What are the top startup myths, and what are the top startup facts? Join us as we take a look at some of the most-believed startup myths and what the truth really is.
What do you need to know when launching a startup? Unfortunately, there is a lot of misinformation out there, and it’s important to know what’s true and what’s a myth.
With one in five businesses failing in their first year, the more you know, the better!
We’ve put together some of the most intriguing myths and facts about startups for you to consider. With this knowledge at your disposal, you’re more likely to see your idea prosper.
And remember, as always, if you need any support developing your startup idea, we’re happy to help.
Startup myth #1: you need an idea that nobody else has had before
Startup fact: it’s okay to improve on an existing idea
While it’s essential for your startup idea to be innovative and something people want, it’s perfectly fine to reinvent the wheel!
Look at Google, one of the most successful search engines in the world. It wasn’t the first search engine to be created, with Yahoo, Ask Jeeves, and Lycos all preceding it. The reason why Google was so successful was that it provided a better user experience and higher-quality results. And as the search engine continues to innovate, it continues to be the number one search engine in the world.
Take a look at what your competitors are doing and offer something better than they do. Market research is an excellent way to see how you can provide a product or service your customers will love.
Startup myth #2: you need a cofounder
Startup fact: you can see success by going it alone
There are some benefits to bringing a cofounder to your startup. A co-founder means you can share the workload and expand your skill set. However, it’s not a necessity.
While most startups do have multiple founders, businesses like Amazon, SpaceX, Mollie, and Digg all thrived with solo founders. While founding a startup on your own is challenging and involves a lot of work, it’s the ideal scenario if you want to call the shots. Just surround yourself with the right people to ensure your startup succeeds.
Find out more about finding the right cofounder for your business
Startup myth #3: you need a great startup needs a thorough business plan
Startup fact: you need a business plan that covers the basics
In the past, when startups had to go to the bank to get loans, they would have to create business plans that were upwards of fifty pages long! While these plans were thorough, they took time to develop.
With lean startup methodology, short and succinct startup plans are on trend. These plans focus on the most critical information, meaning startups can get the funding they need to get to market sooner.
Comparing the traditional business plan with the lean startup plan
Startup myth #4: you need to take risks to be an entrepreneur
Startup facts: entrepreneurs are more risk-averse than you think
Many people think entrepreneurs are aggressive risk-takers that will do anything if it means more revenue or sales! However, the reality is that while entrepreneurs need to be comfortable with uncertainty, they do have to weigh up the pros and cons, especially when large amounts of money are involved.
A scientific study by Zhang and Cain in 2017 showed that risk-taking has no direct correlation in regards to being an entrepreneur.
So don’t worry if you want to launch a startup but like to assess your options before making big decisions!
Startup myth #5: you have to find an investor
Startup fact: there are several ways to find the money for your business
You may think that you need to find an angel investor or venture capitalist to give you the cash to help your startup grow. However, the truth is that many different funding options are available to you.
According to Fundable, 57% of startups are funded by personal loans and credit, while 38% are funded by family and friends. Alternatively, there are government grants available that you can register for.
Applying for funding can take time, and this is something you might not have in the early stages of your startup.
It’s all about choosing the right option for your needs, and of course, your needs may change throughout the course of your startup’s journey.
Startup myth #6: it’s important to scale as soon as possible
Startup fact: scaling too soon can cause a lot of problems
When you’re running a startup, you tend to find a lot of people telling you to grow and scale your business as soon as possible. However, scaling too quickly may cause damage to your startup.
Take the precautionary tale of Doughbies, a cookie delivery service. The startup earned an incredible $670,000 worth of funding but closed down soon after. This is because it grew too fast and too soon, and the customer demand wasn’t there to sustain it.
Scaling is fantastic, but it needs to happen at the right time. If you force it, it can only be a bad thing.
Find out more about the startup mistakes you need to avoid
Startup myth #7: a great startup idea will market itself
Startup fact: all startups need a solid marketing plan
Marketing needs to be an integral part of all startup plans. You need to stand out from your competitors, reach the right target audience, and nurture prospective customers until they are ready to buy.
Here’s a scary statistic – 41% of all startups don’t have a marketing strategy in place. So take the time to identify who your target audience is, what your competitors are doing, and which marketing channels will bring you the best return on investment.
Startup myth #8: I can pay for the best talent with equity
Startup fact: it’s good to offer equity, but don’t make it the be-all and end-all
A mistake many early-stage startups fall for is thinking they can pay the salaries of potential staff with equity. This is when you offer a proportion of shares in your business, with the logic being that the more work someone puts in, the more money they’ll receive in the future.
While equity can be a good tool and can help attract talent, there are three main issues. Firstly, you don’t want to give away too much of your business; otherwise, you lose control. Secondly, when you start making a profit, you will have to give a proportion of it to those who hold equity, meaning you get less money back. Finally, many candidates won’t be willing to work exclusively for equity – they have bills to pay, after all!
Look at how much equity similar businesses are offering to hires and set a finite amount of equity you’d be willing to give away.
Startup myth #9: creating a good startup idea takes time
Startup fact: the sooner you can launch, the better!
The old adage says, ‘slow and steady wins the race.’ However, when it comes to launching a startup, it’s important to move as quickly as you can!
My team follows a lean startup methodology. This approach means you work to make sure your product or service is viable as soon as possible. One of the ways you can do this is by creating a minimal viable product, or MVP. An MVP is a basic version of your product or service that you can use to get feedback from your customers.
By getting to market as quickly as you can, you get an advantage over your competitors.
Startup myth #10: you need to do everything in your business
Startup fact: it’s okay to rely on other people
There are many roles that need to be filled in a startup. Who will develop your website or app? Who will do the marketing? Who will balance the books and make sure every cent is accounted for?
When running a startup, it’s best to focus on what you do best. For example, if your strengths lie in development and design, leave the sales or accounting to someone else. This can be a freelancer, agency, or in-house hire.
The time you save means you can focus more on your startup’s success!
Startup myth #11: a failed startup means you shouldn’t be an entrepreneur
Startup fact: a failed startup gives you lots of experience
Milton Hershey wanted to found a candy business more than anything in the world. However, luck was initially not on his side. He launched three failed candy companies before founding the Lancaster Caramel Company, which he then sold to create the world-famous Hershey Chocolate Company.
The point we’re making is that while it might be frustrating to be involved in a failed startup, it gives you lots of valuable insight. You can use this insight and the skills you learn along the way to increase the odds of success the next time around. Just be open and willing to learn from the mistakes you made.
Startup myth #12: the best time to launch a startup is in college
Startup fact: you can become an entrepreneur at any age
What have Bill Gates and Mark Zuckerberg got in common? Both dropped out of Harvard College to focus on Microsoft and Facebook respectively. However, the reality is that you don’t need to be young and idealistic to follow your startup dreams!
According to the Ewing Marion Kauffman Foundation, the average age of a tech startup founder is 39. This is because they have the life experience, professional network, and soft skills to increase their chances of success.
Startup myth: #13 you should plan your exit strategy as soon as possible
Startup fact: be flexible, as things can change
While it might be nice to daydream about partying on a tropical island or relaxing on a luxury yacht, it’s essential to focus on the here and now. Before you can exit your business, you need to build it up and make it successful.
It’s important to be flexible as things may change. New competitors in the market, negative publicity, and cofounders quitting can all affect your exit plans.
It’s great to know what type of exit you’d prefer ahead of time, whether that’s going public, a merger, or an acquisition, but be prepared to flex.
We hope these startup myths and startup facts have given you some helpful insight into your business. If you are planning to launch a brand new startup in the year ahead, don’t be afraid to take the plunge!
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