We’d love to see these business myths go the way of the Dodo

For as many business practices there are that make sense to follow (such as pay your taxes) there seem to be just as many business myths that don’t make much sense.

If you run your own business or plan to start one, feel free to ignore the following myths that seem to pop up endlessly like those pesky whack-a-moles.

 

1. You need to work smarter, not harder.

For the past decade or more, productivity gurus everywhere have been promoting the idea of shortcuts that will get you to the top.

Yes, productivity hack exist. But to beat the competition – who are also looking for smarter ways to work – you have to work smarter and harder.

 

2. You should always try to bankroll your own growth in the early days.

You don’t want to get in over your head but without a healthy amount of debt in the early days, you won’t have the ability to build up your business’ credit score.

This will become important down the road when you can’t bankroll your own growth and lenders will want to see a positive credit history before giving you a sizable loan.

If you’re the director in a business that is registered with the New Zealand Companies Office, you can sign up with Credit Simple to see your credit score and credit history any time for free.

 

3. You need to collect GST.

Most businesses can collect GST from customers on goods and services sold or consumed in New Zealand that are not a zero rated supply, but only if you register as a GST-collecting business… giving you a bunch more paperwork in the process. The good news is you’re generally not required to collect GST unless you plan on bringing in more than $60,000 in a 12-month span (before expenses).

That means some small businesses like sole traders, partnerships and even early-stage companies expecting a turnover of less than $60,000 in 12 months may be able to avoid the extra headache and give their customers a nice little tax break in the process.

 

4. You need to take lots of risks

Admittedly, there is a certain amount of risk involved in setting out on your own. However, risk-taking shouldn’t be the normal way you conduct your day-to-day affairs.

If you are deciding between vendors, considering an increase in headcount or engaging in any other consequential decision, you can do so methodically and rigorously.

Not every decision will work out exactly the way you expect, but with the right amount of due diligence, you can reduce the risk of failure significantly.

 

5. Cost vs. quality of products and services are the only considerations when vetting suppliers

There are many more attributes to consider when comparing suppliers of your products or services. For instance, you’ll want to find out if they have a history of delivering on time, or what their backup plan is in the case of product shortages. Are they a healthy business that is likely to stick around for the long haul?

You can find out some of this information by checking out a type of business credit report that illion’s credit bureau calls the Failure Risk Score and Report. It will tell you if the vendor is in legal trouble, if any of the directors were part of a failed business, how likely the business is to fail and more.

Additionally, not all suppliers and vendors will report your payments to the credit bureaus. Meaning you won’t get positive credit for your on-time payments. So if you plan on paying your invoices on time (which you should), ask your suppliers if they report to the bureaus.

 

Bottom line

Just because you’re running your own business or planning to start one doesn’t mean you need to fall victim to common myths that pervade the space. And this list is by no means exhaustive. The point we’re trying to make is to question what everyone else is saying and decide if it makes sense for you and your business.

 

General Warning. The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual or business. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.