I’ve been an entrepreneur for a lot of years. At one point, after I had started, grown and sold a few businesses, I thought I knew everything there was to know about making good business decisions. After all, I was a success!
After I sold my companies, I became an angel investor—finding ventures that I thought were promising and plunking down my hard-earned cash to give other entrepreneurs a chance at making their dreams a reality.
As it turned out, I was more like the angel of death—I made some truly terrible decisions, so bad that it seemed like everything I touched was destined to fail. I realized I'd been lucky early on—and I had worked really hard—and that if I didn't rethink the way I was making decisions, the money I'd worked so hard to earn would quickly run out.
Here are the things I learned to watch out for when making business decisions:
1. Ego-Centric Decision-Making
If you think you know it all and that your expertise in a narrow field will translate to every other field, you’re almost surely wrong. Don’t fall prey to the fantasy that you’re King Midas—no one has a golden touch in every area. Rather than relying solely on your own knowledge, assemble a team who has experience, which rounds out yours, and you’ll have the benefit of everyone’s input.
2. Relying on Momentum
There’s certainly some truth to the theory that past history can predict future events. The problem, though, is that the world evolves and, inevitably, things fall out of fashion and are replaced by new products. Think about the typewriter. At one point, typewriters were the best technology available, and they sold like crazy. But at some point, companies had to move on to word processors, and later computers, or they'd become obsolete. If you’re sticking with the tried and true and refusing to look at other options, you may be running a high risk of making a bad decision.
3. Lazy Research
Entrepreneurs have to be hungry and curious. If you’re only looking to confirm the results that you expect to get when you research a new opportunity, you’re likely to ignore other, potentially significant results. Make sure you’re looking at the entire picture—both negatives and positives—when it comes to any decision.
4. Indecisiveness
Don’t become a victim of the "mañana" syndrome. Delaying a decision is still making a decision, and if you’re putting off making a choice, you may end up limiting your options down the road. The thing is, you may be right but you may be wrong. Don’t let yourself be cheated out of success, though. Make the decision and stand by it.
5. Trying to Go It Alone
Just as you can’t expect yourself (or anyone else) to be an expert in every area, you can’t expect that you’ll necessarily understand all the options and complexities of any given situation. Sometimes the very best results are achieved through compromise. If you’re the sole decision-maker, you won’t have the benefit of working through all the angles and options before arriving at a reasonable compromise that benefits everyone.
6. Poor Execution
Making a decision is only 10 percent of the process. The execution of that decision is the other 90 percent. If you fail to communicate the reasons for your decision to your staff, they may fail to understand its importance. If you neglect to plan or follow up on the execution of your decision, then you’re not getting the job done. Make sure you implement your changes in a thoughtful, logical way.
7. Seeing the Tree Rather Than the Forest
Good decisions are made with the big picture in mind. If you’re focused on putting out fires or only thinking about next week or even just next month, you’re not going to be able to plan for the next year or the next decade. Leave the short-term decisions to your trusted staff, and devote some energy to the long-term decisions that need your leadership skills.
8. Not Balancing Sources
Abraham Lincoln was a great president, but it wasn’t just because he was a smart, thoughtful man. He surrounded himself with a cabinet comprised of his most bitter rivals. He knew the power of hearing from someone other than yes men. Don’t fall into the trap of listening to sycophants, who tell you only what you want to hear. By seeking out contrary opinions, you’ll avoid making decisions based on biased sources.
One of the most significant roles we play as entrepreneurs is the decision-maker. If we can improve the process by which we make the vital decisions that affect the health and profitability of our companies, then we’re almost certain to see more consistent and positive outcomes.
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This article was originally published on September 30, 2014.