Given that half of new businesses fail in the first five years, it’s a guaranteed that you have to be at least a bit of an optimist to become an entrepreneur. A healthy dose of cheerful overconfidence also helps you be perceived as a leader, influence others, and shake off failure.
But new British research suggests you shouldn’t take that tendency to look on the bright side too far, Inc. reports.
The grumpy but enlightening study showed that entrepreneurs who are more optimistic than average actually earn 30% less than their more pessimistic peers.
When the researchers out of the University of Bath, the London School of Economics, and Cardiff University combed through 18 years of data on household wealth in the UK, they discovered a pattern that will shock exactly nobody—over-optimistic folks are more likely to start ill conceived businesses that are doomed to failure from the start.
“Our results suggest that too many people are starting business ventures, at least as far as personal returns are concerned. As a society we celebrate optimism and entrepreneurial thinking but when the two combine it pays to take a reality check,” was co-author Chris Dawson’s downer of a comment on the results.
But while these findings threw cold water on overeager would-be entrepreneurs, they also offer a route to greater success for business owners who are willing to dial their natural optimism down a notch.
If optimistic entrepreneurs earn 30% less, it follows you can plausibly make something like a third more by taking off your rose-colored glasses.
