Misconceptions About Small Business Owners

According to the Small Business administration, over 50% of all employees are employed by small businesses. Since 1990, large companies have eliminated 4 million jobs while small businesses have generated 8 million new jobs. If you collected all the small business employees and created a new country with them, they’d be the 17th most populated country in the world. Small businesses are the haven for innovation. They are twice as likely to produce innovative ideas with small business employees generating 13 times more patents per employee than large companies. Small businesses and their owners are an essential component of the U.S. economy. Despite all the good that small business owners provide, there are many misconceptions about small business owners. Here are three misconceptions I hear all too often and their realities.

1. Entrepreneurs are free to schedule their hours however they wish

It never ceases to amaze me how many astronomers do their stargazing during the day because they sleep better at night. Yes, there is some variability in the hours an entrepreneur keeps, but ultimately, their vocation sets the hours. How much control does an entrepreneur have? Well, perhaps they choose to get up and work from 5 am until 5 pm instead of working from 7 am to 7 pm. The first option means less sleep but more time with the family. The second option might allow the entrepreneur a few additional winks of sleep, but they miss out on precious family time.

It also depends on the industry. A plumber who gets an emergency plumbing call at 1:00 in the morning can certainly choose to turn the business away, but they’ll probably lose a customer. The plumber that takes the call can charge extra and will likely gain more business. So, while your plumber buddy may seem like a night owl, he may really just the best emergency plumber in town.

Entrepreneurs, business owners more specifically, have more to do than just set back and watch the cash roll in. They must run their business operations. I know a construction owner, that spends his Fridays collecting checks from his customers who haven’t paid yet. He then takes them to the banks to deposit cash in his business accounts. Then he writes checks to his “guys” for their week’s work. All of whom go down and cash their checks at his bank. So even though many people won’t find him around the office or the construction sites on Friday, it doesn’t mean he isn’t working. In reality, he’s running around making sure his “guys” are going to be taken care of for the time they put in for his business operation.

2. The only goal business owners have is the pursuit and acquisition of money

With great risk comes great reward. Imagine, if you will, that go to McDonald’s and ask for a job. They agree to hire you, but with one stipulation. You will not be paid unless you are one of the last hires standing. If you are the last hire standing you’ll get paid $36.25 per hour. If you aren’t last one standing, you get nothing. That is the world of the entrepreneur. Out of every 10 entrepreneurs, seven survive for 2 or more years; 5 make it 5 years; 3 make it 10 years; 2 make it beyond 15. The other entrepreneurs? They ran out of money, or their products failed, or their stores closed, or someone voted them off the island. Either way, they likely lost all the money they ever earned and then some.

Many believe that the relationship among the stakeholders favors the business owners first, then the customers, and finally the employees. For a company to remain competitive, each of these three groups needs equal representation. When they aren’t, companies like Netflix come along and force the non-competitive companies out of the market; RIP Blockbuster.  It is possible for one, or even two, of these groups to gain an advantage over the others for short periods of time. However, over long-term economic cycles, they will remain equal, or the company will cease to exist.

What did he just say? You treat your employees badly and you lose good employees. You treat your customers badly and you lose repeat customers. If your store goes out of business, consumers lose a preferred place to shop and employees lose their paychecks. If the owner becomes greedy and starts underpaying his/her employees, they will have a difficult time keeping the quality employees they need to care for their customers. A lower standard of customer service means fewer sales. Look at the two graphs to the right, and you will see a greedy owner has a smaller pie to eat.

According to Alignable’s 2015 survey about small businesses and charitable giving, small business owners and entrepreneurs give 10% of their profits to charity. In contrast, the top 1% only give 2.8% of their income, and the other 99% give 3.6%.

3. Business owners will sell their businesses and get rich

Most small business owners have 80% to 90% of their net worth tied up in their business. According to the Exit Planning Institute, only about 20% to 30% of small businesses offered for sale end up sold. BizBuySell’s also stated that in 2016, only 1 out of 5 businesses for sale actually sold.

Conclusion

Google is known for its entrepreneurial innovation or encouraging their employee’s entrepreneurial spirits. To quote James Whittaker, after his departure from Google, “The Google I was passionate about was a technology company that empowered its employees to innovate. The Google I left was an advertising company with a single corporate-mandated focus.”

Entrepreneurs and small business owners are responsible for innovation. They employ half the U.S. workforce, while barely earning more than a salaried employee and suffering through years of struggle and risk. Undoubtedly, there are those in business who earned these labeled misconceptions, but it isn’t the small business owner. They are passionate visionaries who believe the risk of failure is worth the opportunity to help others. The very fortunate ones, the ones who survive the longest, get a chance at the spoils of war. They live frugal but comfortable lives. Giving more than anyone else is one of their greatest virtues. They care about their customers, love their employees, and support their local communities. Entrepreneurs are not greedy, lazy, or expecting to get rich. The life of an entrepreneur is a tough but rewarding one.

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