Steve Witts’ top tips for keeping your emotions out of the decision making process
You’ve found an exciting franchise opportunity. You feel it’s a great one. You spend hundreds of hours research the brand and tell all your friends about it. But something is holding you back.
Should you go ahead or drop the idea? Whatever you do, you should keep your emotions out of the decision making process.
Investing in a franchise is a passion project. You put everything into it and are ready to make considerable sacrifices to make it work, be that financial, time with loved ones or precious weekends.
Yet it’s foolish to plough on while being led only by your heart. A business idea has to make sense financially too.
I help people who are considering buying a franchise and training in a new career to apply financial rigour and due diligence to the process. I’ve previously told people they aren’t the right fit as an entrepreneur. Being led emotionally can lead to you making the wrong decisions.
Here’s my advice on how to take the emotion out of buying a franchise and let your head, not your heart lead:
The sunk cost fallacy
This is the notion that if you’ve put significant time, effort or money into something, it’s best to continue with it.
For example, you’ve spent countless evenings researching various franchises and you’ve told your friends and family about your exciting business.
Of course, having faith and being hungry for success are all prerequisite for being an entrepreneur. However, deep down you may have doubts about whether it’s right for you. Perhaps others have questioned how well-suited you are to the business?
Your emotional instinct might be to continue with the opportunity, as you’re so tied to it now. You start to look for ways to justify sticking with the bad decision, even though it doesn’t make sense. Leaving the process now feels like you’re walking away with nothing and you’re back to square one.
This can be the stage when having someone with an objective view at your side is crucial. Inviting an objective view could help you decide whether or not to proceed or walk away.
Alternatively, speak to people who have already invested in the franchise - both those who have just started out and those who have been in the business for years. It could give you the evidence of success you need or the answer you might not want to hear.
Either way, it could be a matter of tweaking a few ideas, pivoting substantially or walking away to find a better opportunity.
Anchoring in decision making can occur when a person places too much importance on an initial piece of information.
One example of this would be in house buying, such as a property’s asking price. As the potential buyer, you can be led by the asking price and feel making a significantly lower offer is unreasonable.
In purchasing a franchise, this could manifest itself in the demographic of your ideal customer, level of investment or price point.
But don’t stick to one thing. Get scientific - analyse what happens when you change a variable and model it to see the effect. You could make more money selling to less people with a higher price point or a lower price point may bring in more customers and profit. Do the sums and do them thoroughly.
You truly think the opportunity you’ve been researching is for you. As you develop your business plan, you continue to believe this is how you will make your fortune.
You then start filtering out facts that contradict this. You start by simply relying on facts that confirm your view.
Self-deception starts when people believe what they want to believe. It’s human nature; we all do it. That’s why we live in our social media silos, being friends with people who mainly support our views. Again, this is when you need someone offering an objective, professional view and to accept advice when it might contradict your emotions.
Some franchises will use attractive headline commission figures in their publicity, but when you ask them for proof they can’t provide evidence you will be given the support to achieve these sums.
When a franchisor sends you financial information, make sure you know what you’re comparing and that it all stacks up. Dig deep. Ask for proof of commission on the basis they promote it.
This is when an individual focuses more on the negatives than the positives to confirm a preconceived idea.
For example, have you ever been to a job interview that went pretty well, but afterwards you just focused on what you could have done better?
Criticism sticks in our memory far better than compliments. Sometimes, friends and family can be detrimental at this stage. They project their own fears onto you.
If you’re surrounded by risk averse naysayers who talk you out of trying something new, you will only focus on the negatives and be scared to take risks.
Starting a new business means taking risks. By being open and by recognising this bias - and the negative opinions of the people around you - you can retain a more balanced view and build a better business that you initially imagined.
Simply by being aware that various cognitive biases exist and the fact you may be susceptible to them allows you to be more aware of the self-deception your emotive side is carrying out.
Developing a business can be a painful process, with bumps in the road and, in some cases, complete roadblocks.
By being open-minded, you’ll give yourself the option to emotionally remove yourself from the process objectively. Taking advice from a mentor or two - people who have experience in building businesses and who know the opportunities and pitfalls - can be essential.
The success of franchising is down to the fact many franchisors offer a well trodden path to success.
With a franchise opportunity, you have a ready-made company and a proven success record. By following the advice and business plans of those who have already succeeded, you can literally copy and paste what they did and know it works.
We say to all our franchisees, 99 per cent of whom are starting out as travel consultants with no travel experience whatsoever: “Do what we tell you to do, follow our sales process and listen to your provided mentors.”
The rest is simply implementing tried and tested strategies. They minimise risk and by following the stepping stones we offer them our franchisees build the confidence to become experienced travel consultants - and very successful ones at that.
Steve and his team have helped over 800 members train as fully qualified homeworking travel consultants, who work under the Not Just Travel brand umbrella.