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28 Dec, 2008

Entrepreneurs: Ten Myths to Be Broken

For: 100 Business In: Entrepreneurs

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10 errors that we think on the entrepreneurs

There are many ideas on entrepreneurs, and on the action to tackle. Between them, many are erroneous, and business myths have turned. Next we will see the most common ideas that are had of tackling:
1. A lot of money is needed to finance a new business.

It is not true. The typical starting only needs about $ 25,000 to be started. The success of the entrepreneurs who do not believe this myth, they design companies to work with little cash. They borrow instead of paying for the things. They rent instead of buying. And fixed costs convert into variable costs, for example, the commissions payment to his personnel instead of the salaries.

2. The capital lenders are a good place to go in search of money.

No, unless it initiates a computer or a company of biotechnology. Hardware and software, semiconductors, the communication and the biotechnology represent 81 per cent of all the dollars of risk capital, and seventy-two per cent of the companies of risk capital that obtained money in the last fifteen years or more. The funds of the capitalists only are applied to nearly 3000 companies for year and only approximately the fourth part of the companies estñan in starter phase. In fact, the probabilities of which a company will obtain money of a capitalist are approximately one of every 4000.

3. Most of the investment angels (those that give money to tackle business) are rich.

If rich means to be an accredited investor, a person with a clear patrimony of more than $ 1 million or an annual revenue of $ 200.000 per year, the answer is not. Almost the fourth three parts of the persons who provide capital to finance the business undertaking of other persons that not but friends, neighbors, coworkers or relatives. In fact, thirty two per cent they have a familiar $ revenue 40,000 per year or less and seventeen per cent they have a negative clear value.

4. The entrepreneurs have not to financierarse with debt.

In fact, the debt is more common than the solvency. According to the survey of Small and Medium Companies of the Federal Reservation of the United States, fifty three per cent of the financing of the companies that have existed for two years or less come from the debt and only forty seven per cent come from the solvency. Therefore, an entrepreneurs' big quantity that exists, they use the capital debt to finance his companies.

5. The banks do not give money to the companies of new creation.

This is another myth. Once again, the Federal Reservation shows that the banks represent sixteen per cent of the whole financing provided to the companies that have existed for two years or less. While sixteen per cent perhaps do not seem high, it is a three per cent superior to the quantity of money contributed by the most nearby top authority, like trade creditors, and it is superior to a heap of other sources like friends and the family, investment angels, risk capital, strategic investors, and the governmental organisms.

6. Most of the entrepreneurs begin a business in attractive industries.

Regrettably, the opposite thing is true. Most of the businessmen head for the worst industries for the business undertaking. The interrelation between the number of businessmen who create companies in a sector and the number of companies that fail in the industry is 0.77. This means that most of the entrepreneurs are choosing industries in which more probably they will fail.

7. The growth of a company that starts depends more of the talent of the entrepreneur than in the business that escoga.

I'm sorry but the industry that you choose to initiate his company has an enormous effect in the probabilities of which it will grow. In the last twenty years, about 4.2 per cent of all the company of new creation in the computers industry and office equipment they managed to enter the list of 500 companies of more rapid growth the United States. 0,005 per cent of the companies of new creation in the industry of the hotel and motel and 0,007 per cent of startings of the establishments of eating and drinking managed to enter this list. This means that the probabilities of which you will do the list of the Top500 are 840 times higher if a company of technology begins that if a hotel or motel begins. There is no open at all one about the effects of the managerial talent that has an effect simila in the growth of new companies.

8. Most of the entrepreneurs are successful financially.

We feel it, but this is another myth. The managerial spirit believe many wealth, but it is unequally distributed. The typical profit of a business owner is of $ 39,000 per year. Only ten per cent of the businessmen gain more money than the personnel. And the typical businessman gains less money that otherwise had been gained working for someone more.

9. Many companies that start achieve the growth in the projected sales for that his investors are looking.

Not even close. Of 590.000 new companies, or with at least an employee founded in the United States every year, the information of the Census demonstrates that less than 200 come to 100 million dollars in sales in six years, for which the capitalists look. Nearly 500 companies to come to the $ 50 millions in sales for that the sophisticated angels, like the Angels on Coast of Technology and the Group of the Angels look. In fact, only about 9500 company of coming to 5 million dollars in sales in this period of time.

10. To create a company is easy.

In fact it it is not. Most of the persons who initiate the process of beginning a company (the entrepreneur) do not manage to start it and working. Seven years, after beginning the process of creation of a company, only one third of the persons has a new company with positive cash flow superior to the salaries and expenses of the owner during more than three consecutive months.

P.d. It checks the entrepreneurs' test that we create to see what type of entrepreneur you are.

TOPIC: entrepreneurs

5 Responses to "Entrepreneurs: Ten Myths to Be Broken"

1 | Bitacoras.com

December 28th, 2008 at 1:50 pm


Information Bitacoras.com

If you wish it, you can click to value this post in Bitacoras.com. Thank you.

2 | Laura La Plata

December 29th, 2008 at 9:11 pm


There is true everything on what they comment, from my view point the most important thing is to the attitude of the entrepreneur, that it turns into engine that helps us to avoid all the obstacles that intervene in our way.

In my case, I am initiating a project with a team of work, and although beginning is not easy, neither it is impossible.

I recommend to initiate a project based on the web and especially in the web 2.0 a page where they will guide them from the beginning to create a proper project in the web.


I hope that it they should be so many utility as to me.


3 | Free Internet Publicity

January 7th, 2009 at 1:10 pm


Hello, very good article.
And if, there is a lot of erroneous information about the enterprising being, especially the enterprising being in Internet.

Greetings …

4 | peter

May 24th, 2009 at 1:29 pm


the article is very good, it is encouraging for us the entrepreneurs, it helps us morally, gives us a breath on behalf of the experts.
one of the things that have helped me to continue and improve is the criticism, be constructive or the opposite, of equal way it is digestible.
one as entrepreneur has a big responsibility, to go out forward not alone for us, but for the persons who deposit his faith in our projects, in our sleep, and I do not refer only to the creditors, but also to the persons who depend on the employment that is generated thanks to the starter of the projects.
that's why the fact is that concidero of big importance this article, as I already said it, a big moral rel="nofollow""" on behalf of the experts, they give us breaths to be continued and motivate to that resagan through the fault of these myths.

thank you very much. greetings to all and my best desires.

5 | Derkra College

November 5th, 2009 at 8:18 am


Congratulations for so interesting article

In the world exite many creative people with desire of progressing economically, but that simultaneously does not dare for fear to face a field where it can fail and lose money, the true thing is that it needs effort and a suitable training.

We can help those who are interested in learning skills and extratégias TV/radio commercials to go out forward with a company or to close major business in his current work, since we are provided with the experience and the necessary desire to make to grow to our region.


Derkra College
Program of Managerial Formation at Distance

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