Every entrepreneur’s dream is to see their company scaling to the top by offering ground-breaking products or services. True that self-confidence is a crucial element in building and selling your products. However, having an extreme level of confidence can kill your company quickly. You certainly don’t need to hear from us how painful failure is. So to tread carefully on the thin line between confidence and arrogance, here are a few red flags you should look out for.
Image : wesharepics.info
Overestimating the information available
Mark Twain once said: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” There are various studies which suggest that people put a lot of trust in their own opinions irrespective of their profession. Whether they are entrepreneurs, investment bankers, doctors, lawyers or managers, they never revisit their solution to a certain problem. For example, if a physician diagnoses a particular problem with a patient, they never reconsider to run a different set of tests which can lead to a fatal error. When there is a critical decision involved, your assumptions, knowledge or biases shouldn't come in your way. You can look out for different opinions from different people, collect more information, ask for perspectives and use this information wisely.
Not having a proper business plan
Some individuals or startups assume that detailed business plans only serve to please investors. In reality, it helps if you have a clear plan on how your business is going to be conducted. While you are creating a business plan, you can learn about audience perspectives, think through the macro elements, research better, give due attention to every single detail and focus on seizing the opportunity at the right time. This can help you communicate with your employees, lawyers, customers and even auditors better.
The common 'we have no competitors' phrase
This is something a lot of angel investors and VCs hear all the time. But it raises the red flag for an investor as it indicates that you haven't done your basic research or are not being completely honest. If neither of them is the reason, it means that your product does not have any place in the market. Studying about the current market leaders and how you can effectively compete with them is vital.
Riding on past success and stagnating
A couple of years ago, Kodak filed for bankruptcy. The main reason for this according to photographer Robert Burley, who keenly documented the company’s demise, was that “they were a company stuck in time”. “Their history was so important to them--this rich century-old history when they made a lot of amazing things and a lot of money along the way. Now their history has become a liability,” Said Robert. The company not only stopped innovating but never paid heed to employees who foresaw the problem much before it erupted. Success along with overconfidence can lead to some very bad decisions. When you celebrate the success of a company it is important to not be blinded in a way that it stops you from taking the next step forward.
Relaxing post funding
If you think you have achieved certain heights by getting that first round of funding and plan to sit back and relax, you are wrong. The real work starts now in building a sustainable business. Apart from focusing on your product, you must keep in mind the timelines and budget. Do not make mistakes like over hiring or splurging on a posh office space.
So, fasten your seatbelts; it’s time to stifle the ego and enjoy the success ride.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)