Running a small business is difficult work, and there’s a great deal of received wisdom and advice about how to do so successfully. However, some of the commonly accepted ideas about managing a company don’t always hold true. IMT looks at (and debunks) these persistent small business myths.
Common sense is much less common than you’d think – especially when it comes to business. In fact, many of the concepts and strategies routinely cited as being helpful for small business are actually exaggerations or outright falsehoods. To that end, let’s look at a few of the small business myths you can dispense with:
The Customer Is Always Right
As small business site Open Forum correctly notes, “If the customer was always right, every company would be out of business.”
Of course, companies should work to ensure their customers are satisfied, and this is what people usually mean when they say “the customer is always right.” Clients must believe they’ve gotten a good deal from your business, and that if there is an issue that needs to be addressed, your company has at least attempted to see things from a customer’s point of view, even if you can’t solve the problem entirely.
However, customer satisfaction is only a business priority when it’s within reason. Trying to meet demands that are prohibitively expensive, time consuming, and hinder a business’s ability to meet its other obligations is almost always a bad idea.
When You’re the Owner, You Can Take off Whenever You Want
Sure, no problem, as long as you don’t want to take off any day ending in a “y.” When you own and operate a small business, every problem is your problem.
If an employee can’t make it in that day because his dog is sick, that means you cancel your plans and cover that employee’s responsibilities. A major customer is upset and wants to speak to the boss? That’s you, and you have to make that meeting at the client’s convenience. A shipment doesn’t arrive on time? You’re spending the day on the phone trying to resolve the delay.
For a small business owner, time off is typically a fond fantasy.
Social Media Is Your Ticket to Success
This is one of the most alluring myths out there, but the plain fact is that, if used incorrectly, Facebook, Twitter, LinkedIn, and other social media can end up wasting far more time than they return in benefits.
It might be the case that participating in certain targeted discussions or reaching out to specific groups will reward your business and enable you to build useful relationships that way. Yet simply jumping into social media without a careful strategy and a cost-benefit analysis is unlikely to yield much profit. If you have a way to measure return-on-investment (ROI) from social media, such as Klout, be sure to use it.
You Should Spend Money to Make Money
Successful small businesses spend money to make money, but they spend it intelligently, and they don’t simply throw money at their problems. As Small Biz Daily explains, “Hard work and problem-solving is what will really make you successful.”
Small business owners do well to “remember this simple equation: Income – Expenses = Profit. If your profit isn’t where it needs to be, take a closer look at your expenses,” Shabana Shiliwala, owner of the Financial Sort, writes at Zoho Blogs. “You only have so much control over your income, but you’re fully in control of how much money you spend.”
In other words, just because you’re spending money doesn’t mean you’re improving your business. Instead of taking out a business loan, see if you can cut expenses. Tax deductions are not “free money” if you can’t afford the expense. Independent contractors cost less than employees. Working out of home is cheaper than renting impressive-looking space (and you can always meet clients at Starbucks). And speaking of deductions…
You Can Write Off Pretty Much Anything
Not quite. In fact, not at all. One of the most rewarding investments you can make is paying a professional to sit down and explain, carefully and fully, what can be written off for your small business and what’s going to flag your tax return for an audit.
Make sure to hire an experienced accountant or financial expert for tax guidance because investing in professional advice will always save you money in the long run.
You Can’t Afford Health Insurance
You’d be surprised. Now, we don’t know all the ramifications that President Obama’s healthcare reform measures are going to have as they phase in, but health insurance is worth a look. For one thing, it’s a powerful incentive to attract and retain talent.
HealthNet provides a helpful rundown of answers to some of the primary objections small businesses have against offering health insurance to their employees. Small companies are eligible for health care tax credits, for one thing, but to qualify for a tax credit of up to 35 percent this year (which moves up to 50 percent in 2014), small business owners must pay at least half of employees’ health care premiums and have 25 or fewer full-time-equivalent (FTE) employees who earn an average of $50,000 or less per year.
In fact, many businesses will qualify for these benefits, HealthNet says, even if they employ more than 25 workers, so it’s worth checking into.