How to Deal with the Dunning Effect: How to Avoid Overwhelm and Grow Your Business

You’re about to embark on a new business journey, and although you might feel confident, savvy and prepared, you might also feel anxious, overwhelmed and unsure of what to expect. Perhaps you’ve never ran a business of your own before or perhaps you’re just starting out. Regardless of where you are on your entrepreneurial journey, you’ll eventually face the daunting, yet exciting task of marketing and selling your products or services to customers.

Dunning, or performance overestimation, is a common phenomenon among entrepreneurs where people underestimate how competent they are and how successful they’ll be in business, which often leads to them over-ambitioning and risking their safety and the safety of others in a bid to achieve overwhelming success. The Dunning Effect is named after the eponymous Henry Dunning who first described it in a 1914 article in The Journal of Business. There are four main causes of Dunning Syndrome:

Lack of Self-awareness

Self-awareness is key to staying grounded and mindful as an entrepreneur. You need to be aware of your own mental and behavioral patterns in order to change and improve them. Without self-awareness, you’ll find it difficult to recognize your own Dunning Syndrome and the Dunning Effect will run the risk of sabotaging your business.

Performance Comparison

You’re probably comparing your performance in business to that of other successful entrepreneurs or business leaders. This is normal and often necessary to push yourself ahead, however, comparing your performance to that of others can lead to negative feelings of inferiority. If you feel like you’re falling short of what’s expected of you, you’re bound to feel anxious and overwhelmed. Avoid comparing yourself to others and you’ll be able to stay focused on growing your business.

Over-evaluation Of Expertise

Even experienced and successful entrepreneurs and business leaders can suffer from Dunning Syndrome. One of the most common reasons is that they over-estimate their expertise. In their drive to be the best, they might under-estimate how much they actually know. When this occurs, it robs them of the ability to stay grounded and mindful. Being over-equipped, or feeling that you have too much expertise, can also lead to you taking on too much work and becoming overwhelmed. Consider whether you have enough expertise to run your business or not. If you’re not sure, ask for help from an experienced business advisor or coach.

Over-estimation Of Yourself

One of the biggest causes of Dunning Syndrome is the overestimation of yourself. If you feel guilty about your past mistakes and shortcomings, you’ll fear that you’re not good enough to succeed in business. This worry can eat away at your self-confidence and ultimately damage your performance. To counteract this, consider the following:

  • Seek support from a professional, such as a business advisor or coach
  • Be honest about your weaknesses
  • Don’t beat yourself up! There’s no point in damaging your performance with self-deprecating thoughts. Every entrepreneur or businessperson has made missteps along the way, and that’s perfectly okay. It’s a normal part of the process. The important thing is that you learn from these mistakes and move on
  • Take a step back and be objective about your performance

Dunning Syndrome, or the Dunning Effect as it’s also known, can hold you back from enjoying your business journey. The sooner you recognize it, the sooner you can start dealing with it. By taking note of these four reasons for Dunning Syndrome, you’ll be able to stay focused on growing your business and avoid becoming overwhelmed.

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