16 cognitive bias traps that small business owners fall into
Our lives are jam-packed with notifications, events, emails, and ads that each require attention and response. The workday is busy with communications and projects, and if you’re a small business owner, it’s likely that you’re overwhelmed every day with more critical decisions than ever before.
Thankfully, our brains rely on mental shortcuts that allow us to make quick gut decisions. These mental tricks help us get around limitations in time, information, or memory, and are essential to functioning efficiently.
However, these mental shortcuts, also known as cognitive biases, don’t always lead to the most ideal decisions. Because cognitive biases don’t rely on logic, they can cause you to make poor decisions while running your business.
While you can’t spend your whole day thinking through every decision, it can be helpful to be aware of some of the more common mental pitfalls of gut logic. Avoiding your unconscious biases can be as simple as becoming more aware of your own assumptions.
For example, many business owners struggle with planning the timeline of their product release or keeping projects within their projected timeframes. This is caused by the “Planning Fallacy,” which is our tendency to underestimate how long a project will take to complete. Once you are more aware of this tendency, you can build in more time than you think you need, more accurately predict how long a task will take you.
To help you recognise and address the effects of many different cognitive biases, Fundera have created this visual guide on the most frequently encountered biases, with tips on how to avoid them.
Photo by Warren Wong