Saturday, March 16, 2013

5 Business Startup Myths Busted


Many new students often share these apprehensions about starting their own business, or becoming an entrepreneur. They rather prefer to become an employee of an already existing business, preferably a large famous corporation. I would rather call these apprehensions as myths, as I have read and seen myself in numerous business start-up experiences, here they are:

Myth 1: Lots of Capital is required
You don't need capital to start a business; you need connections with people who have capital or goods which you may need to sell to some potential customer. Look around, is there anyone in your family, friends etc., who can provide you inventory on credit, or if you have someone in your friends or family, who can pay you advance in order to buy something they need on recurring basis?

If yes then you are through! you have started a business without investing a rupee on your own. Now this means you need to have a lots of friends or a big social circle, as more people you know, the more you have the chance of finding a supplier or a customer who can cooperate with you in such a fashion. In service oriented business you just need to spend a little time and money in just printing your visiting cards for example, or your profile on social media etc.

So more important than capital are contacts and entrepreneurship is simply a game of connecting people commercially and innovatively. Now once you have started the cycle of rolling cash, you can gradually reinvest your profits, and expand your customer base... Remember your experience with your previous customer and their testimonial is your biggest selling point.

Myth 2: Need some Job experience to start a business
That’s height of innocence; doing a job in a specific business function and doing a business are two different things altogether. Read Michael Garber's 'E-Myth Revisited' for details. When you do a job, you learn part of a process which is required to turn the wheel of a business organization, not the whole of it. So often your technical expertise in a specific business function only makes you believe that you can sell the same expertise into the market, or use it to start the same business, which is rather a composite of lots of processes and a variety of expertise. Also in view of Steve Blank, a start up is not a necessarily a miniature of a large corporation, often start ups are established and operated in a very different fashion then a large corporation, as hardly anything is structured within them. Therefore more of a commonsense, coordination in between different functions often doing them yourself, patience with lots of determination, etc. are they kind of traits you need to start a business.

Often a job experience does helps in this context, however that experience has to be rich enough to cover all important business functions necessary for the start up. May be that job helps you to identify a few customers or suppliers... But not always. 

There is another drawback in this you intend to be an entrepreneur in the long run, i.e. you might get used to the job environment, and as you advance in your career your comfort zone established with the structured environment might become a barrier in starting up your own venture. Furthermore as you grow old, your responsibilities also grow, hence your ability to take risks also reduces as your family extends, you become a father, and your children staring going to school etc.

So the earlier you start, the better it may be.

Myth 3: Doing business is more riskier then doing a job
Yes unless it’s a government job. But otherwise you do job in a business which also carries its own risk and can fail... if it does then eventually its employees (including you) suffers as well. One can argue that risk of failure in the startup is very high. But it can be reduced if you use some common sense and try to grow organically, by connecting people with resources with those who are in need of it, as discussed above.

Furthermore, it’s also too subjective to assume that chances of failure are greater for entrepreneurs than for employees, as you can be kicked out of the job for the same reasons your business would collapse. Besides, if you are fired from a job, even because of no fault of yours, then this will be a huge psychological setback, as you were accustomed to a regular paycheck. But if you are an entrepreneur, you are instead accustomed with uncertainty, you are always mentally prepared for it, therefore if your business collapse, then you are in a relatively better psychological state than an unemployed person. In any case a careful, no-nonsense and intelligent entrepreneur wouldn't keep all his eggs in one basket and would diversify to the extent possible to minimize his risks.

And from an Islamic perspective, rizq is determined by Allah s.w.t, so if whatever is written in your name will be provided to you if you made an honest effort for it. So this concept makes lots of related apprehensions irrelevant for a Muslim entrepreneur. So concentrate on increasing Barakah in your rizq by having faith in Allah's (s.w.t) mercy and doing only the halal or legitimate things even if the profitability is seemingly less in doing so. Remember, according to a hadith 90% of a the rizq goes to traders, businessmen, and only 10% goes to the employed. So the choice is yours.

Myth 4: Law and order Situation is a barrier
According to reports, countries with worse law and order situation have more entrepreneurs then we have in Pakistan. Check GEM report on Pakistan and see how our country is behind many other countries which are much worse, in different aspects.

Even if there is trouble in Pakistan, then you can always find intelligent ways to remain invisible. Like go online, don't open up an office, or use a signboard or avoid marketing through mainstream channels, if you don't want to take the heat. Or maybe you can make some friends with those who would later create trouble for you, if you know what I mean!

Also the law and order situation is never going to be the same always; there are equal chances of it improving in future. Also once you have started a business in cognitive mode, and have got some experience, then you can always replicate it other safer places.

Myth 5: Need a very innovative idea
Why, really? As long as there is a valuable in your hand, and that means almost everything, even garbage has some value for someone, you can sell it to the person who is in need of it. Remember the first point above. Don't look at some innovative idea; rather find an opportunity to complete a chain between a supplier, YOU and a customer. I am not suggesting that innovation is bad, but it shouldn't get on to your nerves and an excuse for not moving forward. On the other hand, for innovation to be really practical, first you need to spend some time to study the value chain of your business. Before that, its only a wild guess that where in the market there are gaps to be filled with some innovative ideas. These gaps can be anywhere in between the value chain, i.e. product design, packaging, distribution, payment method, sales method, customer service or relations, etc, but you can't really notice unless you are in the market doing business yourself. Yes, you need to start the cycle of delivering the product/service to the customer and receive payments and to do that you really don't need an innovative idea. Start with selling vegetables for e.g. and see where are the gaps in the chain? You will surely see them in a few months if you have an eye for it... How can you ever know how deep the rabbit hole goes is unless you don't decide to go down and see it yourself!

So there are a few, if you have some more questions, then please contact me at omarjavaid(at)outlook(dot)com, I will be happy to answer your any further queries InshaAllah.

Author is an academic researcher, author, blogger, social entrepreneur, activist, mentor and tweets @javaidomar 

3 comments:

  1. Excellently amazing and exciting too. Can you please mention me the source of your reference... I am happy that at least somebody gave this subject an attention.

    ReplyDelete
    Replies
    1. its based on my experience, what reference you are referring to?

      Delete
  2. I am an employee & I wants to start my own business but afraid of several things , any more suggestions for me ,(I am also MBA ERP student in KIET).

    ReplyDelete