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.

Related articles:
So you want to be an entrepreneur. Here's how to make the jump
KEO club creates bond and student sounding board
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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