Is it a good idea to have a backup plan? You would think it was. But according to the latest science, it’s actually a bad idea. A recent study in Organizational Behavior wanted to find out it having a plan B helped or hindered. To the surprise of the authors, they found that people with plan B’s were less likely to be successful in their pursuits. Weird, right?
According to the authors, plan Bs “reduced psychological discomfort.” This, in turn, meant that they were less motivated to make plan A work. And as a result of that, they tended to be a lot more blase about their various business ventures. Think about it. Donald Trump aside, not many modern millionaires came from millionaire families. It wasn’t as if they could just go home to mom and dad if their business ventures didn’t pan out. They had to be a success, or they were on a ship that was sinking fast.
The problem with plan Bs is that they play to our natural human desire to avoid risk. We think about our grand plans for our lives on a regular basis, wishing that they would somehow just happen. But we continually execute our plan Bs because they seem less risky. We want plan A, but we do plan B: it’s sensible, right?
The Fortunate Investor recently ran an article about the importance of having an emergency fund. The self-employed need funds that can tide them over, should their incomes fall dramatically. Emergency funds aren’t something many budding entrepreneurs have heard of. They’re either all in, or they don’t bother.
But perhaps it’s this sort of thinking that gets entrepreneurs to the place where they end up in the modern world. Delving into the history of entrepreneurs and one uncovers a common theme. These people were always risk-takers and always doing things that could have gotten them into trouble with the law. Entrepreneurs, for instance, are way more likely to have taken illicit substances when they were young. And they’re also a lot more liable to have been caught playing truant. Entrepreneurs, therefore, are the sort of people who self-select into risk-taking. It’s something they’ve always loved, and they can’t imagine being without it. The business world to them is a kind of natural outlet for their risk-taking tendencies.
But there’s another problem that needs to be addressed here. Being successful is as much about luck as it is about business smarts. Some companies land a big contract, get lucky, and make a name for themselves from there. Other businesses have a great product but don’t get anywhere, perhaps because the timing is wrong. It all means that the self-employed are in a bit of a catch-22 situation. They should have a plan B because there’s no guarantee that they’ll make money. But if they have a plan B, they’re massively undermining their efforts to achieve their life goals. In its own way, it smacks of a Shakespearean tragedy. Plan B or not plan B? That is the question.