5 Startup Business Myths in Small and Home Based Businesses

To give you an example and discuss a few of the myths that cloud the concept

of starting a small business. Let us go over the most common myths that

typically surround the small business owner and discuss their merits and the

facts in each instance. In short many of the things you will hear and run

into are not facts - they are urban legends, misconceptions about starting a

business that have been repeated so often now that many people believe them

to be true even when they ought to know better. In many cases as with the -

SBA has money to loan- myth there is a kernel of truth once you get past the

misconceptions

* There is free money available to help you start your business

If something sounds too good to be true it not only probably is I can

guarantee you it is! Our government only gives away money to foreign

interests with whom they feel they can buy loyalty or concessions - not to

their citizens. While it may be true that some state governments have

policies in place to help people such as veterans, minorities or people with

disabilities those special programs have very specific requirements that you

have to meet before you are eligible. If someone claims otherwise, especially

if they want to charge you a fee for a 'list of lenders and free grant

providers' run do not walk away from them!

The Small Business Administration has millions of dollars of money available

to loan directly to small business

The SBA is an independent agency of the executive branch of the federal

government, and the government is not in the habit of giving anything away.

That includes loans, believe it or not! The SBA is a great resource for small

businesses, and does act as a guarantor for one of three different loan

programs that can be of use to the small business owner, but they themselves

do not provide or arrange for the loans.

The three loans they act as guarantors for include the Seven-A (7a), the Five-

O-Four (504) and the Seven-M (7m) or micro-loan as it is known. Details about

these different loans which the SBA will guarantee and oversee compliance

with for small businesses are not in the scope of this article.

What the SBA does in these types on situations is to help arrange financing

through various lending partners including local banks and nonprofit

corporations and to oversee compliance on the part of the small business with

the loan terms, thus assuring to the lenders that the loan will be repaid.

* People are lining up to loan money to startup companies

Venture capitalists DO exist, and while in some cases they have been known to

finance startup companies that is not what they principally do, nor would it

be wise to do so. Since a venture capitalist entire purpose of investing into

a company is to make money and more then half of the startup companies

created every year go belly-up just leaving that money in the bank earning 5%

would do a better job them financing startup companies hand-over fist.

One of the rules of thumb that investors use is that a good three year track

record needs to be in place, along with a great business plan and the

potential at least for robust growth before they are willing to put their

hard-earned money on the table. If you can show a great strategy with strong

growth potential and have a product or service with a national client base

that has so far been untapped you may be able to get them to bend a little -

but the thought that investors are actively looking for someone to give their

cash to is definitely an urban legend!

* Starting your own business allows you freedom to choose your working hours

Only someone who has never had a job like raising kids, or farming that has

tasks to be done whether you are sick or not would ever come up with a saying

like this, and yet it is one of the most common business-owner myths out

there. Unless you have so much money that you don't need your business to

succeed any 'freedom' you have will be going right out the window the moment

you open your small business or shop! You may have a bit more flexibility in

the scheduling of your free time, but starting a small business will

definitely cut into that free time if you plan on making it a success.

* There are many write-offs you can take on things you otherwise can't write

off

The IRS and the government do NOT give away money. Remember that - that is

the reason for myth number one and two above, and unless you enjoy being

audited it's never a good idea to write off any expenses not 100% related to

your business endeavors even if they are used in relation to the business as

well as your personal life. The best rule of thumb is to ask yourself whether

or not you would still have this expense (say your car for instance) if you

were not running the small business, and if so in any form or fashion then it

is not a legitimate write-off.

Some common write-offs which are normally allowable include any computer and

business software, rent, salaries and monies paid to independent contractors,

advertising costs and even a percentage of vehicle costs if its use can be

tied to the business in question. In some cases strict rules apply, such as

whether you use the computer for personal use as well as business etc. so

checking the law first is a good idea!

* The right business sells itself and doesn't need a marketing or business

plan to succeed

This is very common now in the post 'dot-com' era, but remember folks there

is a reason it's the "post" dot-com era and not the dot-com boom. There is

simply no substitute for a valid business plan and understanding what is

necessary to sell your product or service to the public. Anyone trying to

tell you something otherwise is likely selling something he wants you to buy

from him right now before you go broke and give up the idea of starting your

own business! A related myth is that if you aren't getting a loan or looking

for investors you don't really need a business plan. While business plans are

necessary to get investors the purpose is not that but to ensure you

understand what it will take to be successful, and that you have a linear

outline for how to achieve those goals.

Summary

So now hopefully you see the type of information and assistance considered in

business startups - a little hope in the midst of all the hype out there.

Remember as mentioned earlier, in many cases as with the -SBA has money to

loan- myth there is a kernel of truth once you get past the misconceptions,

but as is always true anytime money is involved you should always be certain

of the facts before investing any of your money on the word of anyone,

whether a trusted friend and advisor or a stranger. After all it IS your

money you stand to lose not theirs!