8 Myths About Being Your Own Boss

The key to success is preparation and more preparation. But first let’s clear some cobwebs by considering these 8 myths about being your own boss…

1. Freedom to Do What You Want

Who doesn’t get tired of the nine-to-five grind and always having to follow instructions?  The freedom to come and go as you like and to do what you want is the biggest myth and the worst reason for wanting to run your own business. Ask any successful businessperson and they will tell you that running your own business involves a lot more hard work than working for some­one else.

You will not only be the CEO, but you may also be the secretary, receptionist, despatch boy and salesperson. You will probably work harder because it’s your own hard-earned money that you have invested, or money belonging to someone who trusted you. You may have to work longer hours just to get things done because you can’t afford to hire an assistant.

Freedom to do what you want? Sure, but to a certain extent. Unless you are a supremely self-confident person,every decision you make that will affect the company will be made with more caution because it’s your livelihood which will be affected.

If the business turns out to be successful  and profitable and it’s time to think about expansion, you’ll lose even more freedom because you will be too busy running and managing the business. Eventually you may even lose your independence and become tied to the company just like a hired manager, despite your status as a shareholder! To remain in total control and to have the freedom to do what you want, you may have to remain a small business.

A business owner with the freedom, independence and control to do exactly as she pleases can only happen in a small business or an already established business which is running smoothly under a team of good managers. 

2. Counting on Friends and Relatives

Financing is essential to any business, and more importantly to a small business because its source of funds is usually so limited.  So where do you get your capital?  Many entrepreneurs start with whatever money they have or can get, be it by selling their house or car and dipping into their savings.

There is also the option of borrowing money. Most entrepreneurs cannot count on financial institutions to give them loans because the business is yet unproven. They also have to agree to many stifling conditions before they can get their loans approved.

On the other hand, a well-off friend, or relative who can afford to lend you the money or become an investor should be the last resort. Why? Because in human nature being, we know that psychologically wise, mixing business and family or business and friends is dangerous. It invites personal conflicts and the business and the personal relationships can both be ruined.

However, when you are desperate it is hard to say no to offers of financial help from relatives and friends, but remember, if the business fails, you may lose more than just money.

3. Breaking Even in a Jiffy

All new, enthusiastic entrepreneurs insist their business will break even within days or weeks or at least months of beginning operations. Well, forget that. Assume that your fledgling concern will have absolutely no customers in the first year, but you will still have expenses to bear. Add up what that first year will cost you in terms of rent, utilities, salaries, raw materialscosts, production costs, supplies, the whole shebang in fact, that’s what is known as working capital. 

To find out how much you need, you have to draw up a busi­ness plan. This is a plan that briefly describes what the busi­ness is,what the requirements of the business are in  terms  of capitalization,  plant  and equipment,  manpower,  distribution, marketing, promotion and expectations of sales and expenses. The most critical part of any business plan is the “pro formas” – the cash flow projections and projected profit and loss statements for the first three to five years of operation. 

If you meet the projected sales and revenue, then all is well.  However, if your projected expenses go sky high, then you are back to square one. The biggest mistake any entrepreneur can make is under-estimating or over-estimating projections. If we are unwilling to pay for the professional advice of an accountant or lawyer, we can end up with a bigger pie on our face. 

The sad thing is that many people, if they do one at all, does an incomplete business plan, or worse, do rough calculations in their head and immediately assume there will be profits.

Of course you can start a business with little or no capital of your own and have nothing to lose if things don’t work out.  For instance, if you are a good cook, you can always go into business by using your personal car to deliver cooked food to the homes of busy working women or childcare services to busy working mums!

4. What’s a Fair Price? 

Another area many entrepreneurs agonize over is how much to charge.  Many small businesses are afraid to charge fair prices for their products or services. In order to get the sale, sales managers frequently give it away. Too often we do not value our own services highly enough because we are too close to them. Whatever the reason, many small businesses base prices on what the market will bear without applying strong sales effort. It is that extra selling that can enable you to command the extra profit. 

A fair price is one that includes a reasonable profit. Customers naturally look for bargains, but most of them know you cannot get something for nothing. They are willing to pay a fair price but they have to be convinced. 

In order to make a profit, you must set the prices – not your sales manager or your customer or the market. How can they set a price that will allow you a profit when they don’t know what your costs are?

Fear of charging too much may be due to lack of self-confidence, perhaps in the quality of your merchandise or  serv­ice.  If so, you had better switch brands, or improve your product or service. Because if you don’t have confidence in your own product or service, who will? 

Sometimes your pricing could be the result of strong compet­itive pressure. If the company down the street can sell for less than you, there must be a reason. The way to begin fighting such competition is to find out the reason. That is usually where we fail.  Instead of coolly investigating the cause of lower-priced competition, we panic and follow suit to grab the customers’ attention. 

If your competitor charges less, you drop near his level for a while.  Then the game becomes one of seeing who goes broke first. If your funds are limited, you will not be able to with­stand the competition, but if you have sufficient funds, you can try competing with better service, personal attention and personally standing behind your merchandise – to make re­pairs, adjustments, replacements, etc. Sometimes, selling also means servicing. When selling a product is added on with good services, it adds value to the product and creates surprised but happy and returning customers.

5. “I Could Sell a Million” 

Frequently you hear someone say, when discussing some new product idea, “We can sell a million of these!” You think the product is so good that the sheer usefulness of it will sell millions. But it’s not realistic. A small business will not have the capital to move that kind of volume. 

You also won’t have the distribution or sales or the advantages and protection of  a big  business. It would be vulnerable to competition from all quarters – and nine out of ten times, it would soon be swallowed up by a corporate giant, and simply be put out of its misery.

Having confidence in your own product is good. Nonetheless, we still have to be careful and set goals that are realistic and achievable. Strong steady baby steps in reaching towards the goals are better than running on stilts that can be wobbly and dangerous, in which we might fall over and end up crippled. Confidence alone does not bring us much closer to our goals unless we pair it up with wisdom and measured action to advance towards success.

6. Cash in the Hand Means Success 

One of the greatest myths about gauging the success of a business is basing it on the amount of cash it has in the bank. It’s a fallacy to think that having a lot of cash in the bank account means the company is raking in the profits.  

In fact, if your company ever had a lot of cash in the bank, that usually means trouble. Management (that means you!) is not doing its job which is to keep the capital working. Having cash in the bank may be alright for widows and retirees, but certainly not for a business.

True, you can use the spare cash as funds for bonuses or profit-sharing or put it aside for expansion or capital investment (to buy equipment, raw materials, etc). Any money that a business has should be put to work in order to generate more income. This can be in the form of giving credit to your customers (to encourage them to buy more), purchasing raw materials for stockpile or adding more products to your existing range. Money  is needed to make more money.

7. Be Serious about Your Business

Because we have invested all that we have – our money, our­selves, even our family resources into the business, we tend to be very serious about our efforts to make the business prof­itable.  We become so focus and driven that we forget to have fun.

The problem with not having fun is that it can make you overly serious about your business and you might eventually kill it.

Having fun in running a business helps keep your sense of humor. When you can laugh at yourself, your company, other businesspeo­ple and business itself, you retain your perspective and keep your objectivity. You don’t tense up. It is hard to enjoy your work if you are too serious about it. But this does not mean it is not important to you. 

It is ironic, but the more fun you have, the more successful you will be. The tighter and touchier you are, the more goofs you will make.

Because having fun makes more profit, it also enables you to do more good.   The bigger you build your business, the more people you hire, the more goods and service your business purchases, the more you are contributing to your community. This will become more serious and stressful if you forget to manage with a little bit more a humour in it. If you really do not enjoy business, you probably should get out of it.

8. You Must Play Big to Win Big

Want to be a big frog in a big pond? In other words, want to be a big player in a big playing field? Don’t! Among the var­ious books on starting your own business, the authors stress one simple but essential rule for small business success: Choose a small market and develop it until you dominate. In other words, be a big frog in a small pond. 

When you pick a market in which the big players aren’t inter­ested, you will have less vicious competition to face.   Big businesses need volume to survive, so this opens up the market for specialized lesser-volume products. Offering specialty products or services might just provide the jump­ start which your business needs to grow. 

One of the reasons we start a business is – we have a great idea about a new product or service which the market needs. But the challenge of converting that great idea into prof­its requires the services of a professional businessperson — one who loves the wheeling and dealing as well as the inventing.   

Unfortunately, not many entrepreneurs like all aspects of running one’s own business.  As a result they are inclined to spend less time on things they dislike doing. For example, you may be a great inventor, but you may not have the sell­ing or administration skills to market your products. If you can be objective about it, you should hire someone who is good at doing what you dislike or can’t do. That frees you to concentrate on what you enjoy doing – which is what you do best.

“Succeeding at business is knowing beforehand what we are in for, and knowing what the consequences would be if we so much as slack off.  That means going into the business with your eyes wide open, not accepting myths as gospel truth.”

It’s not easy being your own boss, but the success that comes after, is the greatest satisfaction of all.

About the author:

William S Andrews, a personal development coach. He likes helping people cope with their problems. In this case, William has his own section on the website of write my paperOpens in a new tab. service. Moreover, he takes part in various conferences to improve his knowledge and develop new skills.

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