16 Cognitive Bias Traps Small Business Owners Fall Into And How to Avoid Them

Updated on June 22, 2020
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Even if you consider yourself first-rate in your field and a master at making logical decisions you still need mental shortcuts to function efficiently and effectively. Limits in time, information, and memory means your brain has to perform a huge number of mental tricks. Since the average person makes 35,000 decisions daily, these timesavers are essential to cutting through the noise and getting things done. However, they don’t always help us reach our fullest potential. If you’re running your own small business, you may want to double check that every gut feeling makes sense and will benefit your company for the long term.

Cognitive biases are patterns of thinking that don’t rely on logic. Because they allow your mind to get around gaps in knowledge and memory, you need them to bypass things like extreme pressure, time constraints, emotions, and overwhelming information.

However, because cognitive biases are based on generalizations and assumptions, they can’t always be correct. And if you don’t check your reasoning, they can lead to judgements and decisions that negatively impact your business. You can’t eliminate them all, but you can become more aware of how they function and ways to counteract them.

Check out our infographic below to learn more about the different kinds of cognitive bias traps small business owners fall into and how to avoid them:

Sources: GeekWrapped | Richardhughesjones.com | Entrepreneur | GetVoip | BusinessInsider | Wikipedia | Medium | PsychologyToday | WesleyanCollege | Journal of Judgement and Decision Making | Inc | Forbes | WashingtonPost | USAToday | Forbes

Vice President and Founding Editor at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. She launched the Fundera Ledger in 2014 and has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending. She is a monthly columnist for AllBusiness, and her advice has appeared in the SBA, SCORE, Yahoo, Amex OPEN Forum, Fox Business, American Banker, Small Business Trends, MyCorporation, Small Biz Daily, StartupNation, and more. Email: meredith@fundera.com.
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