Entrepreneurs and business owners are often portrayed in the media and popular culture as John Wayne-esque cowboys—living day to day by the seat of their pants, making critical decisions casually but always brilliantly. When facing a tough decision, many business owners are advised to “trust their gut” above all else.
While such a scenario makes for good television (business owners sitting a room analyzing data and thinking through the possible consequences of each choice is apparently less entertaining), the belief that they should “trust their gut” has proven disastrous for many entrepreneurs. In reality, whenever you are facing a business decision of any importance at all, choosing based on feelings and emotions is the worst thing you could do.
Why is this such a bad idea? Quite simply, your gut does not have access to historical data, market research, financial projections, and other critical information—and in that information is where the correct decision will be found. Large companies know this, which is why they have employees and sometimes entire departments assigned the task of compiling and analyzing relevant data.
Many entrepreneurs would love to make their decisions based on this type of data—but believe that as a small business, they cannot afford to acquire all of the valuable information needed. But that is just not the case. In this day and age, vast amounts of information are available for free on the internet, and if the data you need is not free, it can usually be found for a low cost.
Here is the bottom line: when you are facing a decision involving your business, you have two real options. The first is to take a plunge one way or the other and hope that you have guessed right. The second is to research all alternatives and find a way to calculate probable returns on all options.
By approaching a decision rationally, you can dramatically minimize the risk you are exposed to because you can draw on data that can predict results with surprising accuracy. Be smart—do not take blind risks when you do not have to. Stop simply trusting your gut!