Why Entrepreneurs Need To Do A Premortem Before They Start Up

Why Entrepreneurs Need To Do A Premortem Before They Start Up

Most entrepreneurs are in love with their business plan. They are convinced that what they’re doing will be so profitable that they fail to think about what can go wrong. This can be tragic, especially when you factor the time and energy which they have invested in a company which is doomed to fail, simply because they did not bother to think about potential problems.

This is something entrepreneurs need to be wary of because starting a company can be an expensive affair. It’s not just the opportunity cost of the salary they could have earned if they’d worked in a job – it’s also the emotional energy which gets drained in doing something which didn’t work.

Being an entrepreneur exacts a huge emotional toll. Not only does the founder have to deal with the daily unpredictable ups and downs which characterise a startup, it also puts a lot of strain on your family, because it completely disrupts your work/life balance. Founders need to be single-minded in their pursuit of success, which means they often have to sacrifice personal ties and friendships in the all-consuming desire to create something innovative.

This Is Why A Pre-mortem Is So useful

This is a thought experiment, where you imagine that you are five years in the future, and that your startup has failed. You then have to list all the possible reasons which could have caused it to fail.

This might sound like a doomsday exercise – isn’t imagining the possible reasons you could flop a very pessimistic way of starting off as an entrepreneur? Actually, you should do this to improve your odds of success! If you’re aware of all the reasons which would cause your startup to fail, your chance of succeeding become far better because you can prevent these problems.

This is a clever way of doing the needed due diligence on your own project before you actually implement it in real life. The good news is that it doesn’t require much money to do this – all you need is time, imagination, and a framework.

A useful way of coming to terms with reality is to actually pitch your business plan to investors and see how quickly they shoot it down. Now, you might get disheartened when people refuse to fund you but when they say no, they’re actually being quite kind. They can point out to you what the flaws in your company are – something which you may not realise because you’re too enamoured by your idea to be able to see its shortcomings. In fact, sometimes the kindest thing an investor can do is to say no to an entrepreneur, so he doesn’t waste five years of his life chasing mirages.

Now I am not saying you need to obsess about failure. The truth is that if you are aware of how and why you will fail, you will actually increase your chances of success. This is the famous Charlie Munger “invert strategy.” After all, success is the antithesis of failure, and as he says, “Tell Me Where I’m Going To Die, So I Won’t Go There!”

In Conclusion

Most entrepreneurs try to model themselves after success stories like Elon Musk and Steve Jobs. Yes, these are inspiring heroes, but the truth is that success is usually idiosyncratic and hard to replicate because it depends upon so many factors which are completely out of your control. You need to be in the right time at the right place, and luck plays a huge part in success – and this is not something you can control.

However, the reasons for failure are usually the same – you run out of money, or you run into people problems, or you are not able to execute because the market is not ready. If you take the time to think this through, your investors are more likely to give you money, because they can see that you are aware of the risks which plague a startup and have a plan to deal with the obstacles which litter the journey of a founder.


[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]

Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

2 YEAR PLAN
₹19999
₹7999
₹333/Month
Unlock 60% OFF
Cancel Anytime
1 YEAR PLAN
₹9999
₹4999
₹416/Month
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

Why Entrepreneurs Need To Do A Premortem Before They Start Up-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

Why Entrepreneurs Need To Do A Premortem Before They Start Up-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

Why Entrepreneurs Need To Do A Premortem Before They Start Up-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

Why Entrepreneurs Need To Do A Premortem Before They Start Up-Inc42 Media
Why Entrepreneurs Need To Do A Premortem Before They Start Up-Inc42 Media
You’re in Good company