According to studies, about 80 percent of people have an optimism bias in terms of themselves and those close to them. In simple terms, people tend to overestimate the probability of good things happening to them and underestimate the likelihood of bad things.

But this bias is only towards themselves and their own near and dear ones. For everyone else, they are realistic and sometimes, pessimistic. If you smoke, you will get cancer and probably die early. But if I smoke, I will be one of those lucky ones, with a pipe in prime health at a ripe, old age of 93.

In many areas of life, we assume that only good things will happen. “I will top the class, I will find love, I will have a great job, I will not get into a terrible accident, I will be healthy till I am old”; the list goes on. But the likelihood of only good things happening is very low. Human beings are very susceptible to illness, accidents and eventually death. But, we like to constantly tell us ourselves that it will happen to everyone else, but not me. On the opposite side of the spectrum, are people who have a pessimistic bias. They would rather believe the worst of everything, claiming to be realistic, and end up depressed, no matter what the outcome.

The trick is to walk a fine line, which is by no means easy because our brains have these set patterns that we don’t even notice. There are good and bad results of the optimism bias. Being optimistic, studies have shown, makes you happier, work harder and in turn, more successful. We all know that being overly pessimistic is of no use to anyone; it only convinces you that you are incapable and makes you want to not even try. Having an overly optimistic worldview makes you try, over and over again. But again, you should be aware of the existence of an optimism bias. In situations where a clear understanding of reality is necessary, like high pressure and/or life-threatening situations, it is important to be more realistic than overly optimistic. In the same vein, it is important to know when something won’t work out, let go of your optimism and walk away.

Now let’s connect what we’ve talked about to entrepreneurship. To even get into the business of startups, there is a certain level of optimism and belief required. The trouble is finding middle ground. You can’t walk around expecting a piano to fall on your head at every corner nor can you pluck flowers, expecting roses with no thorns. Stay away from being too extremist. But how would you know when you’re being overly optimistic, when in reality you are standing on the edge of a cliff?

The trick is to always have a backup plan. A parachute, when the risk is like taking a dive out of a plane. Never put all your money behind one idea. (By all, I mean literally all) Of course, your startup is your baby and you are willing to go all out. Go all out but by three-fourths, rather than by all means. You should have a contingency plan so that you don’t completely fall apart if things don’t work out. It can be as simple as the rules we have ingrained in us from childhood. Look both ways before you cross the street. Don’t trust strangers just because they have sweets (sweets could mean money, big words and gestures). Basically don’t try to get rid of your optimism bias but be very aware of its existence and make adjustments before you end up enthusiastically jumping off a cliff.