Top 10 Biggest Lies Investors Should Stop Telling Themselves When It Comes To Business

Investors are by their very nature optimists. Of course, you have to be an optimist in order to
make an investment in one area or another for obvious reasons. Unfortunately, this can lead to
trouble when surprising outcomes and challenges crop up. As an investor, you may find that
you tend to lie to yourself a lot in order to stay positive.

It is quite easy to make excuses as to why your investments are not heading in the right
direction. Investing in a business is a potentially risky undertaking and there are many
challenges that can easily deter even the cynical. For optimistic investors, it’s very easy to lie
about the risks, challenges and the state of a particular business.  Here are the top 10 biggest
lies you need to stop telling yourself when it comes to business:

10. Things Will Improve When Market Conditions Change

As an investor it’s very easy to assume that your business’s shortcomings are just a product
of the current unfavorable market conditions. While markets are unpredictable, it’s not wise to
assume that your investment’s setbacks are due to external factors. Remember there are
always opportunities to invest and make money even in volatile markets.
If your investment is not performing, be realistic and ready to make the tough decisions.
Situations will not improve through inaction and, therefore, you must deal with problems now.
Confirm that the business in which you want to invest in is viable, and be ruthless when
evaluating various revenue streams. Cut any under-performing areas and make radical
changes to restore profitability.

9. My Passion For A Particular Business Will Help Me Succeed

Just because you have a passion for a particular business doesn’t mean you will achieve
success by investing in it. Although passion is a key driver behind many successful
businesses, passion alone is not enough when it comes to business.Careful planning,
dedication and skilled management should be equal to, if not more than, the passion you have
for your business.

8. I Can Always Re-position When Things Don’t Go Right

During the early stages of a business, you can re position your investment in order to test the
market to see what works and what doesn’t work. However, it is important to understand that
re-positioning doesn’t always work, and you cannot expect your business to do well every time
you re position. Any re-positioning should be supported by a well-crafted business plan and
thorough research.

7. The Profits Will Come Eventually

You may easily think that if you have passion and drive, or if your business is solid
and offers a product/service which provides an effective solution for a real problem,
that your investment will start making profits and eventually succeed. This is just a
fallacy.
It is very easy when you are busy growing your business to believe this lie, but
incredibly foolish. It might be true that there is some good money to be made in the
future, but you cannot simply count on it being possible. You’ll have to plan for it.

6. Big Money Means Taking Big Risks

You may have read the urban folklore of the few who took huge risks and made
billions. But the truth is most people who take big risks fail. Success in business and
investing comes from taking careful, well planned, small steps, evaluating the
results, and taking the next action. Don’t let emotions drive your investment
decisions.

5. Sticking To The Old Ways Will Help Maintain Success

As human being you can get accustomed to routine and be hostile to new ideas. Just
because you have done something for a long time and achieved results doesn’t mean
that it is the best and most effective profit generating solution out there. As an
investor, you need to always be on the lookout for new, efficient and innovative
ways of doing business, or you may find yourself on a path for failure in the
competitive modern business world.

4. This Deal Is Great

For many investors, it can be difficult to look at deals and business
concepts objectively. Most deals aren’t great. However, if you believe implicitly that
you have a great deal, when a lot of things start going wrong it is hard to take a step
back and reevaluate whether or not the deal was lacking in the first place. To
succeed in business, you must be honest with yourself on any deal or investment
opportunity that you come across.
Don’t lie to yourself and put your faith on the idea that a business will take care of
itself because of one reason or another. You should focus on how you’ll realistically
make money. Before you go out to invest in a business, it is important that you are
conservative in your numbers and liberal in your time estimates. Also, ask several
seasoned investors for their opinion on your business.

3. I Know Everything

You feel that you have it all figured out. But the truth is: you could be totally
mistaken and have everything wrong. Research indicates that our brain is wired to
make quick judgments. We tend to lock onto the first information we come across
and that affects how we see everything else.
You may have read books, talked to seasoned investors, attended business
workshops and what not, but you still don’t know everything. Although fear of
trying is bad, venturing out in the world of business with no knowledge and just
passion is even worse. Don’t lie to yourself – you need to learn everything there is
to know about any business that you intend to invest in. Start with the basics and
steadily invest in your knowledge level.

2. I Am Above Average

How do you rate your business acumen? Chances are, you believe you are above
average. Most business people do, and actually most people believe they are better
than most on just about anything from professional skills to personal behaviors and
communication. Your natural tendency to rate yourself highly can lead to poor
investment decisions.
Your overconfidence may also make you feel that your business ideas are superior.
Being optimistic and confident are important characteristics that you should equip
yourself with as an investor. But when you lie to yourself that your business ideas,
or investment options, are the best, not only are you fooling yourself, but you are
impeding your business growth.

1. I’m Rational And Make All Decisions Based On Facts

Although we tend to think that we are rational, research indicates that our brains
are hardwired for stone-age survival, rather than complex economic decisions
needed in the modern world. We use reflexive functions of the brain, such as our fight or
flight instincts, or emotions to make irrational investment decisions that often lead
to failure. For that reason, many investors tend to overact to economic conditions
or investment opportunities and take huge risks in the pursuit of a profit.
Research also indicates that people have cognitive biases or tendencies to think and
reason in certain ways, which may affect rationality or good judgment. This means
even when we try to be rational, we rarely have the inclination to do so. For
example, many investors have a tendency to look for patterns in data or
secret investment formulas even when there are none.

Your emotions and cognitive biases can easily cloud your good judgment and lead
you to make faulty, risky or unwise investment decisions. To avoid this, you should
seek advice from an experienced businessperson or investment adviser before
putting your money in a particular business. It is also advisable to ignore the recent
past performance of a business and to keep a long-term approach.

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