16 Cognitive Bias Traps Entrepreneurs Fall Into And How to Avoid Them

Our days at work are inundated with information, notifications, and decisions. With the overwhelming number of things to consider and choices to be made in our modern workday, its no surprise we have mental techniques to get through the day efficiently. If you’re an entrepreneur or small business owner, you’re likely responsible for a number of important decisions. However, there’s often too little information or too much meaningless information, or we may not be able to recall exactly the details. These limitations in decision-making can mean we need strategies to deal with inadequate time or information. Because our brains are not perfect machines we utilize mental shortcuts called cognitive biases to make a large number of decisions required in business every day.

Cognitive Biases Affect Your Business Decisions

However, because these cognitive biases don’t rely directly on the facts, they can keep you from correctly assessing a situation or making the ideal choice. And if you’re starting your own business, you’re likely aware of how much one small decision can impact your business. That’s why it’s crucial to become better at recognizing when you’re making an assumption and when you’re making a validated business decision. While it isn’t efficient to avoid every cognitive bias becoming more aware of how you make decisions can positively impact your business.

For example, you may struggle with making decisions at all. It is common to see inaction that results in a negative outcome as superior to an action that caused an equally negative outcome. This is known as the Omission Bias. However, both are choices that lead to undesirable results. To avoid this bias, don’t be afraid to take action, especially if you were sure inaction would lead to a bad result.

To help you avoid this and other common biases, Fundera created this infographic on how cognitive biases affect new business owners, and how to avoid them.

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