Top Myths about Entrepreneurship

Becoming an entrepreneur is not an easy task. You have to be committed and establish your business with conviction. However, there are a lot of myths revolving around entrepreneurship.

Top Myths about Entrepreneurship

• Myth 1: There is a lot of money involved to start a new business
  Reality – A small business can be started with very little investment. Entrepreneurs can design and start a business with very little cash. They can even borrow money or rent things to avoid investing huge money. They convert fixed costs into variable costs by paying commissions to people working for them instead of paying salaries.
• Myth 2: Loans for starting a small business cannot be obtained by banks
  Reality – Statistics provided by the Federal Reserve indicate that over 16 percent of all the financing to companies are provided to small start-up companies. It is 3 percent more than the amount of money provided by trade creditors. It is also higher than money offered by close relatives, venture capitalists, strategic investors, and government agencies.
• Myth 3: Venture capitalists help entrepreneurs with money for starting a small business
  Reality – This is not true. They provide finance only to companies which are starting a new computer or biotech company. Statistics indicate about 81% of venture capital funding is offered to computer hardware and software, semiconductors, communication, and biotechnology companies. Also it provides funds to about 3,000 companies every year with only one quarter of them being start-up companies and rest being established companies. So it is quite unlikely to get funding for start-ups from venture capitalists.
• Myth 4: It is quite easy to start a small business
  Reality – Statistics indicate that only one-third of people who started a new company, start making profit only after seven years and break even after paying salary to their employees and covering other expenses. This indicates that it is not very easy to start a company and many fail during the process.
• Myth 5: Most entrepreneurs set up their small businesses only in established industries
  Reality – The truth is that most entrepreneurs set up their businesses usually in industries which are not doing too well.
• Myth 6: Entrepreneurs are usually successful financially
  Reality – This is not true as most of them are not financially strong. The average profit of an entrepreneur is usually $39,000 per year. Statistics also indicate that only top 10% of them are successful in making more money than employees. However, most of them earn much lesser than their earning if they were working in an organization.