You need to have a lot of confidence if you are going to start a business. 75% to 90% of startups fail. To be an entrepreneur, you have to believe that your business together with you, will beat these statistics. But you have to be very careful, as overconfidence can do more harm than good.
So what is left for an entrepreneur to do? Approach the problem with a healthy skepticism and beware of these preventative signs.
Start looking for evidence that your plan will work
Solution: Also look for evidence that refutes your plan. For example, what would be the reason the market is not ready for your product? One of the main reasons why startups fail is that the market does not need them. It is good to learn from mistakes, but sometimes we can prevent them.
Expect an easy market entry, without any complications
Solution: Ask yourself what should happen, and what should not happen, in order for the market to succeed. At the top of the list should be the actions or reactions from other market candidates like your job. What would you do if you were in their position? How would you respond, protect, prevent?
Pays extra attention to financial forecasts, according to investor requirements
Solution: Invite investors to join you in creating a strategic business model. Or, you can create simulations – different scenarios, role play, decision analysis, etc., and tell them what you have discovered. Remember that improving the strategy reduces the risks, and reducing the risks increases the chances that they will give you the amount you need.
You rely on positive anecdotes and aspire to become just like a successful company you know
Solution: Pay close attention to your reasoning. If someone else used the same logic to ask you for money, would you give it to them?
Learn these preventative signs of overconfidence, and adjust the plan, even if investors do not require it. The only time investors risk money is when they can afford to lose. You have bigger goals.