Myths of Entrepreneurship – Ep 19 Blog Post
[Adapted from Episode 19 of the Profit First Nation podcast]
It’s time we dispelled some myths of entrepreneurship. Myths are nothing but widely held (but false) beliefs after all, so let’s all agree to let these myths go here and now. By the time you’re done reading this post, we hope to have convinced you to stop believing in the false truths we tell ourselves as entrepreneurs.
Entrepreneurship especially has countless myths associated with what it means or looks like to be an entrepreneur. In fact, author and businessman Michael Gerber has a whole series of must-read books (aptly titled The E-Myth) that are dedicated to exposing and correcting many of these entrepreneurial myths.
One of the tenants of leadership that we love here at Profit First Nation is: “all of us are smarter than one of us.” When we tap into that collective entrepreneurial knowledge, we are much more likely to find and make use of the resources we need to move our businesses toward permanent profitability
So let’s list some of the biggest myths we tell ourselves as entrepreneurs. The first two are simple, yet rampant:
Myth #1: Because I am an entrepreneur, I have financial freedom
Myth #2: Because I am the boss, I don’t have to answer to anyone else
If you want financial freedom, you have to put yourself on the path to permanent profitability. And the first step toward permanent profitability is getting your butt to the bank and opening the five foundational accounts of Profit First. This will help you to stop operating your business check-to-check and give you a much clearer picture of your business’ financial situation.
Once you’ve gotten your affairs in order at the bank, you’ll likely want to find ways to become more profitable right away. To do that you’ll need to decrease your expenses and increase your margins on what you sell. This leads us to directly to our next myth of entrepreneurship.
Myth #3: I need to reduce my prices to sell more
Friends, this is just pure, Grade-A b*llsh*t. For virtually every small business, the way to incrase your profit margin is to raise your prices – not lower them. We repeat: do not lower your prices – raise them! Selling more at a reduced price will not solve your profit problems. In fact, it will actually put more strain on your business. Trust us on this. You need to cater your product to a particular category of clients to do this, which ties in nicely with our next myth.
Myth #4: I need to design my product or service to serve everyone
No. Just no. If you attempt to do this you will become both physically and mentally exhausted. There are simply too many people to serve, and it is impossible for you to meet the varied and kaleidoscopic needs of *gestures wildly* everyone. You cannot be so flexible and accommodating as to meet the needs of everyone who may want or need what you have to offer, so you must decide on a particular category of clientele and target your products and/or services toward them.
This is why it is incredibly important to not have all your eggs in one basket, so to speak. To extend the metaphor, you’ll need to add more chickens to your henhouse to produce more eggs in more baskets. That way if one chicken stops producing eggs you’re not sweating, because you can depend on those other chickens to sustain you.
In other words, if you want to serve a broader clientele, you’ll need to diversify your offerings by offering other products or services that will appeal to a different category of clients altogether (or at least a different subset of your target client).
We hope that by exposing these myths and shedding some light on these commonly-held (but false) beliefs, you feel empowered to continue on your path toward permanent profitability.
For more information on how to start with Profit First, visit our resources page.