Take Emotions Out of Decision-Making

February 24, 2025

Small business/SME ownership and management is often very personal. Many see their venture as more than just a way to make money. It is also a reflection of their aspirations, commitment, and enthusiasm. Although being emotionally invested fuels motivation as well as innovative thinking, it can also impair one's ability to make rational choices in important situations. Decisions based solely on feelings instead of rational thinking can result in errors, overlooked opportunities, or financial losses. So, how can small business owners and managers reduce emotional distractions and make rational, objective choices? 

Recognize The Impact of Emotions 

Understanding the role of emotions is the initial step in removing emotions from decision-making. Emotions are often seen as natural and can be advantageous in many situations. Action can be driven by excitement, whereas concern can aid in identifying risks. Uncontrolled emotions such as anxiety, anger, or excessive confidence can result in hasty or ill-advised choices.

Create A Decision-Making Framework

A structured framework can aid in separating feelings from the decision-making process. If using a structured framework, decisions are based on data and logic and not “gut” feelings by carrying out a consistent procedure.

A typical structure might involve: 

• Identify the Issue: Clearly outline the decision that has to be made as well as the reasons behind it.
• Collect relevant data: This would include financial statements, customer reviews, industry trends, etc.
• Assess the various options: Consider both the advantages and disadvantages of each.
• Evaluate the possible results: Consider each option assessing risks and benefits using objective criteria.
• Select an option: That aligns most closely with the objectives of the business.
• Review the outcomes: Analyze the impact of the implementation and improve future decision-making.

This methodical approach reduces the chances of making hasty decisions influenced by feelings.

Seek Outside Opinions

Emotional decision-making is heightened when isolation is present. Stress as well as anxiety can impair a business owner's (or manager’s) ability to make clear decisions when confronted with challenges on their own. Seeking input from reliable outside sources can offer new viewpoints and help counteract emotional biases.

Even casual conversations with colleagues can uncover areas of oversight and produce different approaches. Employees, also, can offer useful perspectives that reflect the actual situation in the workplace, making their input highly valuable to the business.

Recognize Emotions

Developing the ability to recognize and manage one's emotions is important for making rational decisions and avoiding being controlled by emotions. Individuals who better understand their emotions and can identify when their feelings are impacting their decision-making allows them to redirect their focus to make rational decisions rather than emotional decisions.

Establish Specific Objectives

Establishing specific objectives as well as measurable indicators can help guide decision-making that is based on a strategic vision rather than immediate feelings. For example, if the main goal of the business is to boost profitability by 15% within the year, any decision can then be compared to that standard.

Having clearly defined goals makes it much easier to support decisions by ensuring they are in line with these goals, therefore decreasing the likelihood of making emotionally driven choices.

Reduce Number of Decisions

Making too many decisions can result in decision fatigue, causing individuals to make choices based on emotions rather than logic. Due to decision fatigue, individuals tend to be more prone to taking shortcuts or acting on instincts instead of conducting thorough deliberations. Combat decision fatigue by:

• Prioritizing Important decisions 
• Establishing consistent procedures 
• Take breaks when needed 

Learn from the Past

Reflection based on past decisions is an effective strategy to improve future decision making. Reflecting on the past is a great way to recognize recurring emotional biases by reflecting on previous achievements and/or setbacks. 

Conclusion

Although emotions play a crucial role in small businesses and SMEs, owners and managers need to find a middle ground between their passion and being objective. Management can make more logical decisions and reduce emotional influence by using the strategies discussed above. Over time, owners and managers using these strategies will be able to detach emotions from the process of making decisions.