Internet Business Ideas: Start Up Business Myths and Legitimate Home Business

To give you an example and discuss a few of the many myths that cloud the concept of starting a small business let’s go over five of the most common myths that typically surround the small business owner and discuss their merits and the facts in each instance.

First and foremost it is important not to listen to too much of the negative statistics and fear-mongering that commonly are thrown about because just as hearing ‘the odds of successfully negotiation an asteroid field’ for a common pilot don’t necessarily apply to certain skilled Star Wars hero’s so also may those statistics of people who didn’t do their homework or research their market not apply to you. In short many of the things you will hear and run into are not facts – they are urban legends, misconceptions about starting a business that have been repeated so often now that many people believe them to be true even when they ought to know better.

There is free money available to help you start your business

If you have never heard this old saying before turn on the old memory chip, “There Ain’t No Such Thing As A Free Lunch. TANSTAAFL.” If something sounds too good to be true it not only probably is I can guarantee you it is! Our government only gives away money to foreign interests with whom they feel they can buy loyalty or concessions – not to their citizens. While it may be true that some state governments have policies in place to help people such as veterans, minorities or people with disabilities those special programs have very specific requirements that you have to meet before you are eligible. If someone claims otherwise, especially if they want to charge you a fee for a ‘list of lenders and free grant providers’ run do not walk away from them!

The Small Business Administration has millions of dollars of money available to loan directly to small business

The SBA is an independent agency of the executive branch of the federal government, and as discussed previously the government is not in the habit of giving anything away. That includes loans, believe it or not! The SBA is a great resource for small businesses, and does act as a guarantor for one of three different loan programs that can be of use to the small business owner, but they themselves do not provide or arrange for the loans.

The three loans they act as guarantors for include the Seven-A (7a), the Five-O-Four (504) and the Seven-M (7m) or “micro-loan” as it is known. Some details about these different loans which the SBA will guarantee and oversee compliance with for small businesses follow for your benefit:
§ The 7(a) program is a flexible lending program which allows qualified small businesses to obtain financing in certain instances if they have been turned down through traditional channels.
§ The 504 loan helps small businesses with fixed-rate, long-term financing for equipment, property or machinery needed for expansion or modernization.
§ The 7(m) program aimed at both small business and not-for-profit child-care centers provides short-term financing for working capital and the purchase of inventory, supplies, furniture, fixtures, machinery and equipment.

What the SBA does in these types on situations is to help arrange financing through various lending partners including local banks and nonprofit corporations and to oversee compliance on the part of the small business with the loan terms, thus assuring to the lenders that the loan will be repaid.

People are lining up to loan money to startup companies

Venture capitalists DO exist, and while in some cases they have been known to finance startup companies that is not what they principally do, nor would it be wise to do so. Since a venture capitalist entire purpose of investing into a company is to make money and more then half of the startup companies created every year go belly-up just leaving that money in the bank earning 5% would do a better job them financing startup companies hand-over fist.

One of the rules of thumb that investors use is that a good three year track record needs to be in place, along with a great business plan and the potential at least for robust growth before they are willing to put their hard-earned money on the table. If you can show a great strategy with strong growth potential and have a product or service with a national client base that has so far been untapped you may be able to get them to bend a little – but the thought that investors are actively looking for someone to give their cash to is definitely an urban legend!

Starting your own business allows you freedom to choose your working hours

Only someone who has never had a job like raising kids, or farming that has tasks to be done whether you are sick or not would ever come up with a saying like this, and yet it is one of the most common business-owner myths out there. Unless you have so much money that you don’t need your business to succeed any ‘freedom’ you have will be going right out the window the moment you open your small business or shop! You may have a bit more flexibility in the scheduling of your free time, but starting a small business will definitely cut into that free time if you plan on making it a success.

There are many write-offs you can take on things you otherwise can’t write off

The IRS and the government do NOT give away money. Remember that – that is the reason for myth number one and two above, and unless you enjoy being audited it’s never a good idea to write off any expenses not 100% related to your business endeavors even if they are used in relation to the business as well as your personal life. The best rule of thumb is to ask yourself whether or not you would still have this expense (say your car for instance) if you were not running the small business, and if so in any form or fashion then it is not a legitimate write-off.

Some common write-offs which are normally allowable include any computer and business software, rent, salaries and monies paid to independent contractors, advertising costs and even a percentage of vehicle costs if its use can be tied to the business in question. In some cases strict rules apply, such as whether you use the computer for personal use as well as business etc. so checking the law first is a good idea!

As the business owner you can set your own salary

Remember that caveat that keeps coming up about TANSTAAFL, the lack of a free lunch? If you give yourself too high a percentage of the earnings the IRS code that refers to ‘unreasonable compensation’ may cause you to discover what an audit, as well as business failure, is all about.

Cash flow is the key to a successful business, and a surprisingly large amount of the incoming cash has to flow right back out again in the form of investments, advertising and expenses to keep a business on the path to growth. Not setting enough aside for this is one of the reasons so many startup companies do fail in their first two years.

Any Internet site can earn money for the owner

I hate to harp, but TANSTAAFL strikes again … if you have a website that has a lot of traffic due to unique content or placement that’s awesome, and as such it does indeed have a more then reasonable chance of earning you money – but just because you have a web site doesn’t mean business will magically come your way. Even the best created and designed site on the web if it is not promoted and linked properly is destined to fail – so don’t blow all your budget on a spiffy site when you haven’t decided what you are going to focus on selling yet!

An expert should be able to become profitable within six months

While not unheard of just having knowledge and skills doesn’t mean you will be able to turn a profit, and most small businesses due to startup costs and need to invest back into the business for future growth don’t see anything out of their company for at least two to three years … again if it sounds too good to be true!

The right business sells itself and doesn’t need a marketing or business plan to succeed

This is very common now in the post ‘dot-com’ era, but remember folks there is a reason it’s the “post” dot-com era and not the dot-com boom. There is simply no substitute for a valid business plan and understanding what is necessary to sell your product or service to the public. Anyone trying to tell you something otherwise is likely selling something he wants you to buy from him right now before you go broke and give up the idea of starting your own business!

A related myth is that

if you aren’t getting a loan or looking for investors you don’t really need a business plan. While business plans are necessary to get investors the purpose is not that but to ensure you understand what it will take to be successful, and that you have a linear outline for how to achieve those goals.

Leon Edward Helps people to start, grow legitimate Internet Based home business income with business structure, small business legal service information, step by step guides and online business training articles, reviews, marketing blog and newsletter... with legitimate business ideas and opportunities as top BBB rated home businesses, turnkey internet business, a 3 steps to internet income business proven mlms, even a start free work at home program

Leon Edward helps people to start, build, market and promote home internet business and ways to earn money at home in an internet home business Get Your free legitimate internet business kit bonuses and training articles, visit http://www.homebusinessit.com/newsletter/

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Start Up Business Myths and Legitimate Home Business