A principle that has guided much of my entrepreneurial journey is learning through observation.
I’m what you might call an expert by observing others.
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Like most entrepreneurs, I fell victim to some of the common pitfalls inherent in our careers. But by observing those that have been successful as well as those who have failed, I’ve been able to recover and be successful much faster. Here’s a common principle I saw: A successful entrepreneur is not only ambitious but also pragmatic. They always plan for twice as much.
What I mean by that is a successful entrepreneur plans for the ventures to take twice along and cost twice as much.
Overestimating and over-capitalizing
I can tell you right now that no entrepreneur knows what to expect when they start a new business. Those who succeeded anticipate the unexpected by overestimating and over-capitalizing. These entrepreneurs exceed the expectations of their investors and their teams.
No amount of planning or preparation will give you all the answers you need to every problem, but you can be prepared for most.
Investors are integral to the success of startups, and they come with a set of expectations. Entrepreneurs that fail treat those expectations as the starting point, not the finish line, limit of their plans and set themselves up to fall short of expectations.
Bushy-tailed entrepreneurs want the process sped up. We have an idea, and we want it to take off tomorrow. We think our idea will change the world, and anybody who questions our plan or their vision just doesn’t understand. But smart investors have been there before, they’ve seen it over and over again, which is why they ask the hard questions, why they ask for detailed documents: they know typical entrepreneurs are overly ambitious by trying to shortcut the process, but the best entrepreneurs always prepare twice as much material as they think they need.
Here’s the advice I’ve learned, I follow, and now I’m passing on to you:
The art of overestimating
Do you have a timeline? Double it. How much do you think it will cost? Double it.
This habit of planning twice as much as a dual effect: you have real, actionable plans you have prepared without having to over-burden resources by running out of time or money. It also boosts the confidence of everyone in the management team, not to mention the investors.
Overestimate, don’t underestimate. Don’t be an optimist, be a realist with optimistic goals. Many entrepreneurs forget that goals are supposed to be achievable and challenges are supposed to be realistic; you should exceed expectations, not fall short.
Nobody ever got mad when they estimated how much groceries will cost that month, then realize they spent less.
The same goes for your new venture: nobody will ever complain when you estimate for the unpredictable, then realize it’s easier than you expected.
The opposite is also true and can stop a new venture before it even starts.
Exceed expectations
How surprised would an investor be if it took less time than you anticipated? How much more willing would they be to invest in your next idea? Or how many other investors will they tell about a “reliable investment I found?” If you have an opportunity to get ahead of schedule, take it. But it will almost never take as long as you expected the first time around – it will take much longer.
No entrepreneur ever “finished” their career, or sold their company by saying, “Gee, that was easier than I thought!” But by overestimating everything, you can at least make it look that way.
By overestimating your costs, and under-promising you reduce the risk to investors, give yourself leeway for unexpected roadblocks or expenses to arise, and set yourself up for a surprising success. In time, your ability will speak for itself, and investors will be less concerned about your capacity to complete difficult plans.
This doesn’t apply to just starting a new company, but any project, any venture, will benefit from over-planning, and under-promising. It’s all about getting it right the first time. No matter how many problems you have, everyone on the outside will see smooth sailing.
Ron Gibori is a nationally recognized entrepreneur and award-winning creative director at Idea Booth–a creative think tank. His work with mtvU on the “Half of Us” pro-social campaign received several Emmy nominations and won a Peabody Award. Ron frequently writes about entrepreneurship, leadership, creativity, and innovation.
