Today, millions of people are becoming accidental entrepreneurs—they never thought they’d be starting businesses, but prolonged unemployment and new business opportunities have changed their direction. Before starting businesses, they should be aware of some misconceptions so they don’t become statistics.
The SBA says that 7 out of 10 firms don’t make it past 2 years, and only about half survive for 5 years. The economy continues to be tough and only those who are realistic have a chance at success.
Myth #1: You have freedom to control your own schedule.
Reality: Small business owners work longer hours than employees. Don’t believe the infomercial claims that you only need to work a few hours a week to see thousands of dollars roll in. Most business owners I know work much more than 35 hours a week, the typical schedule for an employee. Working 60 hours each week, or nearly double that for employees, is common.
Not only is it difficult to control hours, but it’s also challenging to manage scheduling. An owner who wants to attend his child’s school play may have more difficulty shifting appointments than an employee who has personal days. Owners often are “on” 24/7.
Holidays for many small business owners, especially those in start-ups, become infrequent or nonexistent, in contrast to employees with two to four weeks or more of paid time off. Family sacrifices are required by many small business owners in order to succeed.
Myth #2: Anyone can start a business; there’s no barrier to entry.
Reality: While the U.S. has one of the greatest rates of entrepreneurship (4.3% according to the GEM Consortium) among more developed countries, this does not mean that there is no barrier to entry. It is true that education, family background, sex, and race are not overt barriers, but being well educated and having family connections still goes a long way toward ensuring success. It helps, for example, in raising the capital needed to get started.
Myth #3: You have security because you can’t be fired.
Reality: There is more certainty in owning a business than working for someone else. Despite the bad economy and high unemployment (currently 9.5%), about 90% or so of the workforce employed. This can be viewed as security. In contrast, there is no security as an owner of a small business. You can be successful one day and closing your doors the next. Your security is dependent on: customers, vendors, bankers, and the government, to name just a few stakeholders in your venture.
Despite the reality, there’s nothing better than owning your own business. The potential upside is limitless—for financial and personal rewards.