We've all heard the stories: A mom has a big idea, such as inventing a device to prevent toddlers from unrolling an entire roll of toilet paper, and overnight she becomes a millionaire. It sounds easy—but is it?
The truth is that starting your own business can take much more time and money than an office job, and many people lose money before making any, if they make any at all. Even Tamara Monosoff, author of The Mom Inventors Handbook and creator of that TP Saver device, acknowledges the hidden challenge of going into business for yourself. "People get false hopes from TV shows, where you suddenly see the product in Wal-mart and have millions rolling in … This is a journey that is a lot of hard work," she says.
But that doesn't mean starting your own business is impossible, even in this economy. You just have to know what you're up against. After all, businesses owned by women contribute an estimated $3 trillion a year to the economy and create 23 million jobs, according to the Center for Women's Business Research. Here are six myths—and realities—about becoming a successful mompreneur:
Myth #1: The goal is to become a millionaire. Reality: Not only is this goal unrealistic, but it's unnecessary, says Monosoff. "Some people just want to match their current income, or earn an extra $20,000 a year," she says. "Everyone's goals are different." That's why she recommends thinking about what your goals are before launching your business.
Myth #2: Your day job will soon be a distant memory. Consider holding onto that steady paycheck for a bit, which makes it easier to take risks with your new venture, says Carmen Wong Ulrich, CNBC's personal finance expert and author of Generation Debt. But as your business starts gathering steam and takes up more of your time, she says it might make sense to leave your day job rather than jeopardizing both your job and your business. "Assess your how business is going—how much income you can expect, and when—and your own financial situation. Do you have savings? Can you pay the rent or mortgage?" Ulrich says. "As long as you aren't putting yourself in serious financial jeopardy, such as going without medical insurance, sometimes there's nothing like not having a paycheck to get you moving better and quicker," she adds.
Myth #3: One of the first steps is to raise money. Before asking anyone to lend or give you money, Ulrich recommends some introspection. Ask yourself: Are you in love with what you're looking to do as a business? What makes you unique to the market? Can you commit to the hours that are required? How are you at networking? As a business owner, you have to be the office manager, sales person, market, developer, and accountant.
Once you're ready to move forward, think about how to fund your business. If you borrow from a bank or official lender, seek out the best terms and lowest interest rates. If you ask friends, draft up an official agreement to avoid misunderstandings. Angel investors, who invest between $50,000 and $500,000, tend to want some control over what they're investing in. But you want to be sure to retain as much ownership as possible, she says.
Myth #4: You'll soon be your own boss—which means you only report to yourself. Everyone has a boss, even those who are self-employed. When you run a small business, the boss is the customer. "Regardless of the type of business you choose, you need to be committed to serving others—customers, clients, employees, community, and investors," says Monosoff.
Myth #5: You need a brand new idea. Monosoff says there are three different approaches to creating a business, and two of them don't require brand new ideas: First, you can build on a skill you already have. For example, if you're a hairdresser at a salon, perhaps you'll want to start your own shop. If you design websites for a major company, maybe you'd prefer to drum up your own clients. The second approach is to copy what someone else already does, but to do it better. If you like a dim sum restaurant but think you could improve upon it, this method might work for you, says Monosoff.