Myths, Misconceptions and Mistakes of First-time Business Owners
Whether it's a close friend, next door neighbor, bar buddy or your own mother, everyone has their own business advice to share with first-time business owners. We invited expert business counselor Judy Bumpus into your circle of wisdom to help debunk the biggest misconceptions and myths about opening a new business in Missouri.
Judy has worked with entrepreneurs and small business owners for more than 25 years, providing one-on-one counseling and training. She assists business owners and aspiring entrepreneurs with everything from starting a business to creating a business plan to becoming a legal, tax-paying entity. Judy is the client services manager at the Women’s Business Center in Kansas City, a free business center offering classes, seminars, peer round tables, one-on-one consultation, networking and referrals for entrepreneurs and small business owners.
Through the years, Judy has heard some pretty crazy misconceptions first-time business owners have about opening a business. Despite emerging new innovations and industries, the questions she receives and the myths she’s debunked remain the same. We asked her to share some of the most common misconceptions, myths and mistakes she’s encountered and shed some light on the truth about starting a new business.
If you’re starting a business for the first time, know that there are free or low-cost resources all over the state of Missouri that can assist you with everything you need to start or grow a business.
Here are some of the most common myths and misconceptions Judy has negated while working with first-time business owners.
Myth: If I file for my LLC, I’m in business.
Filing the paperwork for a limited liability company is establishing how your business is going to file taxes and outlines the liability of a business.
“Unless you are selling a product or service and collecting money, you are not in business. I don’t care how many pieces of paper you file,” says Judy.
Find a business class near you in Missouri on how to land your first customer.
Myth: I will have more time with my family if I’m starting my own business.
You won’t have more time to spend with your family—you will actually have less. This can be a hard fact to face as an aspiring entrepreneur.
“When you’re working for someone else you may have an admin person, a coworker and a support of systems in place. Most entrepreneurs are working more than 40 hours a week, especially in the startup space for the first three years,” says Judy.
Myth: I want to be my own boss.
“You literally go from having one boss to every customer being your boss,” says Judy. “You end up with tons of bosses because whoever is paying the bills is the boss.”
You may be the boss in how you manage your business and the day-to-day operations; however, as a business owner, you have to satisfy vendors, customers and staff.
Myth: Once I have my EIN number, I’m in business.
Every business owner files for an EIN or employee identification number. The EIN is used to file documents and tax forms in place of the business owner’s social security number. Filing for an EIN does not mean you are in business. It means you can file paperwork on your business’s behalf.
Need to know how to file for an EIN in Missouri? Call us at 866-870-6500 or check out our Registrations, Licenses and Permits page.
Myth: I’m going to make a profit right away.
“Anytime you start a business, you're going to have all of the upfront startup costs you’ll have to pay before you land your first customer,” Judy says. These costs can include licenses, insurance, workspace, supplies, training, marketing, consultants, etc.
“And then you have to cultivate customers. People usually have to hear your name 8-10 times to understand you’re in business before they think of you. So you spend a lot of time building and getting name recognition for your business before you start having a lot of customers,” she says.
Do you need to build a marketing strategy or learn the basics of a business plan? Classes and workshops are a good place to start to get the business basics down.
Myth: I’ll get a free grant to fund my business.
This is far from reality. “Foundations are mission-driven and are not going to give funding to an individual to make money off of their money. They want their mission to be forwarded,” says Judy. This means unless your business has a strong social mission that aligns with the foundation's, your chance of receiving a free grant is slim to none.
For the scoop on grants, check out our guide on Missouri grants.
Myth: I need to buy or rent a space before I can open my business.
“It always surprises me the number of entrepreneurs who sign leases for storefronts before meeting with a business counselor or attorney,” Judy says. Starting a business is exciting but do not sign a lease without consulting a qualified third party.
“By the time they see a business counselor they are already in trouble,” she says. “Business owners will sign a lease, but the parking lot isn’t ready or the fire marshal won’t approve the space. Meanwhile, they must pay rent for a space they can’t use. That's not thinking like an entrepreneur,” Judy says.
Learn how to think like an entrepreneur by taking a class or meet with a business counselor before you sign a lease.
Myth: I need to quit my job before starting a business.
Don’t quit your job unless you have enough money to sustain you and your family to cover the period of time it takes to make a profit or break even.
“Entrepreneurs are risk takers, but that's a lot of risk to take. The breadwinner in the family will quit his or her job to start a business and by the time they meet with a counselor for advice they're already in trouble because they aren't making the money they need to sustain a living,” advises Judy.
Bottom-line: Meet with a business counselor or take a class before starting a business.
“When people are about to start a business they need to have someone who has the experience to help them look at the business impartially,” advises Judy.
Friends and family are often the biggest supporters of entrepreneurs but can also be the biggest detriment by giving misguided advice and blind encouragement.
“Entrepreneurs fall in love with their concepts. It takes somebody who is candid and detached from the business to ask a hard question like ‘who is going to pay for your product or service?’” says Judy. “It may be a great idea, but if you don’t have customers, then you don’t have a business–at least a profitable business.”
Check out these Missouri business centers offering counseling and mentoring all over the state ready to assist you every step of the way.
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