Should Small-business Owners Trust Their Judgment?

Photo (CC) by John Eisenschenk, on Flickr

How often aren’t we told to “trust our gut?” You see this comment made often for people starting a small business or when small-business owners need to make an important decision.

Yet a recent article from Entrepreneur challenged this and indicated that this idea may be a myth.

So who do you believe? Which view point is correct?

Well from my perspective, both are correct. Let’s look first at a young business owner right out of college. Many of the questions this person will face are new. He or she has no history on which to draw. Decisions based on “your judgment” will probably average out close to 50/50 between ideas that worked and ideas that failed.

So how does our decision making ability get better? It happens because of two factors. First, our past history provides information useful in making future decisions. Second, we get better at evaluating a situation and weighing the likelihood of alternatives ideas succeeding. Decision-making process is therefore somewhat a learned skill.

So as we increase our knowledge base, however, our ability to “trust our own judgment” typically increases. Our past history base grows as to when we have made similar decisions. It may not be the exact same question but science has shown that we can pull bits and pieces from other decisions into a new situation. By using that knowledge, we find our decision-making improves.

So how does this long answer help you make decisions? It’s by understanding where you are at when making a crucial decision.

Yet, there are two caveats to this answer.

First, remember that we don’t have perfect memories. This affects us in two ways. We tend to remember the wins and not the losses. This allows us to view our decision making skills as better than what they actually are. Second, we may forget or discount some of the factors surrounding past decisions, information crucial to the final outcome.

The second caveat is how crucial is the decision. If I am trying to decide what appetizers to have for an open house, failure on my part will probably not have a large or long-lasting impact. But deciding on the products to carry for the Christmas season in a retail store, could make or break your business.

So should you trust your judgment? It depends.

I would leave you with one final thought. The old adage, two heads are better than one, is a good one to remember when making crucial decisions. Especially if that second head is a carefully selected mentor.

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About Glenn Muske

Glenn Muske is an independent expert on rural small business, working as GM Consulting – Your partner in achieving small business success. He provides consulting, and writes articles for county extension agents and newspapers across North Dakota. Previously, he was the Rural and Agribusiness Enterprise Development Specialist at the North Dakota State University Extension Service – Center for Community Vitality.