From the July 2007 issue of Entrepreneur

Peter Justen is a serial entrepreneur whose most recent venture is MyBizHomepage, a Middleburg, Virginia, company that offers a free, web-based financial dashboard system and projects more than $3 million in sales this year. However, even a seasoned entrepreneur like Justen can slip up. He could have explored international opportunities before launching his company last September, but he decided to focus on the $25 million U.S. financial dashboard market instead. Fast-forward to today, when about 35 percent of MyBizHomepage's subscribers are international, logging on to check their financials from emerging entrepreneurial economies such as Estonia, Pakistan, Uganda, Uzbekistan and Zimbabwe.

Justen, 51, admits he didn't anticipate the site's immediate and far-flung global reach. "The big 'duh' moment was the international side," he says. "I didn't see any of that coming." Luckily, the website translates into foreign currencies--"A payable is a payable," says Justen--but the company is planning to produce international-language editions of its product to meet the needs of its growing international roster.

Every leader can spot missteps in hindsight, and the corporate highway is littered with projects and prognostications that, well, seemed like good ideas at the time. Failing to anticipate the downsides of a decision, however, can blindside leaders and jeopardize the bottom line. When General Motors Corp. started a co-promotion with NBC's The Apprentice that allowed the public to post ads for the Chevy Tahoe at chevyapprentice.com, it received unflattering spoof ads about the SUV's damaging contributions to global warming. Starbucks had its baristas e-mail a free-drink coupon to friends and family last year--but the coupon inevitably zoomed around the internet, and an angry customer filed a $114 million lawsuit after Starbucks stopped accepting it. And even the ubiquitous Google has "D'oh!" moments: After buying YouTube, the company finds itself defending the acquisition as it fights YouTube's expensive copyright battles.

To outsiders, it seems so obvious. Didn't they see it coming? Maybe, maybe not. Risk management has taken on new meaning for companies since 9/11, resulting in greater use of scenario planning and more in-depth evaluation of threats and uncertain factors. The problem is that all this upfront analysis might not actually lead to greater foresight and fewer strategic gaffes. Hugh Courtney, a University of Maryland business professor and author of 20/20 Foresight: Crafting Strategy in an Uncertain World, sees companies running on faith that better inputs will lead to better outputs, with mixed results. "Companies can make fantastic decisions and still have lousy outcomes," he says.

As an entrepreneur, you're brimming with optimism but short on time, information and money, which only makes it harder to assess the shortcomings of each business decision. "As entrepreneurs, we see opportunities," says Ed Marram, director of the Arthur M. Blank Center for Entrepreneurship at Babson College. "We [think] we'll figure it out as we go along."

Justen thinks companies get so immersed in the deal that they lose sight of the basics, from copyrights to cash flow. Even giants like Google aren't immune. "They get caught up in the hysteria, too," Justen says. "Never be afraid to ask the obvious, block-and-tackle questions, because nobody likes to ask those."

There are things we know we know and things we know we don't know, as former Secretary of Defense Donald Rumsfeld famously put it, and you can generally distinguish the knowns from the unknowns. With some decisions, you have enough information to feel confident, and you can quickly reach a decision--hiring repeatedly for the same position, for example. But there are higher-level decisions where information is lacking or contradictory, making the list of potential outcomes longer--such as entering a budding market or developing a new product. Then there are decisions involving true unknowns, where no amount of analysis will ever give you a reliable answer--for instance, doing business on September 12, 2001, when it felt like anything could happen.

Entrepreneurs tend to spend more time navigating the higher levels of decision making, where the standard toolkit (discounted cash-flow analyses, anyone?) doesn't work very well. When a decision involves a lot of uncertainty, Courtney suggests thinking in analogies and collecting case studies to test your logic. By studying product launches in your industry over the past five years, for instance, "you may be able to get good information on a dozen of them and try to figure out why some worked and why some did not," he says. "It's not just winging it."

At the very least, always ponder the worst-case scenario and whether your company could handle it. You'll never have a crystal ball, and you'll still get it wrong sometimes, but you might get it right more often. "The outcome may not be as bad as it [could] have [been]," Courtney says, "because you've anticipated ahead of time and hedged your bets better." But it's your decision, right?

Chris Penttila is a freelance journalist in the Chapel Hill, North Carolina, area.