8 Lies Small Business Owners Tell Themselves

While we don’t deceive ourselves on purpose when it comes to our business and how we operate it, there are definitely some common misperceptions that many small business owners share. These are things we tell ourselves, believing they are true, when in actuality they’re falsehoods that are working against us both personally and professionally.

It’s important to identify these questionable beliefs so we can correct them. Read on to find out the eight lies we tell ourselves about our business (and why they aren’t true):

Lie #1: DIY Saves Money

Small business owners frequently get caught in a trap of believing that they need to do everything themselves. So maybe in your case you do the bookkeeping, write the business contracts, post to social media, and so on. And while this gives you the impression that you’re saving money, the reality is that you’re spending precious time on activities that aren’t making you any money. To achieve success faster, you should concentrate on your strengths (in other words, selling your product or service!) and delegate other tasks to those who specialize in those areas.

Lie #2: My Business is Profitable

Many people believe that their business is profitable if they subtract their expenses from their income and end up with a positive number. But, in fact, there are a number of other items that also need to be subtracted alongside the company’s operating expenses. These include your personal salary (and the salaries of any partners or employees), all business and personal taxes, your health insurance, funding for your retirement, and your savings (for emergencies) and investments (to build wealth). So don’t buy into the oversimplified idea that income – expenses = profit. All of these other costs need to be covered as well. (For more information about profitability, take a look at this article.)

Lie #3: I’m Reinvesting in My Business

Sometimes when we don’t have enough money to cover an expense, we might rationalize this by saying that our money is tied up right now because we’ve been busy reinvesting in our business. But this is actually code for: “I don’t have enough.” So if you’re using reinvesting as a reason for why you’re not paying yourself, your taxes, or another expense, recognize that this is really just an excuse because reinvesting is what you do with the profits of your business (not with the money still needed to cover expenses, taxes, savings, etc.) When you’re truly reinvesting, you’re taking profits (see Lie #2) and investing them into the business or a project that will bring growth (like marketing, capital improvements, hiring, acquisitions, and so on.)

Lie #4: Sales is Not Our Focus

At times we might get so caught up in our mission that we dismiss the importance of making sales. But ask yourself: how will you fulfill your mission if your business isn’t making enough money? Regardless of whether your business is for-profit, non-profit, or a social enterprise, the reality is that it needs to have sales to achieve its mission, and it will fulfill its mission on a greater scale if it has the revenue to do so. So don’t forget that the purpose of your business (and all businesses) is sales. If you decide not to focus on sales for the business, it’s likely you are instead volunteering your time to support a mission, or have an expensive hobby. Investing personal resources – while admirable – is not a business.

Lie #5: I Formed a Corporation/LLC; Therefore, I Have Limited Liability

Having limited liability sounds great, and you’ve probably heard from other people that you should form a corporation or LLC to protect your personal assets. While this is the intent of these formation options, there’s a lot more that goes into obtaining limited liability than just forming a corporation or an LLC. There are compliance requirements, for instance, that need to be fulfilled to maintain the integrity of your limited liability. (One example includes publishing an announcement of your LLC in a newspaper if you live in New York, Arizona, or Nebraska; requirements vary by state).

Learn more about choosing the right business structure here.

Beyond meeting state-specific compliance requirements, to protect yourself you’ll also need to practice sound financial management. This means no co-mingling of business and personal accounts (moving money back and forth between them) and maintaining accurate and timely books. If you don’t do these things, you may very well be personally named in a legal lawsuit and held liable. Purchasing business insurance is also one of the best ways to protect yourself and your assets in case of litigation.

Lie #6: We All Strive For The Same Work-Life Balance

We’re all different, and how we manage our time when it comes to work and our personal lives doesn’t look the same for everyone. So don’t hold yourself to the standards of others when it comes to work-life balance. It’s common for a small business owner to work 60+ hours a week, seven days a week. While you don’t have to be this extreme, if you are and it works for you (i.e., you and your family and friends are comfortable with this situation), then more power to you. You need to figure out the balance that works for you, taking into account personal needs (including keeping yourself healthy by working out and not missing meals because you’re too busy to stop and eat) and the needs of your family and friends.

Lie #7: I Can Work From Anywhere

Just because you can doesn’t mean you should. Being a digital nomad who works everywhere probably isn’t sustainable or what you need to be balanced and happy. Instead, set boundaries and routines, and establish a reliable work environment. Working in a stable location is more secure when it comes to the transfer of information (a private internet connection) and will show clients (and employees and partners) that you are reliable and professional. If you establish this space at home, you may be able to then deduct home office expenses on taxes too (which requires that you regularly and exclusively use the space to operate your business). Finally, when you’re on vacation or spending time with friends or family, be present. Don’t work everywhere just because you can.

Lie #8: I’ll Give When It’s Affordable

You might tell yourself, “I can’t afford to give right now,” but really it doesn’t take much to give and when you do it’ll come back to you sevenfold. Make giving part of your business strategy and be intentional about it. And remember that it doesn’t always have to be charitable giving. For example, if an entrepreneurial friend is crowdfunding, support them. Because if you support others, others will likely support you, whereas if you never do anything positive, you can’t expect anything positive. Be consistent with your giving, and watch the seeds you plant grow.