We make decisions all day long with varying degrees of success. It's a life skill as well as a business skill. Yet few of us ever give much thought to how we make decisions or, to be more accurate, the basis on which we make them.

Most people I work with define a fact as something that is indisputable.

How many times have you heard someone say, “The fact is......”? Well, the fact is that when most people say this the fact they are about to quote is probably not a fact at all!

This is important to understand because decisions are often based on these supposed facts that turn out to be nothing more than someone’s opinion or guesswork.

Napoleon Hill, the founding father of the personal development movement, identified the critical difference between inductive thinking and deductive thinking and the importance of understanding the difference between the two.

Inductive thinking is what is used when the facts of the situation are not available or unclear at best. Deductive thinking is what is used when you have the facts, or at least what appear to be the facts, at your disposal.

Effective decision making requires you to separate fact from fiction, opinion or guess.

Consider the following example: Three students wanted to buy a television but could not afford to. One day they happened to be walking past a shop and saw a demonstrator for sale at £30. They rushed into the shop and approached a salesperson who was happy to take £10 from each of the three.

As he walked to the till he was accosted by the shop manager who told him to only charge the students £25 as they looked like they needed all the money they could get.

The salesperson put three £10 notes in the till and took out five £1 coins to give as change. Without anyone noticing, however, he put two of the coins in his pocket.

He walked back to the students and gave each one of them a £1 coin.

So, each student paid £9. Fact. £9 multiplied by three is £27. Fact. If you then add the two £1 coins that the salesperson put in his pocket that makes £29. Fact. So, just where did the other pound go?

Most of your opinions are based on your perceptions of ‘reality' or how you see the world rather than something that is indisputable.  President Woodrow Wilson was once asked what effect World War One would have on civilisation.

His sixteen word answer was, “I cannot answer your question because I have no facts on which to base an opinion.”

No-one is suggesting for a moment that you only make a decision when you are in possession of all the facts; that would be a futile suggestion.

But, like Woodrow Wilson, become more aware of the basis on which you are making your decision because opinions often become the father of fact. What starts out as an opinion or guess can soon be presented as a fact - especially by someone who has an opinion about everything, and there are many people out there who are quick to tell you more than they know!

In case you are still wondering where the other pound went to, the story of the three students above is a classic illustration of the art of spin. When they hear the story, most people assume the television still costs £30. Of course, it costs £25.

The salesperson puts £2 in his pocket (making £27) and the £3 he gives as change makes £30, which is what the students gave him.

Make better decisions by deciding on the validity of the ‘facts’ that you are using.

Author Ian Henderson is a leading trainer, consultant and speaker. In a 20 year career he has worked with thousands of people from a wide range of organisations in the UK, the USA, Europe and Africa. He is the director of training of Eagle Training Ltd, one of the UK's leading management, leadership and personal development training companies. For more information on how Ian can help you make better decisions go to http://www.eagletraining.co.uk