It is quintessential to western culture, that we admire entrepreneurs and innovators. Luckily, this is the case, as these individuals are the engines that “makes our world go round”.
It is no secret either, that starting a business adventure does come with a great amount of risk. As the Nobel-prize winning scientist Daniel Kahneman once pointed out, if it wasn’t for our inherent tendency to be biased towards optimism, our economy would crash, since the chances of failing as an entrepreneur in general, are staggeringly high.
So what? Are all entrepreneurs fools for taking the chance?
Of course not. But very few ever constructs a plan B, in case their plan A ends up failing.
You see, I think because we congratulate risk takers so much in our society, having a plan B is looked down upon to a very great extent.
Having a plan B, is indicative to many, that you are not truly serious about your business idea, or that you don’t really believe in it. This is absurd, considering half of all businesses fails within the first 5 years (1). In my opinion, any reasonable person should, at least, think about how to move on with life, in case his business doesn’t survive.
I think it is ultra important that we get passed this notion, that having a plan B equals a lack of will/belief/motivation, and I’ll explain why.
Why a plan B is important
For how long can you stick to plan A?
Here is another fallacy, that we often fall prey to; “perseverance is the main driver for success”. We have all heard the story about the gritty entrepreneur who faced a mountain of challenges, stuck to his business plan, persevered and succeeded in the end. Then we conclude that perseverance was the ultimate key to his fortune.
Why is this a cognitive bias? Because OF COURSE you must stick to a plan for some time for it to work, but you will never read any inspirational articles or books about stubborn entrepreneurs who stuck to their plans for way too long and crashed, and so you are only presented with one side of the coin – the bright side.
It surely does require some amount of perseverance to become a successful entrepreneur, but once you’ve got a plan B, you’ll know exactly how much you have to give.
Once you have formulated your optimal plan A, and come up with a suitable plan B, it becomes obvious that you should keep chipping away at plan A, for as long as you want to, as long as you can keep plan B open as a viable option.
Imagine you want to open your own bank (plan A), and have a backup job at your local supermarket set up in case it fails (plan B). That means, you may put yourself into as much debt, and financial risk as you want to, as long as the supermarket job can still sustain you afterward, in case everything fails.
Said in more succinct terms: a plan B allows you to know, how far you are able to go with plan A.
More people could become entrepreneurs.
One of the more sad side effects of our aversion to having a plan B, is that it may prevent cautiously inclined people from becoming business owners.
If we trick people into believing, that failure is certain for those who contemplate formulating a backup plan, many will convince themselves that the entrepreneurial world isn’t for them, and they will instead stay put in their more comfortable position.
The takeaway message: congratulate people for having a plan B. Even formulate one yourself to learn about the durability of your plan A.