Running a business requires important decisions. When emotions get in the way of these decisions, mistakes are made and opportunities are missed.
The same is also often true in life. If you have goals and plans, you might not follow through with them.
When you act on emotion, you’re less likely to stick to your plan – or even make any plans. You might end up ignoring the research or worse. You might make your decisions on pure instinct.
The following 5 emotional decision making mistakes should be avoided at all costs.
#1 – You Don’t Use Your Research
One of the main issues with emotional decisions is that you’re not relying on your tried and true research.
What’s the point of compiling research and looking at estimates if you don’t use them? Consider all the time and money that you may have spent researching your business plans. Don’t let this go to waste.
#2 – You’re Too Afraid to Make Difficult Decisions
There are many emotions that can get in the way of your decisions, including anxiety. Anxiety causes people to pull out of carefully planned decisions and avoid taking the occasional risk.
You can’t be afraid to make these difficult decisions. Otherwise, you end up waiting too long and missing out on potentially great opportunities.
#3 – You’re Too Greedy to Use Caution
Greed is another emotion that can lead to major problems. Some people don’t notice this greed until it’s too late. They tend to take bigger risks with their business, regardless of the outcome.
This is the exact opposite of the previous emotional mistake. Instead of being too afraid to make difficult decisions, you might find yourself taking these risks and failing.
#4 – You Make Decisions Purely on Instinct
The final problem that comes with emotional decision making is acting on instinct. This refers to decisions that are made without any real thought. You simply go with the solution that seems best at the time, with no additional input.
This is actually a common trait among entrepreneurs and a part of the reason that so many new businesses fail. They enthusiastically make their choices based on their gut instinct. Sometimes they win and sometimes they lose. But, in the end, the chances of success are slim.
#5 – You Make a Legal or Ethical Mistake
There are millions of laws and regulations for nearly every industry. It’s so hard to keep track of all legality and ethics of some components of business. This is what human resource departments and legal departments are for.
When you make impulsive, emotional decisions, you could end up making a mistake that costs your business money.
You may not realize that you’re making a mistake until it’s you get fined or penalized for your actions. This type of behavior can quickly lead to the downfall of a business.
If you want to succeed, you need to avoid these mistakes. Focus on real facts and figures, do your research and don’t be afraid to ask for help. These are all key steps that anyone can apply to their decision-making process.
Now, you probably won’t be able to immediately get rid of emotional decisions. So, you should never act without thinking things through. The following tips can help.
Sleep on Important Decisions
Important decisions may need a night of sleep before you finalize them. The purpose of this is to see the decision in a new light. Sometimes you need and an extra day to think things through clearly.
At the same time, you should understand that sleeping on decisions doesn’t always help. You’re more likely to have less confidence in your decision if wait to make it. But, sleeping does help restore your thoughts, improve memory, and increase clarity.
Work with Others to Make Decisions
You don’t have to do everything on your own. An easy solution for avoiding emotional decision making is to let others into the decision-making process. It’s unlikely that you’ll all have the same level of emotion regarding the decision.
Think of boardrooms. The decisions are made by the board, based on a vote. If you’re truly worried about your ability to leave emotion out of the equation, you can consider structuring your business to require board approval before certain decisions are made.
Get an Outside Perspective on Your Business
Sometimes, an outside perspective can be a little more helpful. When you hire a firm to handle a portion of your business or to help improve your business, you can count on them to give you honest feedback.
For example, hiring a marketing firm to evaluate and assess your current marketing strategy can help uncover decisions that may have been overlooked.
Cool Off Before Making Employment Decisions
When it comes to decisions that directly impact other people, emotions are harder to avoid. At the same time, you don’t always want to push these emotions away.
If you need to decide whether or not to fire an employee, you need to choose carefully between making your decision based solely on their performance and basing it on your emotions.
So, if it impacts someone else, you should cool off first. This is especially true when dealing with employee conflict. Allow cooler heads to prevail.
You Should Analyze and Research Potential Risks
Risks can be taken. Starting a business is a risk. But, don’t let greed or other emotions cloud your judgment. You should always analyze your risks.
Risk assessment is a skill that can be hard to learn. Many businesses choose to hire firms to help with risk assessment. The idea is to thoroughly examine the worst-case scenario.
The bottom line is that emotional decision making can lead to failure. It gets in the way of concrete facts. You need to plan things through.
An outside perspective can help, as can taking a moment to collect your thoughts before making a decision that could impact the future of your business.
Don’t rush the process. If you want to keep a business running long-term, you need long-term planning.