If I had to look back on some of the failures (big and small) in my career I can almost invariably track the causes back to one single theme – allowing faulty assumptions to slip through unchecked and untested. It usually occurred because someone passionately believed they were right and convinced me (and others) that their assumptions were correct. Sometimes too, notably when I was younger, I was guilty of being the person doing the convincing.

Mostly, the failure was due to taking an over-optimistic view of what was possible. With 20:20 hindsight that’s never too sensible. It’s important to dream big but you can’t put yourself in a position where your plans implode as a consequence of your assumptions being overstated by a factor of 2-5 times.

Nowadays, I’m a bit older and hopefully wiser and I don’t get caught up in the hype and emotion anymore. I’ve lost money from believing in the ‘next big thing’ and so I’m more realistic, even (slightly) cynical these days. On top of that my bullsh*t detector starts working when I’m a kilometre away from stuff that sounds fanciful or too good to be true.

I steer clear when I hear or see any of the following circumstances:

  1. Industry minnows whose sales pitch is based on claiming that their competitors are hopeless, out-dated and have inferior business models. Try selling your specific benefits, pal…
  2. Johnny come lately types who immediately criticise everything and claim they have all the answers after a week in charge. ‘Saviours’ are (usually) dangerous.
  3.  Business plans with big hockey stick curves in the future. It doesn’t happen often…
  4. Assumptions that are based on statistics or experiences from other countries. Iceland, you say?
  5. Statements like ‘if we can get ONLY 5% of the market we’ll have a great business.’ Duh…
  6. Businesses that will crumble if favourable legislation changes overnight. Pink batts etc…
  7. Frontal assaults on entrenched market players. Try stealth – you might last longer…
  8. Teams that have no ‘skin in the game’. Money motivates…

Instead I revert to asking tried and true fundamental questions when I am testing assumptions:

  1. What market problem are you trying to solve?
  2. Is it worth solving? Why?
  3. Why do you think YOU can solve it?
  4. How will you make money from solving it?
  5. Will you make enough money to justify your efforts and investment?
  6. How will you compel customers to buy from you?

What these questions are intended to do is expedite a long winded interrogation of assumptions and instead focus on figuring out whether the business is focused on solving a REAL market problem at the lowest possible cost. Any assumptions should be tied to answering these questions and then thrashed to within an inch of their lives. If you still have a viable business when you can survive a material underperformance of your ‘realistic’ assumptions then you’ve got a fair shot…

Good luck, merry Christmas and all the best for the holiday season. Thanks for reading my articles this year. I hope you enjoyed them.  I’ll be back in late January!