Building a successful startup takes time, money, labor, and know-how. Unfortunately, there is a lot of entrepreneurial and startup advice online that simply isn’t true. Young companies—especially those that are starting from scratch—often rely on advice from trusted online sources to get started. Unfortunately, some of that advice can damage their ability to get a profitable company up and running.
17 of the Most Common Startup Myths
In this blog post, we’re going to tackle some of the most prominent startup misconceptions that plague young companies and discuss why they’re not all true.
1. All it Takes is a Good Idea
An idea is just a starting point, not a revenue generator. You need to support great ideas with strategies that account for marketing, customer support, and other business operations. A good idea should go through the same process that any other idea goes through in your business. Research the potential market opportunity and the competitors, then identify if there really is a need that your solution fulfills.
2. Build it and the Customers Will Come
Many entrepreneurs believe so strongly in their business concept, product, or service that they convince themselves everyone will want to buy it. You could have the greatest product in the world, but it won’t go anywhere if your target customers don’t need or want it. The truth is, you can’t create a solution without first identifying a problem that needs to be satisfied. If no problem actually exists, your concept is likely a doomed venture. Always start by finding a problem and matching it to a solution, not the other way around.
3. Investor Funding Will Pour in
Gaining the trust of investors is not easy. Sure, you might convince your friends and family to invest, but earning funding from an angel investor or VC firm is going to be difficult. They need to see proof of concept, financial projections, a business plan, revenue growth, and much more before they’ll consider trusting you with their money. Contrary to popular belief, it is not easy to get funding and—most likely—investors will not be banging down your door to offer money.
4. Branding is All About the Visual Aspect
A brand is much more than a just logo, storefront, or website. It’s the identity of your business. Your brand is the tangible and intangible assets that make your startup unique. Tangible assets can be anything from logos and trademarks to products and brand colors. Intangible assets can be anything from core values and a mission statement to brand partnerships and charitable associations.
5. More Funding = Greater Success
Yes. Having a lot of money is nice to have, but it doesn’t always precede startup success. How you utilize funding is more important than how much cash you have available. Sometimes an abundance of funds is more of a hindrance than a benefit because startups often feel an obligation to use the money once they have it. This can lead to wasted spending or costly, misguided endeavors.
6. You Can Never Have Enough Mentors
Having good mentors is extremely important for young startups and their founders. However, too many mentors can become overwhelming. The more people you have offering advice and sharing opinions, the more confusing and disorganized things can become. It’s important to choose a few select, qualified mentors that know what you’re going through and can identify what is needed to help your business succeed.
7. The Business Plan Must Be Perfect
Too many entrepreneurs spend months on end trying to create the perfect business plan. Putting together a great business plan should be a priority, but not to the detriment of actually starting and running the business. Instead, focus on crafting a business plan that covers all the bases without agonizing over every single little detail. Things inevitably change over time and you can adjust to account for those changes as they occur.
8. Founders Only Answer to Themselves
It sounds nice in theory; you start a business to become your own boss, set your own schedule, and control your work load. In reality, things are a little different, especially with young startups. While there is greater control to some aspects of being a founder, there is also much more responsibility. You have to run the business, find customers, develop products and services, make sure your employees are compensated on time, and personally handle each crisis while the business is still too small to support additional leadership.
9. All You Need is One Big Customer
Landing a huge customer is great, but that doesn’t mean your startup has achieved long-term success. Customers come and go—it’s sad but true—so you need to have a sales plan in place to continuously find, attract, and close new customers. If you rely on one large client to support your business and that client eventually leaves, the future of your entire company would be in jeopardy.
10. You Can Out-Price the Competition
If it sounds too easy to be true, it probably is too easy to be true, especially in the context of startups. A lot of entrepreneurs enter the game with the hopes of undercutting their competition by offering lower prices to steal away customers. Cheap pricing is not a competitive advantage. Every competitor in the market can lower their pricing. In addition, your competition is probably larger and more established than your startup which means they’ll win the price war every time.
11. Make Money Doing What You Love
In some cases, this is definitely true. But in general, doing what you love is not a solid business plan. It’s much wiser to build a business around providing solutions in your wheelhouse of expertise than it is to simply follow your passion.
12. Being Different Makes You Better than the Competition
Being different is not a competitive advantage but being better is. You can create a better product, or employ better marketing, branding, communication, or any other business activity to stand out from the crowd.
For example, Hallmark charges more for their greeting cards than their main competitor American Greetings—sometimes by as much as $0.50-$2 more. Yet Hallmark commands 51.2% of the greeting card market while American Greetings clings to 23.4%. Why? Because Hallmark’s branding is simply better.
13. It’s a 24/7 Workday
Startups are demanding, but the most effective founders know that balancing their personal lives with their professional ones is a big contributor to their success. Many entrepreneurs experience burnout because they’re under the false impression that a 24/7 workday is required to succeed.
Instead of working to the point of exhaustion each day, you should identify how you work best and plan your days around the times and work habits that will maximize your productivity. You won’t be able to contribute anything worth value if you’re constantly tired and mentally drained.
14. Your Product/Service Must Be New
Market disruption doesn’t only take place when something completely new is created. In fact, it’s the startups that reinvent products, services, or processes that usually end up transforming the world. Think Facebook transforming social online communication and McDonald’s revolutionizing the fast food industry.
Again, this goes back to identifying a problem and offering a better solution.
15. You Have to Target a Niche Market
Niche markets can be very lucrative, but they’re also very limited in their ability to support a startup’s growth. Many successful startups begin by targeting a small niche market with the aim to expand their reach and serve the broader target market. In addition, it can be more difficult to take market share away from established competitors because they control a majority of the niche market share.
16. Your Product/Service Must Have Mass Appeal
This is one of the more dangerous misconceptions. A lot of entrepreneurs are told over and over again that their products or services need to appeal to a massive audience. The problem with that—especially when you’re a startup—is that the resources required to reach mass-market appeal can be enormous.
Also, when you try to sell to everyone, you risk diluting your startup into a “generic” brand that focuses on volume rather than value. Companies can often be more successful selling a few expensive products that address very specific needs, rather than selling a large variety of products that address a much longer, more general list of needs.
17. You Can Do It All Yourself
In the beginning stages of a startup this may be true, but as your business grows so does its range of needs. Trying to tackle everything by yourself will only lead to constant failure, frustration, and inefficiency. Find the perfect mix of people, tools, and mentors that can help drive your startup to success.
Wrapping Things Up
Successful startups focus on doing one thing better than their competitors in order to differentiate themselves. You don’t have to invent something new, you just have to find and deliver a better solution.
Each of these startup myths can be detrimental to a young company’s growth prospects. It’s important for entrepreneurs to follow proven examples of startup success and carefully research advice before implementing it into their operations.