Why do entrepreneurs fail?

A research found that entrepreneurs tend to believe they are in a promising line of business. The research asked them to assess their own venture and found that 81% of entrepreneurs rated their success rate at 70% or more. 33% of entrepreneurs said that their chance of failing was ZERO. But statistics show that the chances of an entrepreneur being successful is only 30%.

This information is not counter-intuitive. It makes sense. You will never find someone who ventured into a project on their own to underestimate their own success. And this is a good thing. Optimism and overestimating success chances encourages persistence in the face of obstacles. But optimism and persistence comes at a cost.

Psychologists have confirmed most people convince themselves that they are superior to others on most desirable traits. In the market, this has significant consequences.

When we are passionate, emotive, persistent and highly overestimate ourselves, we fall risk to delusional optimism rather than weighing of gains, losses, probabilities or statistics. We overestimate benefits and underestimate costs.

You overcome this by having a cut-loss limit. This limit will help us return to objectivity.

Author: Mohd Prasad Hanif

Mohd Prasad offers Business and Leadership Coaching, Training and Consultation for small, medium and large enterprises. Certified as one of the Best Coaches by Centre for Entrepreneur Development and Research, Malaysia, Mohd Prasad brings to the table over 6 years over 50 companies with many obtaining 4 star rating by SME Corp of Malaysia. He provides business coaching and development in the areas of Strategic Management, Finance Management, Leadership, Sales and Marketing and Talent Development. He is also the Program Manager for the Bumiputera Vendor Development Program Batch 1 and Batch 2 comprising of 40 bumiputera companies. Mohd Prasad combines the unique experience of an engineer and his experience as a business owner and entrepreneur to formulate Business Engineering Formulas to troubleshoot problem areas to focus in the business.

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