Keep Emotion Out of Your Business Decisions
As entrepreneurs, we pour an enormous amount of energy into business. We sacrifice time with our family and friends to secure a future that we have control of. When we put that much of our heart and soul into something, it’s natural to get attached. It’s even natural to get so close to your business that you stop thinking rationally about it, and become risk-averse, stubborn, and personally threatened if and when things aren’t going well. It’s natural, but it’s not the best road forward.
Successful business owners don’t allow themselves to get so attached to their business that they stubbornly refuse to adapt to changing times or embrace new strategies.
Loss Aversion: We’ve Done it this Way for a Long Time, So We’re Not Going to Change
This is one of the most common problems an entrepreneur can run into, because loss aversion is a fundamental human trait. It’s a proven fact: stock market players will hold onto losing stock for too long and abandon winning stock too early, and the same goes for just about anything us humans take part in.
The only way to avoid this is to distance yourself from your past decisions and ask how you would do it today if you were starting over. Strategies that worked in the past don’t necessarily work today, and if they do, they aren’t always optimal.
An ad in the yellow pages or Austin newspaper might still turn a profit, but with pay-per-click ads and search engine optimization, you can target customers who are exclusively interested in products like yours.
Cold calling and door-to-door sales can still work, but content marketing is a low cost way to expand your reach by solving problems for your target audience and building trust before the sale.
Pamphlets and coupons in the mail can still help with customer retention, but an email list and a social media following can strengthen and personalize relationships with your customers in a way that wasn’t possible before.
If you were just getting started today, how would you do business?
The Assumption Trap
This is another way entrepreneurs can allow their decisions to become clouded. We all have values, and those values can lead to beliefs. We don’t have to question our values, but if we accept our beliefs at face value we can end up designing faulty strategies. We need to test our beliefs and listen to the results if we want to pursue the best road forward.
The only way to make this work is to choose a data driven strategy. We’re not saying that you should start with the facts and let them guide your beliefs. Facts can be cherry picked and skewed to fit any agenda. Instead, you need to acknowledge your beliefs (we all have them), and put them to the test in a measurable way.
It’s a proven strategy. Start with an educated guess, then test it to see if it’s right.
It’s not safe to just assume that your current marketing strategy is paying off, or that it offers the most bang for your buck. You need to measure its impact and explore the alternatives in order to develop your optimal growth strategy.
Testing is a process. It’s never over. Do you want to assume that you know exactly how your business works, or do you want to send your kids to college? It’s that simple.