As an entrepreneur, you've no doubt heard the truism that passion is an essential ingredient for building a successful company, but research shows that having too much passion can often destroy your business.
The enthusiasm needed to take a risk and launch a company, it turns out, frequently clouds entrepreneurs' judgment to the point where they delude themselves into thinking they can be successful, even when faced with insurmountable odds.
As the Wall Street Journal reports, a significant percentage of entrepreneurs who are advised to reconsider their startup business plans due to problems with commercial viability continue pursuing their ideas anyway. In one survey, nearly 30 percent continued spending money on their business, while slightly more than half kept spending time on their ideas.
Among a group of 100 Harvard Business School graduates who had founded companies, the most commonly cited skill they lacked when launching their businesses was sales experience, followed by technical/scientific experience and management experience.
So why do entrepreneurs found companies despite lacking these skills? Too many business owners think an abundance of passion can make up for a shortage of relevant experience.
From the WSJ story:
Serial entrepreneur Steve Blank describes four lies that entrepreneurs tell themselves and their spouses. Lies they tell themselves include "I'm only doing it for my family" and "my spouse 'understands.' " Lies that are also told to spouses are "all I need is one startup to 'hit' and then I can slow down or retire" and "I'll make it up by spending 'quality time' with my wife/kids."
Steve admits that he told himself each of these things, and "none of these were true."
In addition to these common lies entrepreneurs tell themselves, data show that nearly all aspiring founders underestimate the time and money required to become successful with a new company. Of the 100 Harvard Business School graduates who founded businesses, only 4 reported that their initial plans for their companies were "on target."
Avoiding overly optimistic predicitons doesn't mean you shouldn't take risks, however. As Inc. editor-at-large Leigh Buchanan recently reported, global research and consulting firm Gallup found that risk-taking was the top-ranked talent among 155 founders of companies on the Inc. 500 list this year.
Gallup says those with a talent for risk-taking possess a highly optimistic perception of risk but are also rational decision makers who have an extraordinary ability to mitigate that risk. The assessment shows that Inc. 500 founders are more likely than other entrepreneurs to take more and bigger risks. But they are also more likely to optimize their chances for good outcomes and, consequently, rapid growth.
So how do you prevent yourself from mistaking passion for delusion?
One solution is seeking the advice of a mentor who "excels at being a devil's advocate." Another helpful method involves identifying potential shortcomings that your passion might allow you to overlook. According to the WSJ story, important questions to ask include, "[D]o they lack skills in a certain area? Will they be able to withstand an extra year without a salary? Do they have the contacts that they'll need to land customers?"
In many cases, growing your business after the initial launch phase can even require hiring a new CEO, so be prepared to step aside and take on a different role at your company if the situation calls for it.
Passion is certainly a requirement for all successful leaders, but too much can distract you from giving your business what it needs to succeed in the long run.