Are You Overestimating Your Ability to Grow Revenue? - 10/29/2024

My Mom was 5'0" tall and depending on her mood, she grew to be 6'4". Her older siblings nicknamed her "baby". My sister and I were 6 and 2, respectively when my parents divorced. Move back to the Philippines or raise two kids in NJ as a single parent was what she had to choose from. For her it was "fight" not flight and she found she had something to prove. She also thought she was good at lot of things, accounting, parenting, driving...

We had an AMC Pacer, the one with the fishbowl back window, despite all the glass, there were blind spots. She sat on a couple of pillows to compensate for her height, so when we left the laundromat in a rush, she didn't see the car as she was pulling into traffic. This is the late 70s and my little sister didn't sit in a car seat and who even bothered with lap belts.

An angel was with us that day.

This near miss woke her up to her shortcomings. It resulted in two things. a live-in nanny so she didn't have to do it all and car with better field of view.

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As a business owner, what's worse, not being good at something or believing you are when you are not, and not asking for help when you need it?

Excerpt from: Breaking Barriers: Overcoming the Top 5 Financial Myths that Keep You Broke - A Guide for the Small-Medium Sized Business Owner

Behavioral Economic Principle #2: Dunning-Kruger effect: The saying "no plan survives contact with the enemy" has always resonated with me. It partly explains this next limiting economic belief because, no matter all the meticulous preparation to go-to-market and make money, there are often unexpected challenges. The Dunning-Kruger effect is derived from two Cornell University behavioral psychologist’s paper “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments”. The two major findings showcase that individuals with low competence, overestimate their abilities (expertise and/or knowledge) and those with high abilities, underestimate their competence. As business owners, “we don’t know what we don’t know” and even if we recognize that we don't always have all the information or solutions at hand, we often conjure up things as if we know it's true.

Knowing your limitations and in part being more self aware is necessary to avoid this pitfall. This behavior if not managed will imbue itself on a company’s culture of unrealistic expectations. Education and training for better self-assessment such as goal setting via a scientific method in other words, experimentation, will help. For example, one could set a revenue goal, establish a thesis for how to achieve it, and go out observing, if

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