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We opened capex-heavy businesses in four cities in Year One and sometimes we look back at think: were we drunk?

That was about ten years ago. I asked my business partner PK recently if he’d ever experienced a microsecond’s doubt that our business was going to succeed.

No, he said.

Me neither. That’s the kind of relentless optimism you need to do interesting yet mildly-insane things like start businesses, become a cave diver or stand for leadership of the British Conservative Party.

You need that always-on awareness that this caper better succeed, or we’ll have to go back to our old place and apply for jobs, and we would sooner die.

It’s important to balance the optimism with a sense of reality. Throughout the business experience, there are types of misplaced optimism that pop up a lot. Good feelings about things that are just not going to happen, which can lead to capital-T Trouble if you’ve promised those things to your overlords.

We’ve done most of these things (though we have no overlords and highly recommend that). Learn from our errors and avoid some future pain.

1. The Post-Pitch Afterglow

You’re in the cab on the way back from pitching the big, game-changer contract. That post-analysis banter is one of the few enjoyable parts of that process. And you all feel it went really well.

I mean, we don’t want to get too far ahead of ourselves, but they really did respond well to our suggestions, didn’t they? They really seemed to like them. Did you see how they looked at each other and nodded when we brought up the key points? Yeah I noticed that too.

Feeling pretty good about this one. In the bag might be too strong a term, but they’re definitely sitting up there at the checkout just ready to be popped in that bag.

*Realistic Narrator Voice*: Turns out they weren’t, and the client went with someone else.

What’s happened here is that you’ve done a really compelling sales job … on yourself. You believe those pitch points to the core of your soul, and you delivered them well. They sounded so compelling as you rolled them out. Why wouldn’t that be a winning proposition?

Post-pitch, you’re Felix Baumgartner-high on your own fumes. You might not be seeing it through the client’s eyes. So don’t start making promises to potential new staff or looking for bigger premises just because you’ve got a really good feeling.

Particularly when your business is just getting going. Those early-years pitches felt so good to us, everyone saying how much they loved our refreshing, energetic approach. Our win rate was in the Eddie The Eagle class.

It’s easy to forget that it’s different without a big brand name behind you. The client will go: your team, product and pricing was better, but on this occasion we’ve decided … better the devil you know.

Oh well. Read what Bryce Courtenay would do, and keep plugging away. Ask more questions. You’ll get there.

2. The Big Score

It’s kinda similar to the one above, but it’s different thinking. It’s the one where people in a smaller outfit think: this is the big score. This is the client or deal that’s going to pay off the mortgage, put the kids through school and so forth.

I’ve seen people spend a lot of time actually talking about how they’re going to spend the money. Like they’re some criminal gang in a film, jetting off as the credits roll to an eternity of poolside cocktails in some Mexican resort town, all sunglasses and Vuitton suitcases of cash.

“It’s all approved, just waiting for one more signature from someone at head office but that’s just a formality.”

You know how that ends.

Do not talk about how you’re going to spend the money.

Do not talk about the teeth-whitening guys that struck it rich off one campaign, that is not happening to you.

Do not tell all your friends about it. I’m really superstitious about discussing not-yet-done deals to anyone I know, because deals usually fall over for all sorts of reasons beyond your control. Then you have to slink back and have endless yeah-nah conversations.

Success for all but the lucky few isn’t some viral growth rocket ride.

It’s a gradual, tidal thing, and that’s just fine (unless you’ve promised viral to venture capital folk and now it’s blowtorching time). Moderate growth means your systems can grow at a calmer rate, so you can deal with demand without needing to hire every random clown who walks through the door. You aren’t at risk if you end up losing that one big client.

Do not buy Vuitton luggage either, we’ve spoken about this before.

3. The Fantasy League Spreadsheet

We get pitched business investments and most of them come with the same Fantasy League spreadsheet.

The Fantasy League spreadsheet has a fixed monthly growth rate that starts today and continues as surely as the sun rises in the morning. Thanks to the miracle of compounding, by the end of year 5 we’re making $20 million profit per year.

It’s basically saying: we have the genius plan of making no mistakes, and having zero setbacks, forever. And no external factors will affect demand.

Does that sound like the plan of anyone who’s done anything at all before? Business reality is that stuff just goes slower and with more screwups than your instincts told you it would. That’s still OK.

Plan your costs around that worst-case scenario. Gearing up to meet unexpected demand is usually achievable. Getting rid of epic fixed costs isn’t.

And investors are so used to seeing the fantasy spreadsheet that if you show them the sensible, conservative version they’re likely to regard you as one of the adults in the room.

People speak of sandbagging in revenue forecasting like it’s a naughty thing but as a business owner I’d much rather get realistic-to-low forecasts than fantasy fiction from some over-enthusiastic human Labrador.

4. Small Percentage of Big Targets

Plans that say: there are a million people who own a Pug, all we need is 2% of them to buy our new Pug Rug overcoats and that’s $1.2 m in revenue. The idea that it’s only a small target so it’s easy to achieve never quite works out in reality.

It’s not ‘only 2%’ you need. What you need is a product that excites people enough to dump their current product, and that is really difficult because people hate and fear change of any kind.

5. They Seem Like Really Nice People

The universal optimistic prelude to: so we gave them the whole job on credit and now they’re not answering calls or emails.

Now you’ve done a heap of work for free. I beg you, please be more careful than this.

Don’t let any of these things stop you opening four businesses in a year or whatever. Mad overreach then sink-or-swim panic is all part of the fun. These tips are just to help explain some of the things that will happen along the way, whichever way you choose to spin the risk dial.

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If you liked this, you might also like 5 Reasons To Curb Your Growth: Lessons From Shoes Of Prey.

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