Every industry has its own set of myths, but none seem to attract the kind of odd myths that mislead students and new professionals in business administration. In large part, these myths come out of a desire to take shortcuts. However, shortcuts and business administration really do not mix. Here are five of the biggest myths about business administration, and the facts that bust them.
1. Business Plans Are Nice, Not Necessary
Without a business plan, you are going on a trip without a map. When you get started, you need to have a plan laid out so you can follow it instead of trying to keep it all in your head. This plan will help you identify your target market, how you plan to get funding, and what you expect for a revenue flow.
There are certain things that your business plan should cover, including operations, marketing, financial management, required permits and registration, and legal requirements.
2. The Small Business Administration Has Grants for New Businesses
This myth was largely created and perpetuated by infomercials. There is no such thing as a Small Business Administration grant for starting a small business. Government grants are primarily available for nonprofit organizations and business, not for individually-owned, for-profit endeavors. If you plan to start a business, spend time researching different types of funding (and have a business plan ready!).
3. Bookkeeping and Payroll Are Just Basic Math
If you have any experience with personal finance, you know this is not true. There is compound interest, taxes, and a wealth of other factors that are neither adding nor subtracting. You need to understand basic accounting (at the very least) to handle bookkeeping and payroll. If you plan to own a business, you will have a lot more to consider, such as federal income tax, employee salaries, and healthcare.
4. New Businesses Start to Make Money Immediately
This is an odd, but residual myth. If it were true, more people would be starting their own businesses and no one would have to file for bankruptcy. The vast majority of businesses actually lose money in the first couple of years, which is why they get a tax write-off for the first two years. Starting a business is a very expensive endeavor, making it difficult for a business to make a profit early in the process.
According to Forbes and Bloomberg, 8 out of 10 new business fail within the first two years. If you want to be able to pay bills and pay off some of your debt, you will have to plan on keeping your day job for a while.
5. As Long as You Have an Accounting Degree, Getting a Job Is Easy
Given the economy over the last decade, this myth has largely been busted without help. However, with the economy recovering, students seem to think that having a degree is enough to get a job shortly after graduating. For those with an accounting degree, you should know that employers are increasingly requiring experience in addition to the degree. This is why it is absolutely important to start getting experience as you work toward your degree. Look for opportunities in the community and as an intern that can help you get the experience you will need to more easily get a job once you graduate.
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