Entrepreneurs are an ambitious, determined, and at times blindly optimistic bunch. While irrational optimism is undoubtedly a good thing (and absolutely necessary) when you’re running your own business, it can expose you to a lot of potentially damaging tendencies.
The more aware you are of the lies you’re likely to tell yourself as you progress through the difficult journey of entrepreneurship, the better prepared you’ll be to pick up on the ones that can spell out doom when the going gets rough.
Here are the biggest lies entrepreneurs tell themselves every day.
1. Everyone’s Going to Love Our Product
I guarantee that this is simply not possible, nor should it be desired. If your product or service is designed to appeal to everybody, you better be prepared to spend billions of dollars in marketing and PR to get in front of a worldwide audience.
You’ll be left competing against well-established competitors on price, quality, and other attributes that are difficult to call a truly competitive advantage. Plus, even if consumers acknowledge that your product is better than the rest, if they don’t feel particularly passionate about it, you’ll have a difficult time convincing them to switch from something that’s “good enough” already.
Some of the most successful products and online businesses, including Pat Flynn’s Smart Passive Income Blog, have started by going after a very well-defined niche, rather than trying to be a drop in the bucket within a huge industry.
2. We Won’t Need Much Funding
Underestimating your future costs and grasping exactly how much time (and money) you’ll need before your business is generating enough cash flow to pay yourself a livable salary, are consistently cited as two of the top reasons businesses fail.
In my own experience, I failed at my first business largely due to miscalculating how long it’d take to manufacture my product, how much it’d cost, and how much consumers would be willing to pay.
Aim for having at least 6 months to 1 year’s worth of living expenses in the bank (or in funding) before embarking full-time on a new business, if you haven’t gotten it started as a profitable side business first.
3. Our Projections Are Conservative
This one has gotten countless entrepreneurs in trouble over the years. In fact, several billion dollar unicorns missed big on their revenue projections for 2015. Because entrepreneurs are rightfully so optimistic about the potential success of their companies, this can lead to seriously inflated projections on future revenue and customer growth.
It’s widely acknowledged in the startup community that investors rarely believe the financial projections that are put together from the entrepreneurs who come through their door. Once you land on the absolute most conservative projections for your first few years of revenue growth, try cutting those numbers at least in half. This will be particularly useful if you’re bootstrapping and funding the business yourself–and will avoid a painful return to working full-time.
4. We Don’t Have Any Competitors
Denial of the fact that you have competition, no matter what business you’re in, can cripple you very quickly. Even though your unique solution for instantly cleaning your teeth with an incredible new spray once a day may appear to have no direct competition for the exact same spray at the moment, you’re competing with brands like Oral-B and Crest, billion dollar per year businesses that sell toothbrushes: products that clean teeth. If you haven’t found competitors, you aren’t looking hard enough.
5. We Can Take Our Time
Time is always of the essence in business. Whether you know it or not, there could very well be someone else out there in the world, working on the same project as you. If they get a similar solution to market before you, it could seriously dampen your potential growth. Take the real-life example of when Periscope and Meerkat launched similar live-streaming products at nearly the exact same time. With Periscope backed by Twitter and Meerkat with a small amount of venture funding, it wasn’t much of a fight.
6. Our Patent Makes Us Invincible
While patents can definitely serve as a short-term competitive advantage for a new business, in most industries, it’s only worth it’s investment if it holds up in court. If your product is patentable, you should certainly patent it, but don’t expect that to immediately signal your market dominance. For all you know, a billion dollar competitor could be working on the same product, and defeat you in a lawsuit simply because they can bankroll a longer litigation.
Whatever you do, never lose your entrepreneurial optimism. It’s what will empower you to continue innovating, creating, and building powerful businesses. Just be realistic with yourself as you go.