According to official statistics, nearly one million small businesses are established annually in America. However, 60 percent of them still function in the first year, but only 20 percent remain through the first five years. Thus, 800,000 businesses collapse, and the most common reason for that is the E-Myth.

According to the E-Myth, also known as the entrepreneurial myth, proficient skills combined with a creative concept are enough to build a business. This myth is, in fact, a completely mistaken view of American business. The most popular reason for founding a business is the founder’s success in a certain professional area. One day, they realize that just doing technical work for someone isn’t enough for them. As a result, they want to implement their ideas in a particular field.

For instance, you are a skillful barber. You’ve learned many hairdressing techniques. Moreover, you have tons of ideas about what you would change about the hair salon if you owned it. That is the moment you realize you want to be an entrepreneur. More than a million new businesses are started every year for this reason.

However, if you start your business this way with only technical experience and ideas, it is already a mistake. It can doom your business to failure. Many beginner entrepreneurs mistakenly reckon that possessing professional skills equals understanding how the business works. Nevertheless, there is a big difference between doing technical work and running a business.

Let’s say a professional barber opens a barbershop. After a while, they realize that it requires more than technical work. They must also manage assignments, hire workers, and develop the business.

This is why so many small businesses fail in the first few years of existence.