6 Common Myths About Running A Small Business, Debunked
This article is sponsored by Intuit Small Business.
In some ways, being your own boss feels like a modern version of the American Dream. At least, the Instagram-friendly “#bossbabe” idea of it: making money while working from anywhere, as long as “anywhere” is a white sand beach with crystal blue water and cocktail service.
But like the Instagram version of anything, there’s a lot of mythology that goes into that idea of entrepreneurship.
As a small business owner, most of my “working from anywhere” happens at a small desk in the corner of my apartment, in a space that also functions as my bedroom. I keep inventory tucked into every free corner of the one bedroom I share with my husband, digging products out from storage containers under the bed, the back of the closet, the top shelf of the pantry and the inside of the ottoman whenever I get an order.
While the work that goes into running a business differs for every entrepreneur, many of the myths surrounding small business ownership are universal. That’s why we’ve partnered with QuickBooks Live Bookkeeping to help you recognize them and avoid unrealistic expectations while pursuing your own being-your-own-boss dreams.
Myth #1: All You Need Is Passion and a Good Idea
Just because you have a good idea or a project you’re passionate about, doesn’t mean you have a viable business idea that other people will buy into. The problem with the “pursue your passion” narrative, especially when it comes to starting a business, is that it prioritizes what you care about. But running a successful business relies on providing a product or service that’s valuable to others.
Even if you have what you might consider a great idea and a passion for pursuing it, that doesn’t mean that anyone else will see it that way, much less be willing to pay for it. In other words, people don’t pay you to be passionate. They pay you to solve a problem or fulfill a need for them. If you want to build a successful business, your focus can’t just be on your own passions and ideas, it has to be on serving the needs of your clients and customers.
Myth #2: You Have to Do ALL The Things
Though you might be the one that’s accountable for everything that happens in your business, you don’t have to be the one actually running every aspect of it.
There’s a lot that goes into operating a business that goes far beyond delivering whatever product or service you provide — from making sales to sweeping the floors. When you’re in start-up mode, you’re probably taking on a lot of those tasks, but the more you can learn to delegate, the more time you’ll be able to dedicate to the work of growing your company.
For example, you might make incredible custom furniture, but the skill of creating that furniture is different from the skill of running a custom furniture business where you’re not just focused on design and carpentry, but you’re also tasked with generating the sales and managing the cash flow that keeps your business afloat.
While you might not be able to hire employees right away, you can utilize business tools to better leverage your resources. For example, utilizing a tool QuickBooks Live Bookkeeping, which assigns you a dedicated expert to ensure your financial records are accurate and up to date, can help free up your time to focus on the parts of your business that only you can do.
When you do begin to grow, and start hiring contractors and employees, you can further leverage tools like QuickBooks Payroll to manage your payroll and access a suite of services from HR to health benefits.
Myth #3: You Are Your Own Boss
Running your own business might mean that you get to make the final call on business decisions, but it also means you’re the one who is going to be held accountable for those choices. And you’re not just accountable to one person – you’re accountable to every client or customer you have, not to mention investors and employees.
When you make the switch from employee to business owner, you’re making the switch from answering to one boss to answering to everyone. And the ultimate responsibility for all things in your business, whether you manage them directly or not, shifts to you.
Myth #4: You Have a Lot More Free Time
While viral success stories of entrepreneurs position business ownership as the key to ‘time freedom’, the idea that starting your own business is somehow less time consuming than a traditional 9-5 is misleading. While you might work different hours, it’s unlikely that you’ll work fewer — especially in the first few years of building your business.
When you work a 9-5, you’re also likely to get your scheduled paycheck regardless of how well your company is performing. Policies like sick leave, vacation time and parental leave can keep the money flowing, even when you’re not working.
As the owner of your own business, you might have the freedom to dictate your schedule, but the responsibility for your company’s performance never ends. And if your company isn’t making money, you’re probably not either — even if it’s because you’re sick or on vacation or taking time off to start a family.
Myth #5: Starting a Business Lets You Write off All of Your Expenses
Speaking of bookkeeping — a business is not an excuse to write off the cost of your lifestyle. While it’s true that businesses can deduct a lot of expenses that individuals can’t, you still have to follow the rules when you become a business owner. So no, you probably can’t write off an entire backpacking trip to the Andes just because you posted about it on your business’ Instagram page.
The rules governing deductible business expenses can be complicated and change often, which is why accounting and tax prep is one of the first things many small business owners delegate.
You know your business, you know how to create the product, but stuff like reconciling your accounts, making sure you’re setting aside enough money for taxes and preparing the monthly financial reports that will help you make key business decisions, are areas where most business owners could use extra support. A service like QuickBooks’ Automatic Tax Filings is an easy way to take some of that off your plate while making sure you’re playing by the rules.
Myth #6: Sales Is the Most Important Number In Your Business
Measuring your business success by your sales numbers alone is like measuring your personal financial health by just looking at your income.
It doesn’t matter if you make $20,000 each month if you spend $20,001. The same is true for small businesses. It’s your cash flow, not your sales, that’s going to tell you whether your business is sustainable.
So take the time to review and understand where your money is going each month by looking at your profit and loss statements, reviewing your balance sheet, and working with a professional using a service like QuickBooks Live Bookkeeping if you need the additional support.
Without cash you can’t pay your bills, you can’t pay your employees and you can’t pay yourself. And if you can’t do that, you won’t have a business that’s sustainable, much less one that supports your being-your-own-boss dream.
Image via Unsplash
Like this story? Follow The Financial Diet on Facebook, Instagram, and Twitter for daily tips and inspiration, and sign up for our email newsletter here.
