How to face realities in business

Generally, entrepreneurs are optimists and sometimes, expect fairy-tale business outcomes but life seems to play out differently. The realities of life take us to places we couldn’t have imagined we would be. When the American company, Webvan, raised $800m in venture capital, they didn’t imagine that they would go bankrupt in barely 24 months. These are realities that occur in business (and life) and being optimistic shouldn’t blind us to what is really going on.

Jim Collins, bestselling author of the business classic, Good to Great, said that, “You absolutely cannot make a series of good decisions without first confronting the brutal facts.” Effective leaders are not only visionaries, but also realistic – at peace with brutal facts. They understand how to balance the pictures in their heads with current issues on ground. Otherwise, they would only be fantasizing.

This exercise of staring reality in the face is normally strange for optimists – who see the best in everything. So, if you’re struggling in this area, how do you learn to navigate reality as you pursue your dreams? By asking these three questions:

One: What is the situation? Here, you realistically assess the situation. What is really going on? What are the facts? What do the numbers say? Yes, you feel that the business will be profitable in 12 months, but now, the business is losing cash. That’s the reality and burying your head in the sand wouldn’t change it. So, face it.

As you go through this process, it helps to have fresh perspective from people outside your immediate sphere of influence. People who have no problem telling you the truth. This way, a limited scope is avoided and you’re able to observe the situation from new angles.

Two: What are the options? Once you’ve realistically assessed the situation, now what possible action steps are available? One challenge with only viewing the positives and ignoring reality is that you can easily be misled to false conclusions. Valid options emerge where reality and vision meet.

Three: What is the game plan? Based on your strategy document, you’re supposed to have broken-even by now, but it’s taking longer. So, what do you do? What plans do you have in place for such eventualities? Are you able to easily switch to a new plan as required? Leaders who merge vision with reality usually have a game plan in place for times when situations change at short notice. Armed with the brutal facts and flexibility, they advance towards their dream.

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