What cognitive bias commonly hinders entrepreneurs from accurately assessing their own skill gaps?

The cognitive bias that commonly hinders entrepreneurs from accurately assessing their own skill gaps is the 'Dunning-Kruger effect'. This effect describes a phenomenon where individuals with low competence in a particular area tend to overestimate their abilities, while those with high competence tend to underestimate their abilities. In other words, people who are unskilled often don't realize their lack of skill and may even believe they are above average, while highly skilled people tend to underestimate their abilities because they assume that tasks that are easy for them are also easy for others. For an entrepreneur, this can mean that they are unaware of critical skill gaps in areas such as finance, marketing, or operations, leading them to make poor decisions or fail to seek out necessary expertise. For example, an entrepreneur with limited financial knowledge might overestimate their ability to manage the company's finances, leading to cash flow problems or even bankruptcy. The Dunning-Kruger effect is especially prevalent in entrepreneurial settings because entrepreneurs often need to wear many hats and may not have deep expertise in all areas of their business. The effect is compounded by the fact that positive feedback and early successes can reinforce the illusion of competence, making it even more difficult for entrepreneurs to accurately assess their own skill gaps. Addressing this requires actively seeking feedback from trusted advisors, mentors, and employees, and engaging in continuous learning and self-reflection.