Back when I ran a software company, almost every decision I made was on a topic I had never before encountered. But I had to make some decision. So often I just threw up my hands and guessed at the best thing to do, then I said, “Well that was either the right decision or a learning experience.” Have you ever made a mistake, a bad business decision? In “Good Leaders Make Mistakes. Here Is Why” the author tells us the reason for our mistakes is that sometimes we behave irrationally. The fact is, we make mistakes for a variety of reasons. But the important thing is, there is something we can do to reduce the number of mistakes we make.
I agree that sometimes people behave irrationally, even business leaders. We do things against our own best interest, or the best interests of the company, out of (misplaced) senses of fear or obligation. But mostly we’re making decisions with access to incomplete or faulty sets of facts and data. Unfortunately we cannot delay decisions until we have every single piece of fact and data we could possibly need. So we proceed, often blindly.
Do you want to stop doing that? You can…
In the vast majority of decisions we have to make, we’re dealing with people, specifically we’re entering into some kind of business relationship that could help or hurt us. We’re buying a product or service; we’re hiring or firing someone; we’re taking on or getting rid of a partner; we’re starting or acquiring a new business venture; we’re signing or terminating a lease; we’re launching a new product or starting a new marketing campaign using an outside firm to help; the list goes on. The decision of what to do about every one of these business relationships depends on a multitude of factors, including access to data and our own pre-dispositions. But there is a way to break down that’s important in every business relationship and to reduce the risk of making a mistake.
Every business relationship is a contract. And just like personal relationships, business relationships can get messy. In the case of every business relationship (contract), there are two items you must consider in order to reduce the likelihood that your decision will be a “learning experience”:
- Is your motivation for acting on this particular relationship (entering into it or terminating it) based on rational thinking and accurate data and facts?
- Does the document on which your relationship is based (the contract) reflect your needs and understanding of the relationship?
An entrepreneur cannot possibly know or learn everything needed to answer both of these questions affirmatively with complete confidence. In the case of irrationality, you cannot even know sometimes if you are being irrational! But you can make fewer mistakes in your business relationships by allowing yourself access to people you know that you can trust.
Take Item 2 first. We see way too many entrepreneurs who signed a contract without having a lawyer review it because they thought, “What could go wrong?” If you are about to sign a contract, are you sure you understand every sentence in there and how it might help or hurt you. What about the clauses that are missing, how will those help or hurt you? How does it make you feel that the other signer on that contact may have had their own lawyer draft it to be all in their favor? You should have your business attorney draft or review all of your contracts before you sign them.
And what about Item 1, how do know whether you are being improperly influenced by your own irrational thinking or access only to faulty or insufficient data? Again, you should consult with an advisor you can trust. A quick sanity check does not have to take a long time. Having someone to talk things over with may snap you out of any irrationality. And your advisor may have encountered this issue before, providing you with valuable data and facts that you could not have had access to without tremendous expense.
Every entrepreneur gets lonely making decisions for his/her company all the time. You deserve it to yourself to have advisors you can consult with regularly–and your company deserves the special attention that come with such consults.
Entrepreneurs are going to save the world, and Argent Place Law wants to help. That’s why we are a team of entrepreneur-lawyers who provide Legal Business Counsel to Entrepreneurs just like you. How great would it be to have both of the counselors described above in one place? Call Argent Place Law to find out.