I’ve started many businesses in my lifetime, and I have become intensely aware of some of the typical blunders that many geeks, even brilliant geeks, make when trying to start a business. If you’re trying to get off the ground, here are some myths and misconceptions that might be holding you back.
Myth #1: All You Need Is One Great Idea
FALSE. Great ideas are a dime a dozen. And although a great idea doesn’t hurt, it isn’t necessary in order to be successful in business. For example, some companies achieve success by seeking out and destroying or acquiring other geeks’ brilliant ideas. (Also see #9 below.)
Myth #2: Build a Better Mousetrap . . .
FALSE. There are relatively few examples of businesses that simply had an idea, cast it upon the Internet, and rocketed to success. Do your homework and research to know the market. What do you need to know before you spend tens of thousands of dollars on lawyers and prototypes?
Myth #3: Everyone Wants to Steal Your Idea
FALSE. Trust me—literally no one cares. Even if you actually happen to stumble into a geek who is as excited about your brilliant idea as you are, they would almost certainly prefer to work with you rather than try to steal from you.
That said, although patent protection is rather easy to work around, it does serve a purpose: investors like it, especially poorly informed investors. You can even file your own patents. It’s not hard to do once you learn how.
Myth #4: You Know Everything
FALSE. Yes, your buddies and your mom think your ideas are brilliant, but unless they can form your customer base, that simply doesn’t matter. What you need to know is what your customers want—and if you think you know everything about they customers want, you’re wrong.
Myth #5: If You’re the “Idea Person,” You Don’t Need to Understand Money
FALSE. Understanding finance is critical to being successful. How much will your business make? What are your production costs? How many units must be sold to break even? These are critical concepts that help provide a reality check on the feasibility of your idea. In order to pitch your ideas to get any kind of investment, financial modeling has to show profitability. As an investor, my red flag goes up whenever I see weak financials; this is a clear giveaway that someone hasn’t done their homework.
Myth #6: Being Smart Matters
FALSE. You probably thought getting straight As would mean something. Sadly, you’ve been lied to your whole life. You were brought up to think that being smart actually mattered the most. In reality, who you know is far more important than what you know.
Yes, of course being smart is useful. Yes, it creates an advantage for you. Being smart may even help you determine who is best to know and trust. But being successful in business is complex, and being able to collaborate with and build a team of people you know and trust far outweighs whatever brilliance you personally bring to the table. Social skills are really what geeks need to build a team effectively.
Myth #7: A Degree Matters
FALSE. The only thing a degree means is that you’re not an idiot, and you’re able to complete a program somewhere. With the development of massive open online courses (MOOCs), higher education is becoming essentially free and immediately available for anyone who wants it. Sixteen million people are learning online right now on Coursera.
Few of your customers will be concerned with your GPA or where you completed your PhD. Having an education isn’t useless, of course, but the benefit of a degree program is more than just the education and knowledge—it’s also the connections and networking you develop. Students need to focus more on building networking and practical knowledge or experience over academic accomplishment.
Myth #8: You Need a Million Dollars Before You Start Your Business
FALSE. Unless you’re Donald Trump, your father isn’t going to lend you a million dollars to start your empire. Whenever I hear an entrepreneur tell me this is the reason why they haven’t started, I know they were never serious to begin with.
You don’t need much start-up capital—Microsoft and Apple both started in garages. What you will need, however, is determination. More than anything else, you must be willing to put effort into your brilliant idea. No one else will put in the work, the hours, and the late nights to get it done, and you won’t have the money to hire someone else to do that for you. If you’re unwilling to give up your evenings and weekends, no one will believe in you.
Myth #9: Your Cool Idea Is the Most Important Part of Your Business Plan
FALSE. Businesses fail for many reasons, but one of the most common is lack of planning. Your cool new idea simply isn’t enough to be successful on its own. Compared to planning, it’s practically trivial. Know your customers and your market for your brilliant idea: How will you produce and sell it? Who is on your team? What are your risks?
Myth #10: You Should Avoid Competition
FALSE. Blue-sky strategies are few and far between. If there is no existing competition on the market for your brilliant idea, the reality is that someone else has probably already considered it and decided against it. Either there wasn’t money to be made or it could be made easier and cheaper in another way.
Luckily, your competition probably sucks. The vast majority of businesses aren’t run well—they make lousy products and don’t treat their customers well. It’s actually much easier than you think to outcompete your competition, and having bad competition is better than no competition, as all you have to do is see how they are failing and do that thing better.
Special Bonus Myth: After You Get Rich, You’ll Be Happy
FALSE. Even if you succeed, you’ll never be satisfied if you don’t enjoy the idea of starting and running a business. It’s a lot of hard work that shouldn’t make you miserable and drained. Focus your ideas on what you are personally interested in, where does your passion lie? Start planning and put that plan into action! Focus on what the customer wants and build a team to help you get there.