Tuesday, November 4, 2014

Why You Need To Make A "Reality Check" Every Now And Then?

Why you need a "Reality-Check"?
Whenever you talk with someone who wants to open up a new business, you come across a person who is totally charged with an overdose of optimism, daydreaming to achieve great and laudable goals, completely self-sold into their business idea, because she considers it simply awesome.

And all that is just quite normal and, I would say, appropriate of course.

Optimism is the attitude that will allow you to stay in the fight much longer than others.

But, have you ever wondered why most business plans that are out there, are built upon economic predictions with more zeros than we can even come to think of, showcasing the overly optimistic expectations of its very owners?

Certainly entrepreneurship needs a good dose of optimism to succeed.

It’s true that entrepreneurship is not for those with weak hearts. A good dose of optimism is needed to succeed. But there is a very, very fine line between optimism and mere illusion.

Only from this point of view can you understand the fact that, despite existing so many people convinced they have a brilliant business idea, only 1 out of 10 new businesses survive the first five years of its operation. It doesn’t make sense, does it?

I’m 100% sure that, for being an entrepreneur, you have to be an optimistic person, first of all, to be able to assume all the risks and uncertainties associated with entrepreneurship itself. That’s for sure.

But unless you have a checkbook with an interesting balance which serves as a mattress for you just in case your venture fails and you’d to start all over again, or if you’re addicted to gambling and betting, it’s much more advisable to practice a sort of “optimism based on reality”.

But why do we fall into this excessive optimism trap so easily and often?

Unfortunately, when you're making decisions that involve the possibility to make big bucks (or loss big bucks), you become more prone to look for any information that supports your claims that things are going to be fantastic, because it simply makes you feel better and more confident.

You get yourself tightly connected to your expectations both emotionally and rationally, so you openly ignore any information which confronts your beliefs. People say we often tend to hear only what we want to hear, and this is particularly true when it comes to evaluating possibilities for your business.

Interestingly though the greater the profit you expect to receive, the greater the chances you'll fall into the trap of over-optimism.

Haven’t you noticed your eyes swelling in excitement when you explain others the great possibilities you have to achieve excellent results with your wonderful business idea? And yet, when someone simply shows up in scene and raises two or three things contradicting you or simply showing that things might not come out so wonderful, an unpleasant sensation runs down your entire body and you wish you could simple erase that person from the map.

Overoptimism often tends to be the most common and damaging mistake you can make while managing your business. And this over-optimism can be particularly harmful when you want to explore opportunities inside the most competitive or faster changing sectors.

Practice then reality-based optimism.

Like many things in life, all extremes are bad to you. And this rule also applies to the optimism you put into your business: Neither too much nor too little. Just the proper balance and, on top of everything else, always gathering real data to back up your expectations.

Optimism based on reality generates better results than over-optimism.

It's easy to understand why: It’s very difficult, if not impossible at all, to accurately predict the results awaiting for you at the other side of the road, so being "optimistic-with-facts-on-the-hands" always offers you the opportunity to take more informed and realistic decisions.

It’s clear that optimism will help you keep energy levels high at all times, while moderation will allow you to identify more clearly when it really is not worth it to keep on pushing.

What can you do to practice the "reality-based optimism"?

Some recommendations you can take into consideration are the following:
1. Get to know your industry as well as you can: When searching for new business opportunities, try doing it in areas you are familiar with, those you've already had some contact and experience. Or if you want to dive deep into something completely new, try to get this knowledge bringing in people who shares your interests, passion and already have the knowledge about the industry. This knowledge will help you have a more realistic picture of the market in which you want to participate.
2. Always plan ahead for different scenarios: "What if?" Is a powerful question that allows you to open up your mind to new and more challenging situations, thinking outside of the box about different plans of action, planning for alternatives. Don’t keep yourself from having the opportunity to also look at the "dark side" of the force, for there is also a lot that can be learned from it.
3. Receive advice from more experienced people. Surround yourself with a team which is not afraid to put your proposals to the test. Find people who are willing to challenge you, to raise different ideas. If you surround yourself with people who always lipservice you, then you’ll have very little opportunities to see things from a different perspective. Someone with more experience than you or with knowledge you don’t have will prove to be a very important partner in your venture.
4. Become your most demanding customer. Always try to look at your product from your customers’ point of view and not only from your own. Does your product really captivates its customers’ heart, just as it does with your? Is your product really as valuable for your customers as you think it is?
Practicing optimism moderated by a strong dose of reality is a great way to manage your business and ensure the fewest headaches.

Considering and practicing all recommendations above will allow you to skip the self-deception trap and get you on the track to achieving more realistic and concrete goals.

I do recommend you to read the following posts from my blog to dig deeper on the subject:
Want a successful product? Become your most demanding customer.
A business plan’s flexibility: Obstinacy or perseverance?

No comments:

Post a Comment