Photograph by Chris Hondros via Getty Images
By Alexander Goldstein
November 27, 2015

The Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “When making a tough business decision, how do you know when to trust your gut?” is written by Alexander Goldstein, founder and CEO of Eligo Energy.

Trusting your gut more often than not comes with the territory of running a business. Decisions often need to be made daily, sometimes even hourly, and it’s your job to be able to solve these problems both rationally and quickly. Most would argue that rationale stems from experience, while being quick on your feet depends on your business style and personality. Where the two seem to meet creates the infamous “gut feeling.” From business leaders to junior staff members, the gut feeling is universal. It speaks all languages and crosses all aspects of business and life.

But, as we have all probably experienced, gut feelings don’t always lead us to the right decision. So how do you know when to trust them? I’ve learned there are two ways to tackle this. The first has always been to approach tough business decisions with knowledge of the past. For example, I almost always try to recount a time in my life I’ve been in a parallel situation by asking myself, “Have I ever experienced anything similar to this?” If you can find similarities in past decisions you’ve made, it can help put your current circumstance into perspective. I have found that the more similar a situation is, the more familiar I am with it, meaning my gut feeling tends to be stronger. Normally, I go with my gut then—the feeling is there because my subconscious is trying to remind me that I’ve done this before.

See also: Never Make a Big Decision Without Doing This First

When my gut reaction is negative, I make sure to take steps back to understand why. I consider the tradeoffs, the benefits, and the negative outcomes from a more rational point of view. Logistically, I try to understand why I’m associating something with such negativity. Maybe I’m uncomfortable with the tradeoffs, or maybe the decision isn’t consistent with my worldview. I try to pinpoint the feeling and decide from there. Sometimes, gut feelings can appear when a decision warrants change, stemming from the fear of the unknown and less familiar. Yet, change is often the right decision, especially when dealing with the ever–changing world of business. It is imperative to sort your negative feelings in order so you know how to differentiate between a gut feeling you want to stick with and one that just stems from being afraid to break out of your comfort zone.

Self-reflection and logistical thinking are key when trying to navigate gut feelings, especially when making tough business decisions that will influence your business’s trajectory.

Alexander Goldstein is founder and CEO of Eligo Energy, a technology-based energy retailer in Chicago. He is a serial entrepreneur and investor focused on applications of technology and big data analytics to new industries. Prior to starting Eligo Energy, Alexander cofounded Pangea Properties and Enova International.

Read all responses to the Entrepreneur Insider question: When making a tough business decision, how do you know when to trust your gut?

Here’s How Questioning Decisions Can Ruin a Business by Pat Peterson, founder and CEO of Agari.

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