In this lesson, we will aim at busting some of the common myths in the entrepreneurial journey. These are myths and common questions that come out of the mind of a new entrepreneur which you will appreciate more because these questions cannot be answered by anyone else for you.
I always have to raise funding for my startup. It is mandatory to approach investors with a pitch deck and pitch to them as a first step?
The answer is not necessary. If you are starting something on your own and have the appetite to fund for yourselves from family and friends, definitely go for it. It will give you all the freedom to make your own decisions and create a good company culture.
I have to invest heavily in marketing, otherwise my startup will fail.
This is not at all true. It definitely is a trap if you don’t judge the action and its outcome properly and start putting in money. There are several examples where the companies invested heavily on Marketing blindly and lost the battle. Exercise caution before investing in marketing. Some calculated risk is necessary to put your brand out there and for people to know. There should be a clear marketing strategy in place which includes budgeting aspects too.
To start my business I need a lot of working capital.
Gone were the days when we always thought business needed a lot of investment and it was only for those people that had the bank balance or ancestral properties who can multiply their income/assets or take the risk of starting their own business. With the advent of the internet, we could do things we never thought of. You can start a business with just zero investment too. For example, you can start your writing services company by showcasing your writing talent as a freelancer in the beginning. You can promote your work through blogs, youtube, social media etc. Once there is trust you can start your own brand. Likewise you can start a media company, photo studio etc with minimum investment. You just need talent or skill to gain credibility in the beginning and after that anything is possible.
I need to use a lot of new technology to scale my company.
Not necessary at all. There are a lot of companies that stood as examples and role models who just created a prototype or Minimum Viable Product(MVP) like Groupon, Zappos, etc. It’s always a smart idea to go lean and not spend too much until the idea is tested in the market for grabbing customers.
I need to spend at least 6 months in market research
Not necessary. Market research never ends. You continuously learn the market needs, trends and evolve as you grow in your business. However, it is very very important to conduct market research before you start a company. Most startups fail because of this one reason that they don’t test the market enough before launching their full fledged product. In a country like India, the market is so diverse with so many socio-economic statuses that one particular area may not work for another area which is just 100kms away. It is just how the demographic is and you need to be accounting for this drastic difference in the market based on the demographic of the country or state or region.
My risk is lower if I am starting a company with an idea that already exists but just incrementally solve the problem.
Definitely not true in all cases. In some cases it could turn out in your favor which could be because of a small gap you identified in your competitor and closed that gap which also is a huge need in the market. Since you don’t reinvent the wheel for an incremental product, you don’t need to exhaust too many resources and thus your investment of time and money may come down which in turn will reduce your risk. However, you need to research enough to find your niche market for your incremental business idea.
I have to look at short term gains and measure the success of the company
It is a common mistake that most companies unknowingly make and suddenly collapse. They grow very well and scale fast too. But the mistake they make is measure the short term results and assume that the results are going to be twice or thrice or ten fold higher as they progress. Several factors can come into play year on year or even quarter by quarter. There could be a market recession, there could be a shift in spending, there could be a shift in mindset, there could be a shift in demographic or your quality might come down because of too many customers at once. Anything can happen. So, you have to be happy that there are gains in the short term but again you have to think critically before you attach those results to the long term scenario.
I started my own business, that means I will have more freedom and time.
The opposite is true in fact. You will have to spend more time and do harder and smarter work as you are the designer of your idea. Every single convergence, direction, action has to be taken by you with so much homework, diligence and commitment. A small simple mistake can lead to a bigger challenge or a failure sometimes. For example, a wrong hire in the leadership team can lead to a disaster, which we have seen in many companies. So, even if your company grows really well, you will still have to be fully involved in its day to day operations to maintain quality and sustainability. Amazon founder, Jeff Bezos still has the mindset of “Day one” in their company. That means every decision they make, they put so much diligence as if it is just the first day of their operations.
I have a great idea which is very unique and I will definitely be successful.
This is not true. Just because you have a unique idea does not bring you traction or success for sure. As a matter of fact, this can bring more challenges because the users or your clients are not used to this concept and they may not buy into this immediately. To get traction, you need to prove that the concept works and build that credibility. In order to achieve the success you desire, you need to have a solid strategy in place and follow through with consistency.
I am an MBA graduate and so I can become an entrepreneur. OR I am not an MBA graduate or someone who did not take entrepreneurship in college, then I cannot start my own company.
If you are an MBA graduate from a top notch university, you may be a little ahead in your knowledge on how to take certain steps. However, it is not guaranteed that you will be able to do everything and be successful. Especially in this digital era, anyone can learn any skill at any time if they have the will and commitment towards learning it. At the same time the contrary is not true either. Just because you were not a business graduate, it does not mean you cannot start your own business. So, to run a startup you need life skills which are problem solving, critical thinking, decision making, leadership, finance, marketing, business, communication, entrepreneurship skills more so than your college degree or qualification whether it is an MBA or something else.