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 Feris Rifai, cofounder and CEO of Bay Dynamics.
I follow my gut with every business decision I make. After all, your gut is the subconscious part of your brain, and it sways your mind one way or another based on past experiences. It recognizes patterns that serve as your compass to make good decisions in the future.
However, when I make a tough decision, I don’t just blindly follow my gut. First and foremost, I ask questions. I want to gather as much information as possible so that I (and my gut) make an informed decision—and subsequently the right decision—based on the information available at the time. For example, if my marketing team asks me if we can participate in a conference that will cost us $100,000, before turning to my gut, I’ll ask the team questions such as, “Have we participated in the event before?” “Who’s the audience?” “What is our goal as a participant?” “What was the ROI from last year?” Before making any decision I make sure to do my homework first, and then turn to my gut.
Every decision you make has to reference points that can help guide you. For example, when you’re deciding what to wear each morning, you may first look at the weather forecast for that day and then look at your schedule to see if you have any meetings. Those reference points inform your decision, but the final choice is ultimately made when you look into your closet and follow your gut. My gut is at the center of all business decisions (and life decisions for that matter), but asking the right questions always comes first.
See also: Here’s How Questioning Decisions Can Ruin a Business
When it comes to tough decisions surrounding investments and financial outcomes for Bay Dynamics, I apply the same principal. When I sit down at the table with an investor, I first ask questions to get a full understanding of who the investor is, the goals, what the investor is looking to invest in, etc. By gathering that information, I’m also informing my gut so that it sways me in one direction or another based on facts, body language, shared priorities, values, and other nuances that my gut is usually in tune with. In a way, I am helping my gut make an informed decision.
In some cases, I don’t have access to all of the information to be certain I’m making the right decision—a situation that startups run into frequently. Instead of hemming and hawing and trying to analyze every scenario, I look at the limited information in front of me and then turn to my gut to fill in the blanks in a quick and decisive fashion.
Effective leadership comes down to a series of good decisions. I look at each decision as a puzzle. I have reference points to give me a semblance of the picture the pieces form and then I rely on my gut to fill in the rest. If I’ve seen a similar picture before, my gut is a valuable tool in helping me make my decision. However, if the picture is unrecognizable, I may need to turn to my colleagues and business partners for their recommendations so that there’s a multitude of information and guts at work, all of which have different expertise and different past experiences, adding value to the decision-making process.