this is not the case. A founder is always answerable to all the stakeholders of the business. The customers are assessing every move and decision. You’re obligated to satisfy your customers’ needs to scale your business to new heights. The same thing applies when you need external funding from investors. If your startup has received funding, you will have to listen and answer to your investors.
Entrepreneurship is all about risk-taking
Many people believe that risk-taking ability is essential to succeed in a business. Well, the truth is that not all risk-taking entrepreneurs are successful. In his book, Originals: How non-conformists move the world, Psychologist Adam Grant cites a study that shows entrepreneurs are more risk-averse than the general population. “If you’re risk-averse and have some doubts about the feasibility of your ideas, it’s likely that your business will be built to last. If you’re a freewheeling gambler, your startup is far more fragile,” says Grant.
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