Entrepreneurial Myths/Fallacies about Entrepreneurs

Challenges and Risks Entrepreneurs are often thought of in terms of the risk they assume. Even the dictionary describes an entrepreneur as one who assumes business risks. However, like all prudent businesspeople, entrepreneurs know that taking high risks is a gamble. Entrepreneurs are neither high nor low risk takers. They prefer situations in which they can influence the outcome, and they like challenges if they believe the odds are in their favor. They seldom act until they have assessed all the risks associated with an endeavor, and they have an innate ability to make sense out of complexity. These are traits that carry them on to success where others fail. Entrepreneurs Are Born Many people believe that entrepreneurs possess innate, genetic talents. However, experts generally agree that most entrepreneurs were not born; they learned to become entrepreneurs. The recent proliferation of college and university courses on the sub ect supports this point. Entrepreneurship is currently being successfully taught. Money Motivation !ny successful entrepreneur will tell you that starting a business is not a get"rich"#uick alternative. $ew businesses usually take from one to three years to turn a profit. %n the meantime, you will do well to break even. Their focus is on creating a company with a strong financial base for future expansion. Personal Li e !ll successful entrepreneurs work long hours, which cuts into their personal life. However, long working hours are not uni#ue to entrepreneurs. Many corporate managers and executives work well beyond the average forty"hour work week. The primary difference between the entrepreneur and his or her corporate counterpart is schedule control. %f some higher"level manager calls a &aturday meeting, you've got no choice but to be there. They schedule important meetings, during the week so that they can have weekends off for their personal life, which is very important to them. !igh"#ech $i%ards (e are all aware of a few )high"tech) entrepreneur wi*ards, such as Microsoft's +ill ,ates, who have made it. Media attention overplays the success of these few high"tech entrepreneurs. -nly a small percentage of today's personal businesses are considered high tech, and what was considered high tech ust a few years ago is not considered high tech by today's standards. %t takes high profit margins, not high tech, to make it as an entrepreneur. -ne has only to look at the recent problems that have plagued the computer industry to understand this basic principle. High"tech personal computers did very well when they made high profit margins. The industry went into a nose dive when profits fell. Loners and &ntroverts %nitially, entrepreneurs might work alone on a business idea by tinkering in the solitude of their garage or den. However, the astute entrepreneur knows that he or she must draw on the experience and ideas of others in order to succeed. Entrepreneurs will actively seek the advice of others and will make many business contacts to validate their business ideas. The entrepreneur who is a loner and will not talk to anybody will never start a successful business. 'ob !oppers ! recent study of successful entrepreneurs showed that most of them worked for a large corporation for a

number of years before they started their own business. %n every instance, they used the corporate structure to learn everything they could about the business they intended to establish, before they started. Entrepreneurs are not ob hoppers. (enture Capital )sers Entrepreneurs know that venture capital money is one of the most expensive forms of funding they can get. .onse#uently, they will avoid venture capitalists, using them only as a last resort. Most entrepreneurs fund their business from personal savings or by borrowing from friends or lending institutions. *eceptive &ndividuals &ome believe that to make it as an entrepreneur, you have to be deceptive and step on anybody who gets in your way. -n the contrary, this mode of operation doesn't work for the entrepreneur. The truly deceptive entrepreneur will not be able to seek help from others or retain suppliers or customers. He or she will ultimately fail. Li+ited *edication That entrepreneurs are not dedicated to any one thing is a myth. /edication is an attribute that all successful entrepreneurs exhibit. They are dedicated to becoming their own boss. To this end, they'll conduct extensive research campaigns into the advantages and disadvantages of their business ideas in their dedicated drive to start a business.

College dropouts make better entrepreneurs. Today, Silicon Valley is debating the Thiel Fellowship, which offers students $100,000 to drop out of college. The logic? That higher education is overpriced and unnecessary, and that budding entrepreneurs are better off building co panies than studying irrelevant sub!ects. "o doubt so e brilliant people ay be able to get by without a college education. #ut our research finds that $.S.%born founders of engineering and and technology fir s tend to be well educated. &nd on average, co panies founded by college graduates have twice the sales and wor'force of co panies founded by people who didn(t go to college. Surprisingly, attending an elite university doesn(t provide a significant advantage in entrepreneurship. )hat atters is that the entrepreneur gains a degree* the choice of a!or or college doesn(t play a big role in success. The greater the education of the founder, the lower the rate of business failure and the higher the business(s profits, sales and e ploy ent.

The external environment

A business converts inputs into outputs in order to make a profit. However, the business does not exist in a vacuum, it exists within an external environment consisting of the actions of other players who are outside the business. The external environment consists of:

Competitors: Competitors actions affect the ability of the business to make profits, because competitors will continually seek to gain an advantage over each other, by differentiating their product and service, and by seeking to provide better value for money.

The Economic System: The economic system is the organization of the economy to allocate scarce resources. The economy tends to go through periods of faster and slower growth. usinesses prosper when the economy is booming and living standards are rising.

The Social System: The social system is the fabric of ideas, attitudes and behavior patterns that are involved in human relationships. !n particular businesses are influenced by consumer attitudes and behaviors" which depend on such factors as the age structure of the population, and the nature of work and leisure.

The #onetary System: The monetary system facilitates business e$change. #onetary activity is based around earning, spending, saving and borrowing. #oney has been likened to the oil that lubricates the wheels of commerce. #onetary activity involves businesses in a web of relationships involving financial institutions %e.g. banks and building societies&, creditors, debtors, customers and suppliers. ' key monetary influence for business is the interest rate. (igher interest rates increase business costs and act as a break on spending in the economy.

The )olitical*+egal System: The political*legal system creates the rules and frameworks within which business operates. ,overnment policy supports and encourages some business activities e.g. enterprise, while discouraging others e.g the creation of pollution.

The Environmental System: The environmental system is the natural system in which life takes place. !ncreasingly businesses have become aware of the relationship between their economic activity i.e. making goods and services for profits and the effects that this has on the environmental system.