Over lunch today I had an interesting conversation about the current economic crisis and whether the CEO’s of all these large financial corporations were in fact overlooking the risks they were taking, or, they knew exactly what they were doing when relying on the government to bail them out. In both situations, things have worked out for them for the time being. However, if they are ever to get back on track, drastic changes will need to made. The conversation then digressed towards entrepreneurs and their attitudes towards risks. Essentially we entrepreneurs find ourselves in relatively similar situations to those CEOs. The risks that entrepreneurs undertake are substantial, irrespective of how well thought out or well  researched the project may be. In fact, if you  put the simple analogy into perspective, that out of every 10 businesses started, 9 fail, that unbridled enthusiasm we start each venture with may be severely dampened.

The fact of the matter is that most entrepreneurs tend to have an idealistic outlook on how they see their business developing. The prospect of the sky being the limit, provides that much needed motivational force to push ourselves harder and farther. However, certain factors need to be put into perspective before these grand expectations  and castles are made in the air. If you want to build a Fortune 500 firm, an entrepreneur needs to at least:

1. Pick a niche that has the growth potential to provide that sort of scale.

2. Have a burning passion for what you want to do.

3. Write a business plan and articulate your vision.

4. Not be afraid to recruit people who are smarter than you.

5. Raise adequate capital from the most reputable and experienced sources you have access to.

Going into a segment with your eyes closed and ignorant of the risks ahead results in disappointment and failure. A balance needs to be struck and once you find it, then go after the opportunity like there is no tomorrow.

What do you think? Is ignorance really bliss? What would your advice be to entrepreneurs on the topic of ignorance or over enthusiasm?