from Entrepreneur.com
More people might strike out on their own if they knew the truth about starting a business, according to the Kiplinger Business Resource Center. Here are Kiplinger's top ten myths of entrepreneurship:
-- You need a lot of money. In truth, typical startup costs for a small business run about $25,000.
-- Venture capitalists are good sources of money. The vast majority of new businesses do not tap money from venture capital firms.
-- Most investors are rich. About three-quarters of investors are friends and relatives of the founder, and 32% of those have a household income of $40,000 or less.
-- You can 't use debt to finance a new venture. In truth, 53% of the financing of companies two years old or younger comes from debt and only 47% from equity.
-- Banks don't lend to startups. Federal Reserve data show that banks account for 16% of financing provided to companies two years old or younger.
-- Most new businesses are in "attractive" industries. Unfortunately, most entrepreneurs attempt to start businesses in industries in which they are most likely to fail.
-- Growth of a new business depends mainly on the founder's talent. Choosing the right industry is much more important.
-- Most entrepreneurs earn large salaries. Not so. "The typical profit of an owner-managed business is $39,000 per year," according to Kiplinger.
-- Most start-ups attain the returns venture capitalists look for. Actually, very few reach the $100 million sales within six years that venture capitalists typically seek.
Starting a new business is easy. Just ask any business founder if this is true!
More people might strike out on their own if they knew the truth about starting a business, according to the Kiplinger Business Resource Center. Here are Kiplinger's top ten myths of entrepreneurship:
-- You need a lot of money. In truth, typical startup costs for a small business run about $25,000.
-- Venture capitalists are good sources of money. The vast majority of new businesses do not tap money from venture capital firms.
-- Most investors are rich. About three-quarters of investors are friends and relatives of the founder, and 32% of those have a household income of $40,000 or less.
-- You can 't use debt to finance a new venture. In truth, 53% of the financing of companies two years old or younger comes from debt and only 47% from equity.
-- Banks don't lend to startups. Federal Reserve data show that banks account for 16% of financing provided to companies two years old or younger.
-- Most new businesses are in "attractive" industries. Unfortunately, most entrepreneurs attempt to start businesses in industries in which they are most likely to fail.
-- Growth of a new business depends mainly on the founder's talent. Choosing the right industry is much more important.
-- Most entrepreneurs earn large salaries. Not so. "The typical profit of an owner-managed business is $39,000 per year," according to Kiplinger.
-- Most start-ups attain the returns venture capitalists look for. Actually, very few reach the $100 million sales within six years that venture capitalists typically seek.
Starting a new business is easy. Just ask any business founder if this is true!
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