Emotional Decision-Making: Scarcity vs. Abundance
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How do you make decisions for you and your business out of confidence rather than fear? That's what I'm going to dive into today. No, I am not a psychologist. I am not a psychiatrist. I am not a technically a business coach. And I'm not going to get into the nitty gritty.
I'm just going to share with you the lesson that I've been learning and applying to my life recently because I think it will help you see a potential blind spot.
What is “Scarcity Mindset”?
Let's talk about how to make decisions out of confidence, rather than fear.
This is actually talking about what is called a “scarcity mindset,” which is making decisions out of a fear of failure, or a lack of abundance, for example.
“Scarcity Mindset can be defined as a pattern of thinking that focuses on what you don't have and the underlying belief that you're not ever going to have the things that you want, even when you have access to basic needs, like food, water, housing, income, etc.
Whereas scarcity itself is typically defined as not having some or all of the things that are necessary for survival, this definition isn’t meant to diminish the real stress and anguish that can be caused by Scarcity Mindset; in fact it highlights how impactful this mindset can be.
“I’m the only one out of my friends who’s still single.” “I should have gotten a promotion/raise by now.” “I have no money. I’m stuck living paycheck-to-paycheck.””
That means someone stuck in a scarcity mindset is potentially making a decision that is ultimately based on something they’re afraid of, ––and let’s face it, we don’t always make the best informed decisions when we operate from a place of fear.
What is “Abundance Mindset”?
First let me preface this by saying: it’s VERY important not to lean too far in either direction:
lean too far into fear & we avoid problems, make possibly cowardly decisions, break our resolve too quickly, & other similar problems,
but lean too far into abundance and we might just ‘organize’ the next Fyre Festival because we just “believe” it will work out without doing the work. 😂
Abundance is NOT arrogance, ignorance, and other similar terms. It’s not a form of denial, or an unwavering, unfaltering belief to our detriment.
To make decisions from a place of abundance, it just means that we have (developed the skill to maintain) the confidence in ourselves, & maybe also our support network, to reach our goals –rather than the confidence that we will fail.
“Having an Abundance Mindset means not feeling limited by the things that you don’t have, but instead, focusing on the opportunities you do have in order to gain what you want in life.
… It’s a mindset that helps you start from a place of assuming that you are able to get to where you’d like to go and then you can begin identifying the steps you need to take to get there. Alternatively, Scarcity Mindset is like wearing blinders and all you can see is what you don’t have, not the possibilities that exist for you.
Having an Abundance Mindset can help you start to shift the statements you read at the beginning of this post to sound more like:
“I’m able to reach my goals through using my resources, and can find new ones as I need them.” “I’ve been stuck for a while and am ready to learn ways to get unstuck.” “I trust that I’ll figure out a plan to get me where I want to be.””
Personal Example: My Laptop Dilemma
I’ll share a recent personal example, because this “abundance mindset” thing isn’t always easy, even for an idealist like myself!
I bought my previous laptop in 2019 and by 2022, it was no longer serving me. The model that I had purchased was never intended to handle video editing, and in 2022, I had started doing a lot of video editing so I needed a more powerful machine.
So, I did what all designers do, go drool over the latest tech & marinate on what I need vs what I wanted. 😂
I looked at the latest & greatest MacBook Pro and discovered it would cost me in the neighborhood of $6,000+ to buy the one with the specs I wanted, which would give me the most bang for my buck (ie: a computer that “lasts a lifetime”). 🫣
NOT gonna happen anytime soon. 😂
So, here's the thing. The initial price point estimate that I built for myself when I was building the computer I thought I wanted, it had WAY more than I knew I needed for local storage, possibly more than I needed for memory, and was maybe even more powerful than I needed too. When you stack upgrades like that on top of each other in a custom build, on top of the already pricey machine, it's gonna cost a lot of money!
So when I saw that number, I backtracked, thinking, ‘okay, but do I actually need that ALL of those upgrades? Or could I get by with less?’ That's a valid question when you're talking about thousands of dollars in price difference.
I did a lot of research because this was back when the ‘unified memory’ or whatever that the new silicone based memory chips were relatively new still and I wasn’t sure if the size was compatible with what I knew of the old tech (because it was supposed to be way more powerful overall).
The big question was, could I get by with the M1 Pro chip or did I “need” the M1 Max chip?
I wanted to make a good decision. I wanted to make an informed decision.
But here's where that kind of broke down, and scarcity mindset creeped in.
Breaking the Habit of Making Fear-Based Decisions
I realized that the time and energy I was spending in the research of this was ultimately coming from a place of fear.
Going back to the very first Mac that I purchased myself, which was in 2007-ish. I was in my sophomore year of college and I’d sold the MacBook Pro on eBay that my parents had bought me the summer before college, putting the proceeds toward a new one with the best specs I could afford at the time, because I knew that that computer had to last me a good 5 or 10 years.
Basically, that's scarcity mindset saying, ‘I'm gonna buy the best I can afford right now, so it will last me as long as possible, because I'm afraid that I won't have the chance or the budget to buy another one in the next few years &/or that a cheaper option will be a waste of money, breaking/crashing/dying sooner & at an inconvenient time.‘
In other words, ‘this one has to be SO good that it can last until I can afford to buy another one.’
Let’s look at that definition from Headspace again, “a pattern of thinking that focuses on what you DON’T HAVE and the underlying belief that you're NOT EVER going to have the things that you want, EVEN when you have access to basic needs”
So what ‘fears’ did you hear when I described how I was starting to make this decision? If you look back at the examples Headspace gave us in the quotes above, you’ll be able to recognize the pattern!
Basically, the inner monologue (subconsciously) sounds like this:
I can’t make enough money to buy a new computer in the future.
I don’t make enough money now & that won’t change in the near future.
I’m a broke college student, stuck living paycheck-to-paycheck.
This is the last time I’ll be able to spend money on something like this.
Even in 2022, after running my business for 7 years, and 2 years into running it full-time (sans-side hustle), in my mid-30s (adulting & everything!), and after so many big & small life lessons that prove otherwise.
But then it HIT me! I realized, “––wait a minute. Is that true? Can I NOT afford to buy another one next year if I realize this one's not good enough?” Probably, because the truth was and still is, if I needed a different one, I’d FIND A WAY to replace it and I DO have the confidence I could do that.
This fear-based decision I almost made, was just an old habit, –not out of an actual fear.
I share that to say, this happens to the best of us, and sometimes it's just a habit we need to break, because that's what we're used to, & not a “reality” check.
In this example, I was still using my college brain. I was still making, I don't know, $6/hour with limited availability to work outside/around my classes. That was how I used to think back then. So it WAS a big deal to spend that kind of money when you only make $6/hour, ––but I make a decent living now so I can’t make current decisions based on my past situations.
And if I need to buy a different computer sooner than expected, I'd probably sell the one I currently have or sell the older one that we have and give my current one to my husband, because he doesn’t particularly care what he uses.
It’s not the end of the world, and I can creatively problem-solve.
Flexibility, Fear, and Confidence
As an entrepreneur, we've got a pretty unique advantage when it comes to making money. Here's why:
Flexibility in Income Generation
I'm not tied to a single paycheck or employer
I can create new income streams on demand
Options include:
Launching new products
Raising prices
Acquiring new clients
The best part? Not all of these options are super complicated. It's just about being creative resourceful, and confident enough in yourself to TRY them.
Shifting Mindset: From Fear to Confidence
I realized something important recently: I was still making decisions based on old fears and habits. For example, I don't need to buy a $5,000 computer every other year - that would be unnecessarily wasteful. But if I really needed to upgrade sooner than expected, I could absolutely make it happen.
This shift in thinking is like building a muscle. It takes time, consistency, and practice to recognize when you're acting from a place of fear versus confidence. But trust me, it's worth the effort!
Remember: As an entrepreneur, YOU have the power to shape your financial future. Act with the confidence that you can figure things out, even if you don't feel it 100% yet. That confidence will help you reach your goals faster and easier.
Delusional vs Confident Decision Making
Now let’s talk about why making decisions from a place of confidence is crucial for you as a business owner or CEO. It's all about avoiding the trap of playing "not to lose" or playing small.
The Danger of Fear-Based Decision Making
When you make decisions from fear, you're essentially aiming for last or second-to-last place. You're so focused on not crossing the finish line at all, that you may forget about how to actually win. This mindset keeps you from ever exceeding your goal, because the goal is just “not to fail.”
I heard this take on the concept from the "Screw the Nine to Five" podcast (shoutout to Jill and Josh Stanton!), which got me through many years of my actual 9-5. 😂 In that one 10-minute episode, they talked about "playing not to lose;" it’s a simple concept, but it really stuck with me!
Or watch the episode!
Here's why it matters:
Fear prevents forward-thinking, inspirational decisions
Fear helps us avoid even dreaming about higher aspirations & goals
Focusing solely on avoiding failure limits your potential for success
Negative focus tends to yield negative results
The Concept of “Stretch Goals”
Ever heard of a ‘stretch goal’ before? It’s kind of like the concept of having Good, Better, and Best goals, where:
the “Good Enough” outcome would be to hit a revenue goal that just breaks even or just pays the bills.
the “Better” outcome would be to hit a revenue goal that more than pays the bills, leaving a little leftover to have fun with.
the “Best” outcome would be to hit a revenue goal that stuns you and opens the door for opportunities, new dreams, true freedom & creativity, and maybe even further growth that you’d never anticipated.
In that concept, a “stretch goal” might be equivalent to your best-case scenario or “in a perfect world” I’d-be-able-to-achieve-this-crazy-cool goal. 😂 It’s a “stretch” to get there, but it’s just this-side of possible!
Shifting to Confidence-Based Decisions
If you’re playing “not to lose” then you’re basically just aiming for the “Good Enough” goal, rather than working hard toward achieving the “Best” or “Stretch” goal, which means… you’ll NEVER have a chance at winning that Stretch because you’re not using the right strategy to get there.
Again, I'm not talking about making reckless choices or living in denial. This is about making strategic decisions based on positive goals & what’s probably achievable within various levels of reason.
Here's what I mean:
Focus on what you actually want to achieve, not just what you want to avoid
Make decisions from a place of confidence in your own abilities
Embrace the entrepreneurial spirit of problem-solving and risk-taking
The Power of ‘Plan A’ without a ‘Plan B’
I recently came across a clip of Arnold Schwarzenegger talking about the danger of having a Plan B in some cases, which stuck with me because it’s kind of a “burn the bridges” approach, but I get why!
His point was that having a backup plan can subconsciously undermine your commitment to Plan A, so it's like you’re on an island and you “burn the boats.” Meaning, now you have no choice but to make it work without them.
In other words, if there's no other way or not another plan, you have to make Plan A work.
For us entrepreneurs, this means:
Focusing all our energy on making our primary plan succeed
Avoiding the temptation to hedge our bets with backup plans
Trusting in our ability to adapt and overcome challenges
Practical Applications
So, how do we put this into practice? Here are a few tips:
Make financial decisions based on creating success, not avoiding ruin
Trust in your ability to figure things out as you go; it’s okay to start messy & get better with each iteration
Act with confidence in your capabilities, even if you don't always feel it; you know what you’re capable of as a baseline or what’s “typical” based on past history; taking on or aiming for something just a little further past what you’re comfortable with, enough to ‘stretch’ you a bit, will help you grow & become even more capable
Be honest with yourself, but don't let past mistakes dictate future decisions
Don’t make ‘big’ decisions or stretch goals from feelings or emotions; always rely on data to tell you what the ranges of possibility are, wherever possible
Remember, confidence is a skill you can develop. By acting confidently and trusting in your ability to handle challenges, it’ll probably seem easier to reach your goals. It's not about denial - it's about believing in your capacity to create the success you want.
the simplest lessons…
After discussing this issue with a fellow Club member on one of our recent monthly discussion calls, I realized that this lesson I shared with you today –playing to win vs playing not to lose– was a small tweak to a popular concept, but it’s helped me so much in my day-to-day life! And I figured it could potentially benefit you too, my friend.
Remember, sometimes the simplest lessons can make the biggest difference! 😉
