Rethinking 5 Common Maxims About Starting a Business

By Sheree R. Curry

Anyone who starts a business receives all kinds of advice. But which of these conventional statements about entrepreneurship are true, and which are false? To get the real picture, we asked five Junior Chamber International members and business owners to reveal what they think about the myths and realities of running your own company. Our experts are Dominique Döttling, 38, who took over her father’s management consulting firm, Döttling & Partner Beratungsgesellschaft mbH in Uhingen, Germany, and is former executive vice president of JCI and current representative to the International Chamber of Commerce & World Chambers Federation; Brian Stahlhut Christiansen, 35, co-founder of professional training company Keys2passion in Copenhagen, Denmark; Rune Møller-Hansen, 35, immediate past president of JCI Norway, and senior consultant and country manager of Oslo-based ConTra Norway AS, the Norwegian part of a Danish retail consulting and training company; Marco Sessa, 33, co-owner of Zündschnur Marketingkommunikation, which does event planning, PR and promotional design in Switzerland; and Jun Takahashi, 37, who started the legal and business consulting arms of his family’s company, Grupo ECREL de Assessoria, a consulting firm in São Paulo, Brazil. Here’s what they had to say about five common adages on entrepreneurship.

1. If you fail to have a business plan, you plan to fail.
Entrepreneurs hear time and again that one of the first steps to starting a business is formulating a business plan. Investors often look for a smartly crafted, 30-page business plan to land on their desks before they will even consider setting up a meeting. When Møller-Hansen was first making contact with some of ConTra’s biggest customers, showing the customers parts of the business plan really paid off. “We started negotiating on a much higher level,” he says.

This is one adage with which our experts generally agree: You really do need a business plan for business success.

Christiansen: Write it—do it now. But don’t go overboard. Make it brief. You will find that writing a short and simple business plan forces you to analyze your business. It will lead you to clarity. If you can’t explain why I should do business with you in 30 seconds, you don’t have a business plan.

Takahashi: It’s better to have a business plan written on a napkin than to have no plan. But just because you have that business plan, it doesn’t mean your business will be successful.

Sessa: You need to have a clear vision, inspire the people working around you—and then the most important thing is to take action. Having a business plan and not really putting the thinking into action does not make your goals happen.

2. You need a ton of money to start a business.
As entrepreneurs know, money doesn’t grow on trees. But too many wannabe entrepreneurs think, “If I only had enough money to start my business, everything would be great,” says Mike Ryan, director of the Small Business Development Center at the Schulze School of Entrepreneurship at the University of St. Thomas College of Business in Minneapolis. “It’s a big myth that most successful entrepreneurs have a lot of venture capital behind them. Only about 1 percent of all new businesses do. The majority start out with less than $50,000.” Our experts say you don’t need a lot of money starting out to make a lot of money down the road.

Christiansen: You don’t need loads of money, but you do need money. How much money you need obviously depends on what kind of business you want to create. I have helped several startup businesses, and generally they tend to underestimate the need for capital. But there are many ways to finance your idea. Don’t let money get in your way.

 Döttling: The more money you take from a bank, the more you will have to work for the bank. So focus on the necessities. And do not concentrate on making big bucks. Focus on making your customers happy.

Sessa: Money makes you lazy. If you don’t have the money, you treat every client as your best client, and you try harder to make the best of every project—even if it’s a little project. This helps you think like an entrepreneur in action and not like someone counting the money.

3. Be budget-wise, not time-foolish.
One way to pinch pennies is to keep initial overhead expenses low by wearing more than one hat in the business or by starting out of your garage, basement or dining room.

But for some, being a work-at-home multitasker might be too costly. “Time is money,” says Paul Casey, author of Is Self- Employment for You? “Look at yourself as being worth $70 an hour going in. If you’re licking envelopes in the middle of the day, you can’t sell. Hire someone to do it for you for $10 an hour. Hire an accountant for $25 an hour.” Pay them with the $3,000 per month you’re saving by not leasing an office.

On the flip side, there’s still something to be said for spending a little for a professional office. Here’s what our JCI leaders think.

Sessa: Always try to keep the overhead expenses low! Everybody should do everything in the beginning of a small business. If you hire somebody to assist you in helping your vision come true, this is OK, but if you hire somebody to make coffee, get the post and answer the phone, then maybe you’re not on the right track. The start is hard—the future is even harder.

Döttling: Keep in mind that hiring and training someone takes time, too.

Takahashi: Usually in small startups with low investment, the entrepreneurs are multitaskers. That means they take care of the business aspects, and they also make coffee, clean the office, send mail and pay bills. What’s good about this is they can learn every detail of the business while it’s small and then teach others when it’s bigger.

Christiansen: Get out of the garage—fast. We started out as a homebased business, but it is too cozy and familiar. When we moved our business to an open office space with other consultancy businesses, we gained inspiration and motivation every day—the value is way more than the rent. You need a full business day, in a business setting, with business people doing business. Of course, an office has a price, but it’s a great investment, too.

4. Going into business with your best friend, spouse or other relative will ruin the relationship.
“Working with your father becomes a daily routine, just like working with any other person,” says Döttling, who worked with her father for five years. “Working together did not bring us closer emotionally. But spending that much time and having so many common subjects [to discuss] keeps you close even at a time when the parent-child relationship usually starts to loosen up.”

A lot of people go into business with someone they are close to, but these partnerships rarely work out, says Carol Frank, author of Do As I Say, Not As I Did! Gaining Wisdom in Business Through the Mistakes of Highly Successful People. But don’t despair. You may be able to make it work if you have complementary strengths, says Frank. “Only go into business with your friends or family if you know your weaknesses and strengths complement each other and you map out upfront what can go wrong.”

Döttling: My father never asked me to work with him. I decided to come and work in the company, and he agreed. You have to make a distinction between your private family life and your business, especially in front of your employees. In conflict situations, consider [that] there are business conflicts that are very normal from time to time, and [there are] father/daughter or father/son conflicts that are also very normal. So if you find yourself in a conflict with your father, try to sort out what kind of conflict it is, and then solve it step by step. And for your employees, keep in mind that there are a lot of assumptions and common ground within a family that outsiders cannot understand. So be sure to include employees in communication processes in an appropriate way.

Sessa: My partner is not just my partner in business—we are also living together and working closely in JCI. It is important that you are always clear about the roles, the responsibilities and the position of each person. From my point of view, it’s not a problem in the business that makes it impossible [to work together]. It’s most likely the combination of private stress and personal matters that influence the work.

Takahashi: What really ruins relationships are false expectations or bad communication. Put everything on paper, and make all involved read and sign, revise, reread, re-sign. Have evaluation meetings as [often] as possible, and respect others’ thoughts.

5. Business takes passion and skill, not age.
When Møller-Hansen was a shop manager in Denmark, he participated in a three-day leadership-training course. On the last day, the trainer took him aside and said, “I want to give you two pieces of advice. The first is to join JCI or another organization like that to develop your network. The other piece of advice is to study psychology and pedagogy so you can let your energy and passion be a tool for others to succeed.”

Møller-Hansen followed his advice. “I am still grateful that he saw that in me,” he says. Some people might be born leaders, but without the right training, skill development and passion for work, they will not get very far, no matter how old they are.

Møller-Hansen: In retail, you can get a lot of respect at a very young age. If you are a skilled, hardworking and honest person, customers, partners and investors will do a lot for you. My advice is that if you are young and depend a lot oninvestors, you really need  to be humble, and at the same time show some results and have a “stayer” mentality. If not, you will just be another high-flier with a crash landing.

Döttling: Credibility does not come with age. It is your personality and your background—your skills and experience. Launch a business that follows your passion, and you will be happy. And eventually, the emotional payback will be followed by some financial joys.

Takahashi: Many businesses did well with passion, but many more failed because they were based only on passion. Many experienced people have failed and, on the other hand, many really outstanding businesses have been started by inexperienced people. You can do well if you have commitment, passion, true will and good planning.

Sessa: You need to have passion for action. If you don’t believe in your vision, the dream will never come true—have a vision and the action. Not every vision brings you a successful business, but it makes it much easier to believe in what you are doing. If you lose your passion, the money will never come.

Møller-Hansen: Don’t dream your life. Live your dream.

Sheree R. Curry is a business writer in Maple Grove, Minnesota.