Small business owners constantly have to make decisions about their businesses and they often don't have all the information they need to make truly informed decisions. Often, the information is not actually available or it may cost too much to gather it. In any case, many decisions don't have a good factual basis and many will be wrong.
Typical are decisions to go after a particular market segment or to develop a new product. While such decisions are often based on incomplete information, once the work starts, the information comes rolling in. After putting in a lot of work, it usually becomes clear whether the decision to proceed was the correct one. The information which was not available before, now makes the situation clear.
That's where emotion comes into the picture. Many small business owners will at such a time not be willing to pull the plug. They have invested time and effort and don't want to admit, even to themselves, that they were wrong. This is where they let their emotions get the upper hand and continue working on a lost cause, running their business into the ground.
Instead, as soon as the picture becomes clear, if it shows that the initiative was wrong, the small business owner should cancel the program and move on. He's going to be wrong a good part of the time and the only focus should be on whether there is anything to be learned from the wrong decision. That way he will minimize the damage from wrong decisions and build on the right ones.
While this kind of emotionalism will always hurt businesses, making conscious decisions based on grounds other than pure business numbers often makes sense for the business owner. In the hit movie, "The Aviator", Howard Hughes repeatedly makes decisions to proceed with the development and construction of airplanes against the advice of his managers and without a clear business case but he knows he may, and in some cases will lose money. Yet he succeeds overall.
Often the best business owner is one who is passionate about his business and who, as a result, will consciously make some decisions without a good business basis. Often such decisions will work out but, even if they don't, as long as they were made knowing that the business case wasn't there, the business owner can justify them. That's why he is in business in the first place.
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