Before moving forward you had better

Great addendum, Dien, to what was a very insightful post by Michael. It begs the issue of a fascinating paradox that we must grapple with as entrepreneurs. Consider the following:

Without a positive, forward-thinking attitude, optimism, persistence, and much resolve, an entrepreneur is highly unlikely to achieve long-term success...

...Yet as Dien insightfully points out, misplaced optimism on a 'per-project basis' can be very dangerous, and can prevent us from meeting our objectives.

I see too many entrepreneurs so intoxicated by the excitement of a new project, that they somehow rationalize projections which are completely unrealistic.

Does this sound familiar?

"If I 'only' get a 5% response, I'll make $57,324 on this project with hardly any work! There's just *no way* I won't get 5% with a list this targeted and an offer this good!"

Why set yourself up for a deflating crash and burn? Instead, figure out how to make a profit at 1%, or better yet 1/2% or 1/4%. I like to always cut my projections in half, and then half again. And if I STILL come out ahead, then I can be reasonably certain that I have a winner.

As Dan Kennedy said, "Why not play the games where the question isn't whether you'll win, but by how much?"

So there you have it. Strike the optimal balance of visionary, big-picture optimism, with 'micro-pessimism', and you'll be on your way to smashing entrepreneurial successes!

Thanks again, Michael and Dien, for your insights. I'd be happy to explore this topic further with anyone else who has an anecdote or opinion!

Best regards,

Jesse Horowitz

> Thanks Michael, good story and really good
> wisdom.... :)

> I agree, Michael....

> As you know, I've been studying "serial
> entrepreneurs" -- those who have
> started multiple businesses with
> "high" success rates. And I've
> noticed there are things in common between
> them all....

> One thing which comes up over and over is
> that multiply-successful entrepreneurs
> limit their risk .

> It's good to think positively -- otherwise
> you might not do anything at all. But the
> other side of that -- which isn't talked
> about very much -- is to think about what
> you'll do if it doesn't work. And I've
> noticed that repeatedly successful
> entrepreneurs do this....

> One way is to have a Plan B, a backup plan,
> of another way you can profit if the first
> way doesn't work. And there are other
> strategies too.... For example, the idea of
> "testing" in mail order is another
> way of reducing risk, in a specific kind of
> business.

> Another way is the approach used by Bob
> Reiss, which he explains in his book
> "Low Risk High Reward." He created
> a game based on TV Guide.... So by
> cooperating with a "big name" like
> TV Guide, he was able to reduce his risk. He
> also had an even better way....

> Instead of paying his suppliers in cash, he
> made profit-sharing agreements with them, so
> they got a part of the profit.

> This might sound like he was giving away his
> profits, since it's true, if the game was
> successful, then he would end up making less
> money. That's because he had to share the
> profits with his suppliers as well as with
> TV Guide (which also agreed to promote the
> game, also for a share of the profits)....
> BUT --

> On the other hand, think of what happened if
> the game DIDN'T sell. Well, in this case,
> Bob Reiss had practically lost nothing!
> Since his suppliers were taking a share of
> the profit instead of cash up front, it also
> meant they were taking a share of the risk.
> In the end, he had "farmed out"
> the risk to others, so the financial risk to
> himself was practically zero.

> He says in his book that most entrepreneurs
> are over-optimistic about their chances of
> success.... It's good to look at the
> "down-side" and actively look how
> you can limit your financial risk, through
> one scheme or another, just in case. Most
> don't even think about this, which is why
> some people start businesses then end up
> losing everything. It does happen -- but it
> doesn't have to.

> Thanks Michael, excellent post! :)

> - Dien