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 Alex Nocifera, founder and CEO of Local ID.
With three startups launched over the last 12-plus years, my gut has become a trusted navigational tool for my business decision-making process—but it’s taken time. In my early years as an entrepreneur, my gut didn’t quite have the grey-haired, seasoned wisdom to confidently live out the decision-making path. But gut intuition is a skill, and as with many skills, it can be trained and fine-tuned over time.
Any founder setting out on the entrepreneurial journey has the responsibility of being the company’s instinctual leader. It's often in the early stages of entrepreneurship that your gut shines with the soul of the company you founded. But it isn’t until your operations methodically align and your business reaches desired outcomes that you know you’ve nailed the gut decision-making process.
Naturally, when I started out, I often leaned on my trusted circle of advisors, my personal collection of business bibles, and my investors for wisdom and expertise.
Now, with several years of experience as an entrepreneur, paired with the day-to-day charge of being CEO and founder of my most recent startup, Local ID, I've learned how to listen to my gut to drive growth, acquisition, and ultimately, get desired outcomes. Even in an environment that focuses on big data, there's never going to be enough big data to simulate that stomach-flipping adrenaline rush that drives you to make a strong, thoughtful decision.
Logic alone doesn’t take into account human error. It's so important for us to lean in to those gut feelings—that’s where we catch great growth opportunities. In situations where we must follow our instincts, that's when we make unique impacts and uncover out-of-the-box solutions.
Today, the structure of our business requires us to identify three core areas of decision-making: customers, employees, and investors. What's interesting here is that your gut instinct develops a pretty good sense for how all of these stakeholders will respond. How will whatever decision we're faced with impact those three key constituents? Additionally, you can factor in the dimensions of time, urgency, cost, and gain to contextualize your scenario and paint a clearer picture.
Ultimately, being confident in the bets you make and the risks you take gives you a gut instinct. But it's important to keep in mind that you're running a startup—you're officially in the business of disrupting and changing behavior, meaning you’re very much at the epicenter of mistakes. If you're waiting for the perfect, no-risk answer, there's a good chance that the opportunity will fly by—sometimes right into your competitors’ hands. Embrace the potential of being wrong, but don’t be afraid to go with that priceless human instinct: As long as your gut’s win-loss column nets positive, you should come out victorious.
Read all responses to the Entrepreneur Insider question: When making a tough business decision, how do you know when to trust your gut?
Proof You Can Always Turn Failure into Success by Tricia Clarke-Stone, cofounder and CEO of Narrative.
The First Thing You Should Do Before Making a Tough Decision by Denise Terry, CEO of EmbraceFamily Health.
The Hardest Part of Being an Entrepreneur by Francesca Federico, cofounder and principal of Twelve Points.
Here’s Why Good Resumes Won’t Signal Promising Team Members by Randy Rayess, cofounder of VenturePact.
This is How Long it Should Take to Make a Decision by Tim Flannery, a venture partner at Pilot Mountain Ventures.
Why You Shouldn’t Think Twice About Firing an Employee by William Vanderbloemen, founder and CEO of Vanderbloemen Search Group.
This is How the Most Successful Leaders Make Tough Decisions by Simon Berg, CEO of Ceros.
The Best Way to Make Fast Decisions by Vijay Ramani, cofounder and CEO of Totspot.
What Every Leader Can Learn From Alfred P. Sloan About Tough Decisions by Frank Fabela, Vistage CEO peer advisory board chair.
Proof Data Can’t Always Help You Make Decisions by Morgan Hermand-Waiche, founder and CEO of Adore Me.
Doing This Will Help You Make Tough Decisions by Suneera Madhani, founder and CEO of Fattmerchant.
Here’s What Happens When You Don’t Trust Your Gut by Gesche Haas, founder of Dreamers//Doers.
Here’s What You Should Do When You Have to Make a Tough Decision by Alexander Goldstein, founder and CEO of Eligo Energy.
Never Make a Big Decision Without Doing This First by Feris Rifai, cofounder and CEO of Bay Dynamics.
Here’s How Questioning Decisions Can Ruin a Business by Pat Peterson, founder and CEO of Agari.