6 Misconceptions of Small Business Ownership

So many misconceptions about being self-employed and owning your own business. Here are a few I’ve experienced in my business life that maybe you can connect to also.

Misconception #1 of Small Business Ownership: Obviously, You’re Rich

Anyone who is an entrepreneur, or has started a small business of any kind, has had to deal with the perception that because they own a business, they must be rich. Oh how I wish this was true. And, logically thinking, if it was, then the small business failure rate wouldn’t be running at around Y1-25%, Y2-36%, and Y3- 44% (staticbrain.com).

Business Failure Rate

Although, most start-ups begin on varying budgets, the idea here is that most entrepreneurs are entering into this area of their lives because of one of two things. Either necessity, or passion. The biggest being passion. Most entrepreneurs will tell you that it’s the elusive desire to work for themselves, provide a much needed product or service, or the freedom of being their own boss.

I actually started my business in design from a desire of both necessity and passion. My necessity pushed me further into growing my business and that passion kept me consistent in my desire to grow as a business owner. Both for financial and personal freedom.

Whatever the reason may be, assume that at the start most entrepreneurs are barely making ends meet. That most are definitely fearful of what their financial future looks like. That they have risked a great deal in order to have taken this leap to pursue their passion in entrepreneurship.

So to be safe, this would not be the best time to be hitting them up for a loan. In fact, if you are friends or family with a new small business owner in your circle….take them to lunch. Trust me, they will appreciate it.

Misconception #2 of Small Business Ownership: You Have Copious Amounts of Free Time

It’s not unreasonable to think that self-employed individuals definitely have some flexibility in their schedules. As a matter of fact that’s one of the greatest benefits of working for yourself.

However, don’t confuse that with “copious amounts of time” it’s just not reality. Honestly the opposite is true. Especially if you’re building your business with sweat equity. You literally don’t have “hours” you work because you are willing to work at any hour for pretty much any client. Ok, well that doesn’t sound great, but you know what I mean.

As a designer, the term “starving artist” takes on an entire new meaning. I understood that I was willing to take any job, any specs, and pretty much at any rate just to get SOMETHING in the works.

Anytime you perceive “free-time” in all reality is lost opportunity to work.  Small Business owners will learn either by reading what I’m saying, or learning the hard way, that they have to stay busy. There is always work to do, even if it’s building your business. You should always be your first client.

Misconception #3 of Small Business Ownership: As Long As You’re a “Friend” We Won’t Charge You

I mean you’ve been a friend since 1st grade why wouldn’t I give you something for free? Well, probably for the same reason that you can’t go into your job and give them a week worth of free employment. If the purpose of your business is to make money then I will charge you. You won’t get free work, whether a friend or family member. If you’re making money in your venture, then expecting free design work really isn’t fair.

One lesson I learned early is if you DO discount a rate, show it on the invoice. Not to let the client know how much they are saving, but to show the value of the work they received. Nothing hurts your business worse than you undervaluing your product or service. Sure it may be necessary to cut your rate, put a product on sale, in order to get the customers attention….but don’t do it blindly. Make sure your client knows they got a deal. Yes, even friends and family.

Misconception #4 of Small Business Ownership: We NEVER Work for FREE

Ok, so I’m not a complete stickler. I’d be lying if I said I never work for free for friends and family, but I’ve found a way to incorporate that into some specific boundaries that I have established for myself and my business.

The first area that I work for free for friends or family are life events. Graduation Announcements, Wedding Invites, Funeral Programs etc….. I WILL design these for free. I don’t know why, I’ve just never felt right about charging for these. Maybe it’s the sentimental part of me, but if I can be a part of the atmosphere of the event, then I’m more than honored to do this work. That one for me was always a no brainer.

The Second, I am open to consider doing free work for ANY company/business/event that is a not-for profit business. It’s at my discretion and according to my availability. I do like to take on pro-bono work at least a few times a year, or when business is slow. It’s also a great source of inspiration because most non-profit work, in design at least, serves to be a great source of design exploration.

There’s a ton of freedom with design work in this field because the majority of people you are working for appreciate you helping them, and it feels good to do it. I’ve heard of designers using this as a means to gain exposure for their business. idk, I guess that’s ok, a free plug. But if you’re doing pro-bono work it should be done without any strings attached (and that means no notoriety). Of course, you find your boundary and work within them.

I think it’s important to not turn into a tyrant or scrooge, when you become a small business owner. Which means staying faithful to the friends and family that were faithful to you. Give back from your passion what you can. I’m not saying give away at the extent to damage your business venture, but “give-back” should constitute at least some value of your services and yes the recipients of that should be your closest friends and family members and those within the community that could benefit from what you do.

Misconception #5 of Small Business Ownership: You Need a Job? We’re ALWAYS Hiring

For some reason it seems like if you own a small business, long lost friends, family members, ex-colleagues, and old high school sweethearts…. reach out to you in order to find employment. U.S. Small Business Administration show small firms employ just over half of the private-sector workforce and created nearly two-thirds of nation’s net new jobs over the past decade and a half.

Now with that kind of figure, of course one would assume that we’re always hiring just because our neon open sign is lit, and we have purchased our business license. NOW, let’s understand that the term “small business” is a broader term on a national level than the small business I’m discussing.  The SBA considers firms with fewer than 500 employees a “small business.” I’m discussing the mom & pop shops and the one-woman shows.

It costs money to hire an employee. Even one, and even minimum wage. There are taxes involved and most of the time the help we need isn’t in the menial tasks that we COULD potentially hand off to someone else. We need help in the areas that are usually more technical, more strategic with a specialized skill set.

So, is the first line of jobs available for my business going to be someone who can answer my phone, send out my invoices, or respond to emails like an administrative assistant? Not likely, because what I need are skill sets that will expand upon the businesses and services that I’m offering or wanting to offer my clients.

So for a designer, I’m looking to hire employees like an accountant, business strategist, blogger, content strategist, web developer. These as you can see are all specialized skill sets. Once I’m in a place to not have to answer emails personally to clients, well then this blog will no longer apply.

Misconception #6 of Small Business Ownership: Clients Shmiants

I swear it took me YEARS, and I’m not exaggerating to say YEARS to convince my family (especially my mother) that I had legitimate “clients”. That my design business was no longer just something I did for fun. That I literally worked with large corporations and legitimate business heads in areas of technology, real estate, service industry, media, etc…

For some reason, it’s hard for people to see the person I used to be, and the business person I’ve grown into . Honestly, I’ve had a tendency to keep my business and my family separate for a lot of the formidable years of  business growth, because I didn’t want my already insecure spirit to be shaken. It’s hard being in business for yourself. It’s even harder to not have the people closest to you fully on-board with your vision.

Keeping your business plans, your expectations, hopes and dreams limited to a trusted “few” is something I highly recommend. Your business is honestly to be protected, and sometimes that protection needs to be implemented against a well meaning Aunt Sally, that thinks your business hopes are “cute”.

Until a point where your business is speaking for itself, so to say, keep it under wraps. Even Jesus was kicked out of his hometown because those that saw him growing up weren’t geared towards seeing him as anything other than the child he had been. This is a great lesson for business as well. Keep it under wraps. Let your family and the outside world see it’s growth from their own perspectives. All in due time.