Entrepreneurial Myths of Business Success

Did you know that many small businesses fail to be successful in their first five years and never go beyond this? Have you wondered, what's so special with the small percentage that succeeds in their first five years of operation?

Well, the secret is an effective marketing strategy. An effective marketing plan will show you how to beat the competitors strength and build a stronger brand image for your business.

Skills and technical know-how are not enough to succeed in Business

According to business startup statistics in America, one million businesses are created each year, but shockingly 40% fail in the first year and 80% within the first five years. This large number of failed businesses are mostly due to the E-Myth.

An E-Myth (entrepreneurial myth) is when people assume that if a person has skillful technical knowledge and a good business idea that it is sufficient enough to create a business that will succeed. This is a fundamental misjudgment in today's American businesses.

Many people start their business because they have become the master in their professions, such as hair stylists, car mechanics or computer programmer.

While working, the entrepreneurship idea will strike, and they will realize that they are tired of being bossed around and want to be the boss themselves. You want to run your own business according to your ideas and excel in it.

For instance, you are a barber in a salon. Throughout the years you have been employed, you have mastered the art of cutting, trimming, dressing, grooming, styling and shaving and got lots of ideas how to run a salon. Then you realize that you will rather open your own salon.

This type of ideas is the major reason there are a million of business each year.

Starting a business with your technical expertise and new ideas is very wrong. And you have a high percentage to fail.

By this, you have made a big assumption, by assuming that having technical experience means you can run your own business.

In reality, technical knowledge and the skills required to operate a business are two entirely different things.

From our example above, let's assume the barber opens his salon, and immediately realize that technical knowledge is insufficient to run his business successful. There is more he needs to know, like, hiring and managing employees, organize tasks and general knowledge to grow the business.

Well, this is why many small businesses fail today.

The struggle to surpass the adolescence stage.

Businesses have stages that they have to go through just like those of a person. Typically a business goes through three stages - infancy, adolescence and mature stages, same as we do. Strangely, most businesses never reach their adolescent stage.

In the infant stage, there is no difference between the owner and the business, they are seen as one in the same thing.

The first stage is very exciting. The owner is finally his boss and gets to do all the work by himself. For the barber, he is finally doing everything according to his idea and plans.

To be successful at this stage means more customers and more production is required. In the long run, this will become too much to handle.

For instance, at the salon, customers will notice that they have to wait long to get their hair done because there is only one barber.

Finally, he is the boss but finds himself doing all the labor work himself, and you realize you have become the clumsy boss you always wanted to avoid.

When you hire your first employee to help you, the business enters the adolescence phase.

This stage starts out positive, as this means the owner will not have to do everything himself.

Surprisingly, in the adolescent stage business owners enjoy too much freedom by delegating their task to subordinates. He gets too much comfortable doing nothing, assuming the employees will execute the task, rather than ensuring all tasks are properly done.

Back to the salon business, the customers start to complain about the trimming the new barber does.

In this stage, the owner has the biggest challenge ever, to come out of his comfort zone and control every aspect of the business himself. He is forced to learn to control everything himself, or the business will fail.

What should the barber do as the business owner?

He could decide to lay off his assistant and take control of his business activities by himself and overload himself with work.

Or he could let the business take its course and accelerate to the point of not being in control, employs more employees and accept the inevitability of decline in quality.

Thirdly, as you will learn in the following pages, he can admit that his business has to grow and he needs to plan for this opportunity from the start.

Plan your business from the beginning

Even if one is prepared to go out of their comfort zone and take control of the business to focus on growth, where does one start? One needs to start from the beginning before you even launch the business operations.

This is because most business that make it past the adolescence to maturity stages were found with a broader vision than many, and all their structures are planned accordingly.

All successful business focuses on the future, and are built to work without the owner's direction. This way, when it's time to go past the adolescence stage, the business can handle the growth.

You need an entrepreneurial vision to launch a business that will survive to the maturity stage. You have to plan from the very beginning on how you like the business to look and work hard towards its goals.

As a business owner, you need to ask relevant questions like "How will the business work as a whole?" instead of "What work is necessary for the business?"

For example, the salon owner knows which technical knowledge the salon requires. He stylishly cut hairs, but the question is "what will set his business apart from the competitor? How will he attract new customers? Which target group of customer does he want?" All these questions require an entrepreneurial vision.

To implement your entrepreneurial vision, you will need an entrepreneurial model.

The entrepreneurial model is defined as the plan of action your business will apply to satisfy potential customers need in an innovative way.

These include business market opportunity, clear set goals for your ideal customer and how to deliver the product.

To save his business, the barber might consider to close the salon for a few days and works toward outlining his entrepreneurial goals and entrepreneurial model. He could either decide to change his market segment from adults and target small kids and college student and work to satisfy their needs by offering some incentives to the student to join his salon.

Various business personalities in business activity.

Do you think of yourself as a single person's personality? If you do then your business will experience some struggle. The reality is that we are made up of a variety of battling personalities. A person can be at the same time an entrepreneur, manager, and technician.

During the business activity, one moment we are an entrepreneur designing new products, the next we are the technician, stressed with the new idea we just created a while ago!

Among our battling personalities, the entrepreneur is the innovator, observing the surroundings and seeing the world of opportunity.

He is a dreamer and visionary. He sees all the different angles, possibilities toward success and works entirely focused on the future.

But sometimes this energy and constant opportunity-chasing can create destruct and chaos. He will try to organize people along and gets stressed when thing are not done accordingly or lag behind.

Without the entrepreneur's mind, there will not be innovation.

The manager in you is realistic and love order in all aspects of business activity. When we see opportunities, he sees problems that need to be fixed,

As the entrepreneur works on innovations and creating new things, the manager arranges everything together into orderly rows.

Without the manager, the business can never function properly.

Then we have the technician, the executor, and tinkerer.

The technician in us loves to control the workflow and excel by getting things done.

He is stressed by the entrepreneur's craziness and the need to always change ideas, and irritated by the manager meddling in his workflow. But he is happy when both the entrepreneur and manager create more work for him.

Without the technician's mind, nothing in the business will get done.

Even though the three personalities in us are always battling each other, we must find ways to utilize each strength to run our business successfully. For this, a small business owner is approximately 10% entrepreneur, 20% manager and 70% technician.

Now we have all the daunting odds out in the open if you plan to start a company. But how can you avoid to be part of the 80% of failed businesses? There is a revolution going on in the small business industry, and within this lies the secret of success.

The revolution of small business success.

Do you know that we are in the middle of a historic revolution that promises to change the business industry indefinitely?

It is known as the turn-key revolution, as more and more businesses are being formulated in the form that owners can easily give away their keys to anyone, and that person will be able to operate the business successfully.

A business in the turn-key revolution formulates a model that works perfectly, offers the same product to the customer on every purchase and can be reproduced without the owner's presence.

This is known as franchising.

Any business can be a turn-key business, provided that it creates a franchise business format: the model you will give to the franchisee, the person who will run the business, etc. This contains the A to Z business process, organization, and systems.

The rate at which a franchise business succeeds is incredible, but as we have seen 80% of small business fail within their first five years, while 75% of franchise business format succeed.

For instance, when someone wants to buy your business, their first question will most likely be, "Does your business model work?" If your business model is designed to operate in the simplest and most efficient way, with possibilities for anyone to run, then your business model will be appealing to buy.

When it comes to turn-key business model, you are not just selling the product you produce to customers. You are working to sell the whole complete package, processes, and systems to a franchisee.

The turn-key revolution starts with Ray Kroc in 1952, with his obsession to create a hamburger stand that would produce the same hamburger to each customer. He engineered the way hamburger stand worked, and making everything to be exact, for instance, every hamburger was flipped at the same time. He created a process that anybody could follow because he saw the eventual franchisee, the person going to operate the business, as his real target customer.

The system of McDonald's business as a franchise was sold thousands of times over by Kroc.

Always think big: what you start can one day be a national chain

So where do you start with the franchise business model? Firstly is to start with a franchise prototype, the original model of the business which will be replicated.

You need to make sure the franchise prototype gives value to people and be simple enough that it will be able to be operated by anyone.

Whatever value your prototype provides customers with is what they perceive it to be. Confusing right? In a simple sense, the value could be anywhere: your reasonable prices, your amazing customer services, gift your customers receive in the mail, etc.

For example, the barber salon value could be his personal connection he built with each customer and how the barber remembers each customers hair style cut.

The next process is the way the value is delivered; it needs to be designed in a way that the model is process-dependent and not expert-dependent.

This just means, develop a system that is straightforward and efficient that your business will not rely on you or technical expertise.

In the example of the salon, the barber should train all the employees to offer the same quality services to each customer, and they will not depend on the owners approval.

The most important part of the franchise prototype process, everything needs to be documented in an operations manual.

Why?

When you don't document your business process, then no one will be able to run it without you. So, it is necessary to write down every single process as part of the company's how-to guide.

As for the barber, he has to document the training process, and each new employ will need to undergo this process.

Lastly, the franchise prototype should be able to provide 100% predictable service.

Customers will be most likely to come back when they know what type of product or service they are going to receive from you. For instance, the customers at the salon want to get a constant hair cut style every time they get their hair done, and will not be happy to suddenly get a bad cut one day. A franchisee will not want to run a business with unpredictable results.