Myths of Enpreneurship | UNIT 1-Entrepreneurship: Concept and Functions

'The basics: Myths and Facts' by NAM Charitable Trust, London is licensed under CC-BY-NC-SA 4.0

According to Guy Kawasaki, many entrepreneurs believe a set of myths about entrepreneurship, the most common being:

Myths of entrepreneurship

Class 11 | CBSE | Topic of UNIT 1-Entrepreneurship: Concept and Functions

Starting a business is easy – It’s a Myth:

Starting a business may seem easy, but in reality, it’s quite difficult. Many people try, but most don’t succeed in actually running a successful business. Research shows that after 7 years, only about one-third of new business starters have a company that earns more than their personal costs for even 3 months in a row. However, small businesses are a bit easier to start and manage. Example: Someone opening a small food stall might find it easier to start than someone opening a big restaurant, but even that requires planning, money, and hard work to succeed.

Start-ups can’t be financed with debt

Many people think new businesses can’t take loans, but in fact, most start-ups use loans (debt) more than investor money (equity). Entrepreneurs often borrow money to get started, especially when they don’t have outside investors. They just need to plan how much to borrow and how much money to raise in other ways. Example: Lijjat Papad started in 1959 with just ₹80 borrowed by seven women in Mumbai. They used this small loan to buy ingredients and start making papads at home. Over time, the business grew into a huge women’s cooperative without taking outside investments.

Banks don’t lend money to start-ups

Many people believe banks don’t give loans to new businesses, but that’s a myth. Banks and government schemes do provide loans to help new entrepreneurs start their businesses. You just need a good business plan and proper documents. Example: Under the Mudra Loan Scheme, many small business owners in India have received loans to start or grow their ventures.

Most entrepreneurs start businesses in attractive industries

Many entrepreneurs choose popular or “trendy” industries to start their business. But studies show that these are often the industries where most businesses fail, because there is too much competition. So not always all entrepreneurs start their business in attractive industry some take the risk of following their passion irrespective of industry. Example:Mahima Mehra, instead of entering a popular industry, started Hathi Chaap, a unique business that made handmade paper from elephant dung. She tried different materials, did a lot of research, and found that elephant dung had more fibre, which was perfect for paper-making. Her success came from doing something different, not something popular.

The growth of a start-up depends more on talent than the business idea –

Not completely true/ partially true
Even if an entrepreneur is talented, choosing the right industry matters a lot. A growing industry gives more chances for success, while a declining one makes it harder to survive. Example: Kunal Shah, the founder of Freecharge, entered the digital payment industry at a time when online transactions were rapidly growing in India. His success was not just due to his skills, but also because he chose the right industry at the right time, when digital payments were in high demand.