In his book, How to Start and Operate a Business: Winning the Entrepreneurial Game, which I published a number of years ago, author David Rye lists and debunks a number of these myths.
Myth No. 1: Entrepreneurs Are High Risk Takers
Entrepreneurs, Rye states, are often thought of in terms of the risk they assume. Even the dictionary describes an entrepreneur as one who assumes business risks. However, like all prudent businesspeople, entrepreneurs know that taking high risks is a gamble. Entrepreneurs are neither high nor low risk takers. They prefer situations in which they can influence the outcome, and they like challenges if they believe the odds are in their favor.
They seldom act until they have assessed all the risks associated with an endeavor, and they have an innate ability to make sense out of complexity. These are traits that carry them on to success where others fail.
Entrepreneurs generally seek the best risk/reward situation. Like most humans, they are often are a little hesitant to risk everything and take wild chances.
One way entrepreneurs can limit the risk they are exposed to is by choosing one of the best business ideas out there. Knowing which businesses to start and which to avoid is the first step towards success.
Many people, Rye says, believe that entrepreneurs possess innate, genetic talents. However, experts generally agree that most entrepreneurs were not born; they learned to become entrepreneurs. The recent proliferation of college and university courses on the subject supports this point. Entrepreneurship is currently being successfully taught.
Again, I agree with Rye. I can’t overemphasize the fact that almost anyone can be a successful entrepreneur. However, every aspiring entrepreneur should ask themselves these questions before committing to a business. Starting your own company is not an easy decision and you must understand that it will change your life in many ways.
Myth No. 3: Entrepreneurs Are Mainly Motivated to Get Rich
Any successful entrepreneur, argues Rye, will tell you that starting a business is not a get-rich-quick alternative. New businesses usually take from one to three years to turn a profit. In the meantime, you’re considered to be doing well if you break even. During the business start-up stage, entrepreneurs do not buy anything they do not need, such as fancy cars. Most drive junk cars and use their surplus money to pay off debt or reinvest it in the business. Their focus is on creating a company with a strong financial base for future expansion.
Becoming an entrepreneur is not a get-rich-quick alternative.
I largely agree with Rye. For entrepreneurs, money isn’t everything. But there’s nothing embarrassing about being partially motivated by money, as are most entrepreneurs. If entrepreneurs didn’t have the ability to get rich and get financially rewarded for their work, the United States could be almost as poor as Cuba. It is OK to make money, build a business, and help build your local economy in the process.
Myth No. 4: Entrepreneurs Give Little Attention to Their Personal Life
All successful entrepreneurs, Rye says, work long hours, which cuts into their personal life. However, long working hours are not unique to entrepreneurs. Many corporate managers and executives work well beyond the average 40-hour workweek. The primary difference between the entrepreneur and his or her corporate counterpart is schedule control.
In the corporate world, you may not have control over your schedule. If some higher-level manager calls a Saturday meeting, you’ve got no choice but to be there. Entrepreneurs don’t mind working 60- to 70-hour weeks, but they will do everything they can to preserve their private time. They schedule important meetings during the week so that they can have weekends off for their personal life, which is very important to them.
Entrepreneurs are not afraid to work long hours, but they will do everything to preserve their private time and schedule control.
I find what Rye says is true, that most entrepreneurs do not give a lot of attention to their personal lives. I have, at times, been an outlier and had almost no personal time, such as when I was a full-time student at Harvard Business School and running four start-up businesses at the same time, or was a full-time college student and starting an independent newspaper business. Sometimes, as an entrepreneur with an especially fast-growing business, you are going to have to sacrifice personal time.
Even if you are likely to sacrifice some of your personal time to get your business off the ground, starting it isn’t the most time-consuming part of the process. It doesn’t take much time to start your own business. Running it and getting it to the next level is another story…
Myth No. 5: Entrepreneurs Are Often High-Tech Wizards
We are all aware, says Rye, of a few high-tech entrepreneurial wizards who have made it. Media attention overplays the success of these few high-tech entrepreneurs. Only a small percentage of today’s personal businesses are considered high tech, and what was considered high tech just a few years ago is not considered high tech by today’s standards.
It takes high profit margins, not high tech, to make it as an entrepreneur. One has only to look at the recent problems that have plagued the computer industry to understand this basic principle. High-tech personal computers did very well when they made high profit margins. The industry then went into a nosedive when profits fell.
Yes, I think Rye is right on the money. Very few businesses require high tech abilities. In fact, I have started and ran a multimedia business, an interactive software business, and two Internet businesses, with virtually no tech experience or expertise. (Although, to be sure, I did learn to do a little computer programming along the way when I started these businesses, to help me appreciate what the engineers were doing.) Furthermore, most businesses are not even tech businesses at all.
Myth No. 6: Entrepreneurs Are Loners and Introverts
Initially, Rye says, entrepreneurs might work alone on a business idea by tinkering in the solitude of their garage or den. On this myth, I don’t totally agree with Rye. The astute entrepreneur knows that he or she must draw on the experience and ideas of others in order to succeed. Entrepreneurs will actively seek the advice of others and will make many business contacts to validate their business ideas. The entrepreneur who is a loner and will not talk to anybody will never start a successful business.
Entrepreneurs need to seek the advice of others. A loner will find it difficult to start a successful business.
I’ve spent a lot of time working largely in isolation during the early stages of building businesses. I think a lot of other entrepreneurs have, too. Not ideal in hindsight, but that’s what I often did. Generally, I think entrepreneurs are willing to work independently if it is necessary to succeed. But even independent-minded people can get lonely, especially if you are working day and night in small home-based business.
Myth No. 7: Entrepreneurs Are Job Hoppers
A recent study of successful entrepreneurs, notes Rye, showed that most of them worked for a large corporation for a number of years before they started their own business. In every instance, they used the corporate structure to learn everything they could about the business they intended to establish before they started their own. Entrepreneurs are not job hoppers.
I tend to agree with Rye. I think most entrepreneurs have usually had a good track record in the workplace. Most have spent years working for other people before going on their own. But you don’t have to do so to succeed. The longest single job I ever held lasted about eight weeks, but in total I’ve only worked a few months for anyone else in my entire lifetime.
Myth No. 8: Entrepreneurs Finance Their Business with Venture Capital
Entrepreneurs, Rye says, know that venture capital money is one of the most expensive forms of funding they can get. Consequently, they will avoid venture capitalists, using them only as a last resort. Most entrepreneurs fund their business from personal savings, or by borrowing from friends or lending institutions.
Venture capitalists only finance a tiny proportion of small businesses.
I often remind people that venture capital is a relatively small industry and, as such, finances an extremely minute number of small businesses. To be financed by a VC firm, your business might need to meet all kinds of criteria, and then find a VC firm that totally loves it. Furthermore, since VC firms tend not to want to put much money into any one startup, most VC-funded startups have to get money from not one but several different firms.
Myth No. 9: Entrepreneurs Are Often Ruthless or Deceptive
Rye thinks that some people believe that to make it as an entrepreneur, you have to be deceptive and step on anybody who gets in your way. On the contrary, this mode of operation doesn’t work for the entrepreneur. The truly ruthless or deceptive entrepreneur will often alienate others and be forced to waste time and energy repairing relationships with employees, customers, and suppliers, or simply fail.
I don’t know if people are predisposed to think negatively of entrepreneurs as Rye states. But, in any event, I think entrepreneurs have some bad apples in their ranks. Not many, but some. I have lost sales to competitors who fabricate the facts, exaggerate the truth, slander their competitors, and engage in all kinds of other unethical behavior. But I have found that such competitors eventually implode.
A truly ruthless or deceptive entrepreneur will fail.
Often, they lose their best employees, whom they also treat poorly, or they lose their customers. Once, when I was in a dogfight with a totally ruthless competitor in a business that was extremely dependent upon sales, his three best sales people, as well as his sales manager, approached me on their own initiative and ended up joining my team.
Myth No. 10: Entrepreneurs Have Limited Dedication
Rye says it is a myth that entrepreneurs are not dedicated to any one thing. But he adds that dedication is an attribute that all successful entrepreneurs exhibit. They are dedicated to becoming their own boss. To this end, they’ll work like a dog to make their business succeed.
While I agree with Rye that entrepreneurs will work like a dog to succeed, I do think that many entrepreneurs can change businesses or direction quicker than other people. Often, this ability to switch direction quickly can be essential for success, and entrepreneurs tend not to switch direction recklessly, although there are always exceptions.
Takeaways You Can Use
There are a lot of myths about entrepreneurs.
Most of the generalizations about entrepreneurs aren’t true.
You don’t have to match the stereotype of an entrepreneur to be successful.