Misconceptions are more dangerous than not knowing. When we’re aware that we don’t know something, we seek out the answer. When we already know the answer then we forge ahead.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
Apocryphally attributed to Mark Twain
When we make decisions based on underlying misconceptions then it’s probable that the results which follow will be off course.
If you’ve decided to take the plunge and turn your hobby or artistic talent into a business, then just a few poor assumptions could make for an a very bumpy ride.
Below are 3 ideas that I feel are often misunderstood by those starting up a side hustle, passion project, consultancy or small business.
I’m not suggesting that these 3 are the biggest, or the most common, though that would make for a delicious, click-baity headline. There are many startup misconceptions, many of which I probably suffer from myself, so I’d love to hear your thoughts;
What are the important misconceptions that you believe are prevalent among small business owners?
Leave a comment below or send me a message
Misconception #1 : As long as you’re talented at (X), you have the skills required to run a business which does (X).
I think many people who strike out on their own have the assumption that if they are good at baking, then they’ll be good at running their own bakery. We seem to have the symptom that the artistic or technical skill (baking a marvelous cake) is the hardest part of the process. We seem to believe that we get the baking part right, then we just post it on Facebook and Instagram and BOOM! … small business sorted.
The assumption that artistic and technical skill is what’s required for business success seems so deep seated that it’s often not even a conscious assumption.
We just assume that if we are great at design then we can easily be a freelancer who provides design services. We assume that if we take a really great photo that we’ll be able to run a wedding photography business.
We misunderstand that the artistic and technical skill of design and photography is dramatically different to the entrepreneurial skills needed to start a graphic design or photography business.
Nobody would assume the the CEO of a bank does the same kind of work as the consultant at the branch. One is building the business while the other is delivering the product.
They’re two completely different jobs. When we start a business we must do both, and we’re usually only skilled in delivering the work. Usually we need to develop a completely new skill set around how to build a business.
The good thing about skills is that they can be learnt.
Book to read : The E-Myth Revisited by Michael E. Gerber
(health warning – Michael Gerber uses an explanation mechanic of a first person dialog with a fictitious business owner which I find very cumbersome. However, I think that the central idea is so often misunderstood that it’s worth ploughing through this sometimes irritating writing mechanic).
Misconception #2 : There is no recipe for building a business.
I think that many people who start up a business or a side hustle don’t use a recipe.
That makes no sense. If someone else has baked a great cake before, why would we try and figure out it from scratch?
We’d just go online and search, “chocolate cake recipe” and follow that recipe as closely as possible.
There are two basic recipe’s for building a business (franchising aside) which emerged around 2005, and have now been well codified. One is Lean Startup, the other is Design Thinking.
I believe Lean Startup is best if you have a technical solution and are looking for a market. Design Thinking is best if you have found a market niche you want to serve, and are looking to design a solution for them.
The seminal book on Lean Startup methodology is The Lean Startup by Eric Ries, but I don’t recommend it because I found it difficult to chew through. I prefer it’s forerunner, The Four Steps to the Epiphany by Steve Blank. Steve was Eric’s lecturer and The Lean Startup is based on Steve Blanks ideas. Practice the lean startup idea of Genchi Genbutsu and go to the source material 🙂
Book to read : The Four Steps to the Epiphany by Steve Blank
While not a true Design Thinking book, the simplest book that I can think of as a starting point if you’ve got a market and are looking to design a solution is Talking To Humans.
Book to read : Talking To Humans. by Giff Constable
Bonus, it’s authors have a free download
Don’t forget to do your Assumption Exercises!
Misconception #3 : Big target markets are good.
There’s an assumption that if we start with a big market, there will be lots of people who need our service, and that will make the business easier to start and keep going.
Actually the business will be easier get going if you have no competition, and it will be easier to keep it going if you become the biggest fish in your pond.
The easiest way to become the biggest fish in your pond is to start with a very small pond, a hyper-niche market. Very small ponds also tend to have very few fish in them so there’s less competition. Sure, there may be fewer customers as well, but you don’t want 10 000 customers on day one anyway.
When you start in a big pond, there are many competitors and they’re all bigger and better than you. You’ll need lots of money to get your message through to your customer, and it will be hard to convince them that you’re better than the established players.
Those established players will also fight back if you try to eat their lunch, and it will be bloody.
In a big market it’s hard to practice the principals espoused in Talking to Humans above because all of those people are spread out and diverse. You simply can’t talk to 10 000 people on day one.
By contrast, in a small market, there a few competitors because small (initial) markets are unprofitable for big existing players to pursue, so they won’t fight you for those markets. It’s cheaper to reach the customers because they’re easier to identify and target directly. It’s easier to convince them to give you a shot because they’re currently under-served since there are very few players in the small market. It’s easy to practice the Talking to Humans principals because it’s easy to identify and reach members of the small target market.
Book to read : Zero to One by Peter Thiel with Blake Masters
Bonus: Zero to One is simply the collated course notes that Blake Masters made during his Stanford class lectured by Peter Thiel. If you don’t want to buy the book you can read Blake’s original ‘Zero to One’ course notes here.
(just search for the cs183 tag on the blog for all the ‘chapters’)
Quick Win : For easy digestion of the main idea, watch Peter Thiel’s lecture at Y-combinators Startup School here
What are the important misconceptions that you believe are prevalent among small business owners?
Leave a comment below or send me a message