Buying a franchise? How to make a big decision
Deciding which franchise to buy can be daunting; this is perfectly natural as it is a big and important decision.
Big, important decisions often share three characteristics: a high level of complexity, they cannot easily be reversed, and are likely to impact significantly on our lifestyle.
With this in mind, here are some tips for making good decisions based on psychological research.
When faced with a complex decision take the time to gather as much relevant information as possible. Ask yourself "What other facts will help me to make a good decision?" Once you have considered the facts at a conscious level, give your subconscious mind the opportunity to get to work.
It is amazing how this can improve your ability to come to a good decision and sort the wheat from the chaff. The subconscious mind works best when the conscious mind is distracted in a totally unrelated task.
So go off and do a puzzle, read a book or do some sort of physical activity that you can immerse yourself in. You’ll find when you come back to the decision you will have greater clarity.
Check the facts
While we like to think of ourselves as smart and rational, there is a wealth of research that shows we humans are highly irrational in our decision making processes.
We are often influenced by irrelevant or flawed information, and salespeople can use this to persuade us to their way of thinking. For instance a franchise salesperson may pretend to be fascinated by you to make you more likely to trust them and their recommendations.
Or they may dazzle you with impressive sounding claims which have no relevance or factual evidence behind them. To guard against this, ask yourself these three questions:
- Am I being influenced by charm, or by good information?
- How relevant is this information to the potential success of the business?
- Where is the evidence to back up this claim?
Never make decisions when you’re "too"...
Another cause of poor decisions is our emotions. Emotions cloud our thinking and cause us to filter out important information. For instance, when we like someone we tend to ignore their faults.
When we are feeling disappointed we tend to magnify obstacles and problems but when we are excited we tend to downplay them. And when we are angry we tend to say or do things we later regret.
Someone once said to me, never make a decision when you’re too - too mad, too sad, too glad, too anything! I think this is great advice.
Balance the risk
While on the topic of being ‘too’, the third cause of poor decisions is being too reckless or too risk averse. I recently needed to take out a new mortgage.
The level of risk aversion shown by the bank led me to almost take my business elsewhere. I had the feeling someone behind a desk was more interested in covering their rear with endless information than in making a prudent decision on our ability to pay back the loan.
A useful way to achieve a balance between being too reckless or too risk averse is to consult with someone who has a different risk profile to you. The reason for this is when people with similar approaches get together they tend to exaggerate their tendencies.
So whether you are overwhelmed with fears and concerns, or you feel you urgently want to jump into a quick decision, talk this through with someone who is likely to challenge your assumptions.
Of course despite our best endeavours, no-one gets every decision right. As Henry Ford said, "Failure is simply the opportunity to begin again, this time more intelligently."