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When Starting Something New, These are the Hidden Obstacles That Can Ruin It

Better Decisions For Entrepreneurs


One day, a young woman came up with a business idea that excited her. She wasn’t qualified to run it on her own — she had no training in business, technology, marketing or sales. She didn’t even have the money to start it up.

 

So she did what everyone in her position would. She tried to learn about these things. She found herself a business mentor. She enrolled in an incubator program. She hired a business consultant to guide her through the complex process of applying for an entrepreneurship grant. And now she had the knowledge, support, network and money to do it.

 

But this young woman didn’t stop there. She went into Serena Williams mode (“Believe in yourself when no one else does”). Instead of celebrating the progress she made, she dug deeper:

 

“This feels like a dream – like I’m living someone else’s life. Why is that? Is it because I don’t really see myself as an entrepreneur? Is it because others don’t see me as one? I want to be able to trust my decisions in this new venture – what am I missing?"




Embarking on a fresh journey, whether it's launching a business, pursuing a passion project, or attempting a daring experiment in the kitchen (note to self: never underestimate the power of too much cinnamon!), is akin to setting sail on an epic quest. Ready for the adventure, we are in the mindset for learning and seeking help for the obvious obstacles that get in our way.

 

A recent report by the  United Nations Development Programme and The Behavioural Insights Team reveals that overcoming the obvious obstacles is not enough. Some hidden obstacles, ones that involve our own self-beliefs and decision processes, are often the reason we struggle.


The obvious obstacles to starting something new

 

Not having the business school frameworks and models needed. Things like understanding the competitive landscape, identifying a gap in the market, exploring the viability of the product or service, seeking market feedback, choosing the right employees and incentivizing them, accessing resources, and developing and growing one’s business.

 

Financing. Access to finance can be tricky when there are considerable frictions in the process, such as bureaucratic and complex administrative processes. Real or perceived regulatory complexity may prevent people from undertaking these tasks, despite being initially motivated to complete them.

 

Networks. Weak ties or acquaintances with people in the field are important to acquire insights, advice and gather resources.


The hidden obstacles to starting something new



Self-identity. Do you think of yourself as an entrepreneur?

 

Self-identifying as an entrepreneur is an important motivator of entrepreneurial activity (beyond monetary incentives which are often low and/or uncertain. When ‘being an entrepreneur’ is central to a person’s identity, they experience more entrepreneurial passion and work harder to pursue their business goals. Individuals who have been socialised in an entrepreneurial environment (through parental and peer influence) and identify with the prevailing values of these groups are more likely to start a venture themselves. Because entrepreneurship is often associated with masculine norms of success, women may find it harder to strongly identify as entrepreneurs.

 

Negative stereotypes. Does how others see you harm your prospects?

 

Gender stereotypes, whether explicit or implicit, affect women’s aspirations to become entrepreneurs, but also affect the decision-making of suppliers, clients and other members of entrepreneurs’ networks and make financing or growing their business more difficult.

Women are associated with gender-based stereotypes (e.g. personality traits such as being emotional, or behaviours such as being expected to take on domestic roles) which can lead to gender-based discrimination towards women from institutions and clients (e.g. investors and banks being less likely to provide finance to women). Some traits are generally perceived as positive in male entrepreneurs (e.g. confidence) but negative for women.

 

Self-efficacy. Do you believe you have the ability to succeed?

 

Entrepreneurs’ self-perceptions influence how interested and likely they are to start a business, and how motivated and likely they are to succeed at it. It also impacts their perceived control, how much stress and self-blame they experience, and how long they persevere for. Finally, it predicts the scope of career options and occupational interests considered (especially for girls and women).

 

Scarcity mindset. Is your decision-making affected because of pressing needs?

 

Poverty and associated stressors can be a source of cognitive load, leading people to ‘tunnel’ their attention towards their most pressing needs (such as food or money), leaving limited mental bandwidth for other important issues. Entrepreneurs who face this ‘scarcity mindset’ may be less able to focus on business activities, especially those that involve planning for the future. As a result, they can make suboptimal decisions (e.g. not saving enough, overborrowing, or not investing enough in education).

 

Planning fallacy. Have you adequately planned for how you will achieve your goals?

 

Entrepreneurs may be full of good ideas and big intentions, but one key finding from behavioural science is that intentions do not always translate into action. One common reason for this is the planning fallacy, the tendency for people to underestimate the time, effort or risk required for an action. When entrepreneurs don’t have plans - particularly specific, action-focused plans - to calibrate these estimations, they are less likely to follow through on their goals and succeed in their business endeavours.


P.S. If you're starting something new these days, which hidden obstacles do you need to work on?

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