Busting 5 SME myths

Money is arguably the biggest challenge of running a small business. This including  making it, saving it and sourcing it.

So many aspiring business owners dream of the numerous rewards that await them when they finally break free of the shackles of the rat race and become their own boss.

But many see only the gold at the end of the rainbow and go into it with misconceptions about what's it's really like to own their own business.

Most think funding sources are just a phone call away, that they'll have time for weekly golf games and will be rolling in the dough faster than you can sing "Money Money Money Money Money."

According to the executive vice president of Africa and Middle East at Sage, Pieter Bensch, it is important for small and medium-size businesses (SMEs) to build up a fund for a rainy day.

SMEs are often so inundated with advice about saving money that it can become difficult to know what to implement and what to ignore.

So to help you sort out the myths from the reality, below is a list of the top 5 "small-business myths."

In the listed, these the most common, inaccurate information you may have encountered, along with the real advice on starting your own venture, so you can make savvy, educated choices for your business.

These pointers will help you overcome some of the most critical hurdles every business owner encounters, saving you time and aggravation, so you, too, can come out on top.

Myth 1: The government has grants for startups.

Nothing could be further from the truth! The government does not have any programs that lend money directly to any business. For instance, in some countries may have special grant programs in place that may be a resource for people with disabilities, veterans, or minorities. These special funding programs have very specific requirements that must be met in order to be eligible for consideration.

Be cautious about surfing the web for funding information. There are a lot of companies out there that claim to be able to assist you in getting money from the government. You may want to be skeptical about any extravagant promises you hear - odds are, if they sound too good to be true, they probably are, so stay away from them.

Although each county approaches economic development differently, one of the best places to get reliable help in any part of the country is an Economic Development Corp. (EDC) office in your area. The office, which may oversee either local, regional or statewide economic development opportunities, can offer information and resources that'll help both startup and existing businesses.

Myth 2: Venture capitalists loan money to startups.

A great business idea is not enough to entice venture funding. And while the dotcom era had its fair share of unusual partnerships, formed on the basis of an innovative concept scribbled on a piece of paper, the basic rule of thumb is that a company has to show a great track record, doing business for at least three years with the promise of robust future growth.

More important, venture capitalists are interested in companies that can show a detailed strategy in their business plans, with strong growth potential and management teams, delivering a product or service that has either a regional or national client base.

So, yes, your startup will have to seek out alternate funding sources.

Myth 3: I'll be able to write everything off.

Absolutely not, unless you have a strong desire to get audited. Personal expenses should not be shielded under your company, and the business expenses you do incur should be clearly connected to the business you're running.

According to experts, you can easily identify a real business expense vs. what isn't by asking yourself this question: "Is this an expense I would incur if I were not in business?"

Typical real expenses can include your computer and any business operating and account management software, rent, employee salaries, money paid to independent contractors, advertising costs, and your business phone bills.

You may even be able to deduct 100 percent of your car payments, as well as gas and repairs, depending on the percentage of car use that's dedicated to business-related work.

Myth 4: I can pay myself whatever I want.

 Think again! If you take all the money coming in -  or a large portion of it  - what will you have left to pay your expenses?

Here's another point: It may not be legal. Although the more typical scenario is that some new business owners may not truly understand just how much they need to plow back into their company for marketing, operations, and other expenses in order to sustain their business.

According to financial experts, "cash flow is key," and business owners should be prepared not to take any money out of their business for one to two years.

Not sure just how much you should pay yourself? Find out just what you have to take into consideration when setting your salary.

Myth 5: I should be profitable after six months because I'm an expert at what I do.

Most small business owners have the idea of thinking that after a few months they should be making money. Unfortunately, that is not true. You can be an expert at what you do but that doesn't guarantee a profit.  In fact, most new business owners don't see a profit for two to three years.

When you're working for yourself, some of the things you start out thinking you'll do fall by the wayside. It also takes time to develop your unique brand, your marketing materials, and the right plan to generate sales. All too many new business owners don't have a sensible business development plan in place for how they'll generate sales.

Realistically, it takes many years - and lots of reinvestment into the company - before most new businesses are on the steady ground.

The bottom line? If you do your homework, work with the right experts, craft realistic business and marketing plans, fund your venture adequately and make the necessary provisions to roll with the punches that will inevitably hit you, you'll have a much better chance at succeeding as an entrepreneur.

So what are you waiting for? Now that you know the difference between fact and fiction, you're ready to start your business and keep it moving forward on the right track!