One of the reasons so many new small businesses fail within the first year (more than 20%) is that their owners go into their venture loaded down with numerous common myths about operating a small enterprise.
Many don’t think to question what seems like just common knowledge, such as, “the customer is always right.”
Let’s dispose of that small business myth right up at the start. The fact is, if the customer was always right, every business would be required to shutter their doors within weeks! For example, what if the customer thinks you should sell your product at a 10% loss for each sale? Does that make them “always right?”
Obviously not! Yes, it is important to see things from the customer’s point of view, but it is up to you to set customer expectations about the benefits they can receive from your business or product.
Sales Are Everything?
If you think making a lot of sales is the Holy Grail of a small business, you need to think about this in a more nuanced way. It’s often the case that a business is making tons of sales but failing to make a profit. Profits may be elusive for a variety of reasons, from a price that is too low to suffering losses on the distribution effort and more.
Don’t focus on sales numbers — focus on cash flow. The latter figure must come up positive at the end of each month regardless of the number of sales you make.
Spend Money to Make Money?
This myth is among the biggest reasons that small businesses fail. Very often, the business owner with the biggest grub stake starting out is the one that ends up crashing and burning sooner than later. It makes them think that throwing money at every problem is the best way to enact a solution. But there’s always another challenge that needs fixing. Each expenditure should produce a specific result. Non-spending strategies can solve problems too.
Technology is only for the Big Guys?
Do yourself a favor and jettison this myth right away. Technology is the best friend of a small business. Things like AI-enabled apps, advanced SEO techniques and powerful accounting software are what give the “small guys” an ability to compete with the “big guys” on an even playing field.
Think of technology for your small business as “the great equalizer.”