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Four common business misconceptions

ENTERPRISE
By Pauline Muindi | June 9th 2021

The first recorded history of entrepreneurship dates as far back as 17,000 BCE, where locals from New Guinea are recorded to have exchanged obsidian, a black volcanic glass used to make hunting arrowheads for other needed goods. Despite this fact, entrepreneurship is still riddled with myths and half-truths that can be misleading to rookie business owners.

1. You need money to start a business

Just ask anyone why they haven’t started that business they keep talking about. They will probably tell you that they don’t have the money to do it. But contrary to popular belief, you don’t need huge amounts of your own money to start a business.

Of course, it is necessary to consider the financial resources necessary to set up and run your business. However, don’t give up if you don’t have enough personal financial resources to get started. Think about the relationships you have built over time and consider how you can utilise them to bring your idea to market.

For instance, you can team up with a business partner, ask for soft business loans from family and friends, try crowdfunding, look for small business funding opportunities from the government, or approach angel investors.

When starting a business with little money, be open to adapting your business model to avoid as much fixed costs as possible – such as rent, salaries, and unnecessary services. There are many kinds of business that you can start with limited capital being a consultant, offering a service, or giving an artistic performance.

2.You should keep your ideas to yourself

Fearing that their ideas might be stolen, many entrepreneurs keep a tight lid on start-up ideas and other business decisions. But you have more to gain than lose from sharing your business ideas or decisions with relevant individuals.

While there are some incidents of idea-stealing, there are literally tens of thousands of entrepreneurs who benefit from sharing their ideas with trusted advisors, mentors, and early customer interaction. Part of making an important business decision is discussing it with relevant people. They might be able to point out your blind spots and reduce your biases.

Bear in mind that there are very few truly unique business ideas. Coming up with an idea is the easiest part of the business. The true test of your entrepreneurial skills is creating a profitable and sustainable business. Most of the people you speak to about your idea will be preoccupied with other endeavours, lack the skills, resources, or desire to make it work, scared of the risks, or simply have the integrity to not steal your idea. Even if someone decides to run with your idea, they won’t execute it quite like you would.

However, you still need to exercise some discretion on whom you share important business ideas and decisions with. You don’t want information leaking to competitors.

3.Customers want lowest prices possible

When you are competing against bigger businesses, it can be disheartening when they offer lower prices on their products or services. In such an instance, you might find yourself considering lowering your own prices…sometimes to unviable levels.

Don’t be in a rush to lower prices. Despite the hype surrounding deals and discounts, customers know that cheaper isn’t always better. In fact, according to research, low prices can backfire on business owners as consumers sometimes see low prices as a sign of low-quality products.

Instead of engaging in price wars, your focus should always be on offering the best value. Most people are willing to shell out more money for products that are of higher quality, offer better value for money, or have a unique value proposition.

For example, if you have an events company, you can aim to give your clients a premium experience and charge them premium prices.

Many business owners in the luxury market manage to avoid price wars and instead focus on an exclusive audience. Instead of sweating the pennies about your pricing, think about how you can charge more by offering your customer better quality.

Bear in mind that there can always be cheaper options in the market. But your goal as a business owner is to make profits, not to win price wars with competitors. If you sell premium products, you stand to earn more from selling one high-quality item than selling a hundred poor-quality ones.

4.Business is the path to overnight success

You might have come across arguments that business is the fastest and easiest way to achieve financial freedom. However, entrepreneurship is definitely not the path to easy money. Get-rich-quick stories that litter the media are often exaggerated, with most entrepreneurs only sharing the highlights of their journey and not the challenges.

The truth is that for a majority of entrepreneurs, it takes years of sustained effort and determination to overcome seemingly insurmountable challenges to achieve “overnight success”.

Don’t forget that running a business isn’t about collecting revenue. You will have to pay for everything that goes on behind the scenes – raw materials, salaries, rent, utilities, legal fees, permits, taxes, and unforeseen costs.  If you go into business without considering the realities on the ground, you will set yourself up for failure and disappointment.

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