Member Article

The 6 Factors Preventing Small Business Owners From Making Good Decisions

Good businesses are built with good decisions. You’ll be making a lot of them as an entrepreneur, and while some of them may seem almost inconsequential, others will determine your business’s destiny. While there aren’t many absolute “right” or “wrong” decisions, there are good ways and bad ways to go about decision making. Generally, the more information you have and the more logically you consider your options, the better decisions you’ll end up making.

That being said, there are six main factors that typically prevent small business owners from making the best decisions they can:

1. Incorrect assumptions.

You carry a number of assumptions about your business environment that you may or may not know you carry. These can affect your decisions in a number of ways, such as leading you to believe one set of outcomes is possible (when it really isn’t), or causing you to neglect an entire swath of your business problem. For example, if you assume that everyone in your target demographics favors strong customer service over product design, when it comes time to allocate your budget for the coming year, you may end up favoring the wrong department. Try to back your assumptions up with research, and look closely at the inner workings of your own mind to identify any areas you’ve glossed over.

2. Incomplete knowledge.

This is a problem that affects everyone, not just small business owners. It’s impossible to make a good decision if you don’t have all the information surrounding that decision. Granted, it’s not always possible to gather “complete” information on a given problem, but you should at least try, and gather as much information as you can. Start by digging up as many possible decisions as you can; if you’re looking at the problem with only two possible decisions, you’re instantly limiting your decision tree, and you may be overlooking a key opportunity. From there, perform more exhaustive background research, and try to look at the problem from all angles.

3. Reliance on advice.

First, let me explain that advice is always a good thing. The more advice you get from seasoned professionals and other experts, the more informed you’ll be about your problem—and you might even proactively prevent factors one and two on this list in the process. However, it’s irresponsible and inefficient to over-rely on this dispensed advice. No matter how experienced or skilled someone is, they don’t know everything, and trusting them to run your business is a bad idea. Take their advice to heart, and follow it if you truly believe it’s the right thing to do, but don’t trust it implicitly or take it as absolute truth.

4. Favoring the present over the future.

Many new business owners end up making decisions that shy away from short-term sacrifices or temporary losses, even if that means also sacrificing long-term gains. For example, they may avoid cutting out a product line or reinventing one of their core procedures simply because it will take too much time or cause too much stress in the “now.” As a general rule, your decisions should be pointed toward the future; what decision is going to do the greatest amount of good for you a year from now?

5. Sentimentality.

Small business owners have greater emotional attachments than CEOs of bigger businesses; they often build their own enterprises from the ground up, giving them a strong emotional investment, and they treat their teams of employees like family members. Accordingly, big decisions like letting an employee go or fundamentally changing the nature of the business can be hard from a sentimental standpoint. You have to overcome this if you want your business to succeed.

6. Excessive hesitation.

Decision paralysis often sets in where you aren’t sure what to expect, or if your decision involves two or more options that are too similar to distinguish. It happens to all of us, but you have to acknowledge it and address it if you want your business to keep thriving. Spending time wrapped up in hesitation is the same as not making a decision, and not making a decision is often worse than making a bad one. Even if you aren’t sure, it’s your responsibility to be decisive. When in doubt, trust your gut.

Avoid these factors at all costs in your small business, or else learn to work around them. Some of these are the natural result of human biases and flaws in thinking, which you can’t help, but all of them can be recognized, accounted for, and honed to form a better decision making process. There’s no guarantee that all your decisions will be “right,” or that they’ll all lead to favorable outcomes, but overall, you’ll make more rational, complete, educated decisions, and that’s going to help your company grow in the directions it needs to.

This was posted in Bdaily's Members' News section by Jessica McMohen .