By Ed McLaughlin and Wyn Lydecker – this article was originally published on LinkedIn Publisher
The Internet is great. It’s the biggest repository of human knowledge ever made. There are 52 billion web pages currently indexed by Google. That’s a whole lot of information. Not having a central authority to regulate it means it’s a whole lot of misinformation, too. It would take many years and more processing power than anyone really has available to review all the misinformation out there. Today, I am only interested in what I view as the fallacies that relate to entrepreneurship.
Entrepreneurs come in lots of flavors, and stories about entrepreneurship come in even more. With that many words flying around on one topic, some are going to be misleading, some off-target, and some flat-out wrong. The cost of their wrongness can be paid in failure and lost opportunities. Don’t let the falsehoods take you down. Here are the five most common incorrect pieces of advice for entrepreneurs and entrepreneurship out there.
1. Love is All You Need
Said another way – passion. This is a very popular idea – doing what you love and feel passionate about will yield success. Luckily, some big media outlets are combating this damaging idea, like Jeff Halden in his article on Inc.com. Not enough people can be refuting it, as far as I’m concerned.
Now, I’m not telling you to start a business that will make every working day a misery just so you can grind out some money. What I’m contesting is the idea that passion is all you need. You need to marry your passion to what you’re actually good at doing, and specific experience and skillset that you can monetize. This is what I call distinctive competence, and I have written about it at length (see Lessons on Entrepreneurial Failure and Success, and 4 Questions Every Successful Entrepreneur Must Answer). Harness your passion to reality with the tether of your competence, and it will carry you farther than you could go on passion alone.
Put this fallacy aside and embrace your distinctive competence for entrepreneurial success.
2. Entrepreneurs Are the Anointed Ones
This story may be known to you as the Mark Zuckerberg narrative. It’s the idea that you have to have a stroke of brilliance beyond the kind that mere mortals can divine to be a successful entrepreneur. That’s just not true. Entrepreneurship is accessible to anyone.
For the same reason incremental innovation is great for existing companies, incremental innovation can start a successful business. Not every single business needs to change the way the world turns. With a solid plan and bankable distinctive competence, your business can be successful. It doesn’t have to be the next Facebook, or as older business people used to say, “the next Xerox.”
3. VC Funding is a Must
I make no secret of the fact that I think bootstrapping is the best way to go when funding a startup. I did it myself, so I can say with certainty it’s an effective option. Even if bootstrapping is not possible, there are a lot of alternatives out there, both in funding and in company type that are completely valid alternatives to venture capital. Keep in mind that 75% of venture-capital-backed companies fail.
You can pursue the course of lifestyle entrepreneurship, creating a business in your free time that has minimal startup costs you can easily meet with your own money. You can bootstrap your business, borrow from a bank or friends, take advantage of vendor financing, appeal to economic development funds, or turn to the internet and crowdfund your capital. The world is full of possibilities!
Don’t let the sexy sheen of winning over venture capitalists outshine other less disruptive paths to financing.
4. You Can Do Good OR You Can Do Well
This is the idea that you can’t make a difference and a profit. While I believe you need to fuel your own success to have enough to give back, you can be the owner of a successful business that makes the world a better place.
If your business accomplishes that directly, like Tom’s shoes has, that’s great. If you make the world better by paying a living wage, hiring more people, helping the economy grow, and enabling your employees to send their kids to terrific schools, good for you.
The world doesn’t require you to live with a choice of pursuing “evil profit” and “charitable poverty.” Build your business to fit your values, and know that money and magnanimity don’t have to be mutually exclusive.
5. You Have to Have a Full Management Team to Start
This myth makes you think you’re supposed to check off a bunch of boxes with C-Suite-level executives in order to start up. Doing that may actually slow down your start and may prevent you from bringing the right people on board.
I had my own tough experience with this, when I started my business, USI Companies Inc, I thought I needed some very specific, quantifiable metrics to make a team, such as people with MBAs from name schools. It turned out that I didn’t. What I needed were a team of people who were willing to join with me to work as hard as possible to turn our new startup into a success. It’s not that you’ll never need teammates with specific titles and letters before and after their names, but the very beginning of your startup has a different set of needs than a business that already has traction and has needs for specific levels of experience in its management team.
Building a startup team is more about forming a team of like minds and values who can work through the rough stuff, than about having what seem like the correct choices on paper.
Stop telling yourself these five myths, and get started building your business. Hearing stories may be the way human beings learn best, but we need to be choosey about which ones we take to heart. We start hearing stories in childhood and grow up with lasting impressions of what constitutes true love, valor, good, and evil. Stories shape our perception of possibilities.
When we hear stories about entrepreneurship, the consequences can be just as powerful. The good news is, we’re adults now and can judge stories as they play out in the real world. That means we can learn which ideas we want to embrace and which ones we need to ignore. Listen to the stories and the “conventional wisdom” carefully, and be your own judge of the content. Then, set out on your own path.
Ed McLaughlin is currently co-writing the book “The Purpose Is Profit: Secrets of a Successful Entrepreneur from Startup to Exit” with Wyn Lydecker and Paul McLaughlin.
Copyright © 2014 by Ed McLaughlin All rights reserved.