Startup Business Myths in Home Based Businesses
Let's talk about a few misconceptions that create obsticles to starting a successful online/offline home based business. The most common myths that home based business owners and discuss their merits and the facts in each instance. In short many of the things you will hear and run into are not facts - they are urban legends, untruths 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. In many cases as with the -SBA has money to loan- myth there is a kernel of truth once you get past the misconceptions
* There is free money available to help you start your online home business
If something sounds too good to be true 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 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. Details about these different loans which the SBA will guarantee and oversee compliance with for small businesses are not in the scope of this article.
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 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!
* 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 achieve your goals and become a success.
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