Last Updated Apr 20, 2011 5:15 PM EDT
Myth #1: Entrepreneurs fail because they lose sight of the big picture.
The truth: For a small business, short-term results are all-important. For example, focus on the long term where revenues are concerned and you'll quickly run out of cash. Revenue and cash flow are everything to an entrepreneur, even long after a small business is well established.
You're better off setting a short-term revenue target. If possible set a daily target, at the longest a weekly target. Base your target on how much revenue you need to generate during that time period to stay in business. Monitor results and take decisive action whenever you fail to meet the target. By all means create long-term plans and strategies, but think and operate from a short-term, tactical perspective. Otherwise there won't be a long-term.
Myth #2: Busy entrepreneurs fail to grow their businesses through one of the easiest and least expensive strategies: networking.
The truth: While networking does occasionally pay off, count on networking to drive results at your own peril. Why? Networking is hard work. Successful networking requires a lot of time and effort and consistent, focused follow-up. Attending networking events, asking for referrals, passing out business cards, doing favors in hopes of building positive word of mouth... all can be valuable but the payoff (if any) is very hard to predict.
Instead, focus on sales. If you spot easy opportunities to network, fire away, but allocate at least 90% of your time on direct sales activities and 10% on networking. Your business needs sales, not just a list of contacts.
Myth #3: Entrepreneurs fail because they depend on too few customers.
The truth: True, losing a major customer when you only have a few can be devastating. At the same time it's often easier and less expensive to grow the amount of business you do with existing customers than it is to land new customers -- especially if you serve your existing customers well.
One easy way to increase the business you do with a customer is to ask, "Is there anything else I can help you with?" If you've built a good working relationship, a customer may say, "I wish you could. We have (whatever it is) coming up and I haven't found the right vendor yet." Provide a solution even if expanding your capabilities is necessary.
Myth #4: Entrepreneurs fail because they price too low.
The truth: The opposite is often the case: Entrepreneurs typically feel their time/skills/products/etc. are "worth" more than they are (or they feel they "deserve" to be paid what they are "worth"). If you sell products, low prices may be the only way to gain market share. If you provide services, how do you expect to command premium rates without a track record?
Focus on keeping startup and operating costs as low as possible and expect to win some customers based on price. Lots of experts say the best strategy is to set prices high so customers "feel" they will receive premium service. Sounds good, but without a means to immediately establish credibility or exclusivity that pricing strategy usually won't work.
Myth #5: If an entrepreneur fails, it's because she lacks focus.
The truth: In reality, the key to success, especially early on, is generating revenue any way you can. Instead of adopting a laser-like focus your guiding business principle should be, "We will do or sell anything a customer will pay us for."
The key to business success is making profits, and without revenue profits are impossible. I ghostwrite books, but along the way I've planned and catered corporate events, written and produced videos, facilitated meetings, developed productivity improvement plans for manufacturing facilities... if I can do something and a customer will pay me for it, why wouldn't I?
Focus can be good, but too much focus can cause you to miss opportunities; plus it's boring. Revenue is better, and profit is best.
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