Kellogg World Alumni Magazine Spring 2007Kellogg School of Management
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Myths and realities of entrepreneurship

Misperceptions about what it takes to launch your own venture abound, says Professor Barry Merkin. He sets the record straight.

Myth: Venture capitalists fund startups. Fact: Less than one percent of all new businesses are backed by venture capital.

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Myths and realities of entrepreneurship
KEIP keeps it real for budding entrepreneurs
 
   

Myth: Access to capital is required for a startup. Fact: More than 80 percent of new ventures are boot-strapped from personal savings, credit cards, second mortgages and the like. The median start-up capital is about $10,000. Waste Management began with a single truck; Sam Walton started with $5,000.

Myth: Someone will steal my idea. Fact: Someone probably already has your idea. And your next one.

Myth: Being first to market is important for success. Fact: Being first to execute well and delight customers is important for success. Quicken was No. 28 to market.

Myth: Most successful entrepreneurs take huge risks in starting their companies. Fact: Most successful entrepreneurs concentrate on minimizing risk.

  Professor Barry Merkin
  Prof. Barry Merkin  Photo © Evanston Photographic
   

Myth: Most successful entrepreneurs start their companies with a breakthrough invention, usually technological. Fact: Most successful entrepreneurs succeed by exceptional execution of ordinary ideas: See Jiffy Lube, Starbucks and Charles Schwab.

Myth: You have to start a company to be an entrepreneur. Fact: Successful entrepreneurs use their innovative passion in many ways, such as buying companies, creating new ventures within larger companies and re-strategizing nonprofits.

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